Personal Care Product Contract Manufacturing Market Analysis By Service [Manufacturing (Skin Care, Hair Care, Color Cosmetics, Fragrances), Custom Formulation, Packaging], And Segment Forecasts, 2018 - 2025

Industry Insights

The global personal care product contract manufacturing market size was estimated at USD 15.36 billion in 2016. The increasing demand for skin care and hair care products is expected to drive demand over the forecast period. In addition, the rising demand for specialty products is expected to further augment the demand for personal care product contract manufacturing.

The personal care industry is characterized by the major brands outsourcing the manufacturing of specialty products to the contract manufacturers. As the demand for specialty cosmetic and skin care products is increasing, the personal care product contract manufacturing market is expected to witness significant growth over the forecast period.

U.S. personal care contract manufacturing market by service, 2014 - 2025 (USD Million)

Manufacturing accounted for over 85% of the overall revenue share in 2016 followed by custom formulation and packaging. The growing prices of raw materials coupled with innovation in technology are expected to be the key factors for driving the manufacturing growth over the forecast period.

Development of new and gender-specific products is expected to drive demand in the industry. Increasing use of hair sprays, styling mousses, and deodorants by male consumers, in addition to the high demand for lip colors, lip-glosses, and other cosmetics products from the female consumers are expected to drive the demand.

The profit margin is low in contract manufacturing industry. The companies are price takers as the brands' approach or outsource the production to contract manufacturers to reduce operating cost, on account of which the contractors have to supply the products at lower prices.

Introduction of ground breaking technology in the product manufacturing and packaging of products including dental floss, electrical toothbrush, and denture adhesive cream is expected to drive personal care contract manufacturing market as the brand owners are reluctant to invest in new technologies and require premium quality products to meet consumer demand.

Service Insights

Packaging accounted for 8.5% of the revenue share in 2016. Rising demand for flexible and innovative packaging in personal care industry is expected to have a positive impact on the industry growth over the projected period. In addition, need for rigid packaging for specific cosmetic products is expected to aid market growth.

The packaging of personal care products enhances the aesthetic value to the product, which is one of the primary factors influencing the purchasing decision of the consumer. Moreover, the companies are investing in innovative packaging which is expected to propel the growth for personal care packaging market.

The companies are rigorously striving to innovate and develop new products owing to changing consumer taste & preferences in order to meet the customer need thereby investing majorly in research & development and custom formulation. In addition, high expertise provided by the contract manufacturers in custom formulations is expected to augment market growth.

The rising demand for cosmetic products coupled with increasing trend of outsourcing product manufacturing is expected to drive the demand in the market. The personal care market players are focusing on developing new promotional strategies. As a result, these companies are outsourcing the manufacturing and related services.

Manufacturing Service Insights

The skin care products are manufactured for various skin condition such as normal, dry, oily, sensitive, and mature, due to which manufacturers tend to provide a wider product portfolio based on consumer preference. In addition, the increasing demand for organic products owing to harmful effects of chemical skin treatment is expected to fuel growth over the forecast period.

The manufacturing of make-up and color cosmetics market is expected to witness growth on account of the increasing demand for the products in developed as well developing nations. The major brands including P&G and Unilever are outsourcing their mass manufactured products and are focusing on the production of innovative products, which is expected to drive demand.

Global manufacturing service market revenue by region, 2016 (%)

Fragrances & Deodorants accounted for 14.09% of the overall revenue share in 2016 with growing demand for premium fragrances and deodorants such as Axe and Dove. The penetration of these deodorants is increasing significantly owing to the consumer preference for spray-on technology driving the demand for the segment over the forecast period.

The rising demand for skin care products particularly from the millennials to delay the signs of ageing is expected to propel the demand. In addition, increasing R&D expenditure towards producing specialty formulations involving organic ingredients is expected to propel growth over the projected period.

Regional Insights

The industry in Asia Pacific is driven by the increased demand for products such as deodorants, shaving creams, among youth in emerging economies including India and China is expected to have major impact on the growth. In addition, increasing demand for anti-aging products among adults is expected to drive demand for personal care products over the forecast period.

Europe is the largest market for personal care products, and thereby driving the contract manufacturing market, accounting for a share around 21.0% of the overall revenue share in 2016. Growing demand for personal care products, particularly in France, Italy, and UK, owing to consumer inclination towards grooming to inculcate positive self-esteem is expected to drive demand.

The European Commission framed Horizon 2020 Strategy, with the prime intention to promote the consumption and production of natural ingredients in chemical, personal care, automotive and energy sectors, which is expected to propel the contract manufacturing market for natural personal care products in Europe.

The advanced technological capabilities and supporting infrastructure have promoted the highly sophisticated manufacturing of critical products on a large scale with high accuracy in North America. The demand for custom formulation owing to the presence of R&D hubs of key market players is expected to drive market growth.

Competitive Insights

The companies in the contract manufacturing market are highly competitive and compete on the basis of prices and regional expansion. Established players including McBride and Colep compete in terms of innovation and new product development abilities. The companies provide high-performance products with customized solutions in terms of services.

The major players in the industry constantly invest in the research & development projects to enhance the formulation capabilities to gain a competitive edge over the other players in the market. Widespread distributions channels of the major players benefit the company in catering to the global market and provide optimum quality services to its customers.

Report Scope

Segments covered in the report

This report forecasts revenue growth at global, regional & country levels and provides an analysis on the industry trends in each of the sub-segments from 2014 to 2025. For the purpose of this study, Grand View Research has segmented the global personal care product contract manufacturing market on the basis of service, and region:

• Service Outlook (Revenue, USD Million, 2014 - 2025)

  • Manufacturing

    • Skin Care

    • Hair Care

    • Make-up & Color Cosmetics

    • Fragrances & Deodorants

    • Others

  • Custom Formulation and R&D

  • Packaging

• Regional Outlook (Revenue, USD Million, 2014 - 2025)

  • North America

    • U.S.

  • Europe

    • Germany

    • UK

  • Asia Pacific

    • China

    • India

    • Japan

  • Rest of World