InterviewUS cosmetic chemicals demand flat for ’09 – consultant

03 April 2009 21:21  [Source: ICIS news]

NEW YORK (ICIS news)--US demand for cosmetic and personal care chemicals will remain flat in volume terms in 2009 due primarily to a slow start to the year, an industry consultant said on Friday.

“Clearly in the last quarter of 2008, the cosmetic chemicals market was afflicted with the same destocking and deleveraging as the rest of the chemical industry,” said Neil Burns, managing partner at US-based chemical consulting firm Neil A Burns.

“Demand was down by as much as 20-40% in November/December due to this phenomenon. However, the effect was temporary and overall volumes in 2008 held up fairly well,” Burns added.

To deal with the current financial woes, cosmetic chemical suppliers are said to be deleveraging and reducing inventories just like everyone else in the value chain. Companies are also ramping up sales and marketing activities to take advantage of the current “quiet period”, he said.

“For cosmetic chemicals, the sales cycle is much longer than that of commodity chemicals like solvents or caustic soda. Therefore, the sales and profits earned in the fourth quarter of 2009 and first quarter of 2010 will depend to a large extent on the work done now to develop new business,” he said.

Despite tight budgets this year for most chemical companies, investment and product development for cosmetic and personal care applications continue to increase, Burns said.

“A key point to bear in mind is that cosmetic chemicals are largely going into end products which are either consumer staples like shampoo or affordable luxuries like anti-aging skin cream. The purchases of these types of products are a lot more credit-crunch resistant than the purchase of a new car or a new swimming pool,” he added.

Long-term growth areas in the cosmetic and personal care market include natural, organic and other renewable-based products, Burns said.

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By: Doris de Guzman
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