The Green Report: The Question Begs the Answer

Editor’s note: This article originally was published in the August 2007 issue of Global Cosmetic Industry (GCI) magazine and is being reprinted with permission. All rights reserved.
Leaf 2
The best ideas are worthless if they are not or cannot be implemented—regardless of how concise, logical or noble they may be. Ideas make for good copy, but action changes the world.
       Going green has long been a great idea, and there is no shortage of compelling stories explaining why. However, it hasn’t been until very recently that stories of green action have taken center stage.
       At a recent Cosmetic Executive Women (CEW) Newsmaker Forum, Bernd Beetz, CEO of perfume house Coty, noted that, “The green movement is a total challenge and opportunity. I think we have to open up our minds to translate it into concepts and products.”
       Seeing the movement in motion, find out what a range of cosmetic industry experts have to say about where they think things stand with the move toward green.

The path to green
Where does the beauty industry, in general, stand in meeting growing demands for natural and sustainable products? How effectively is the industry greening?

Robb Zurek, business development manager, Continental Packaging Solutions: The move toward natural ingredients is the most prominent thing happening in the beauty industry. The greater consumer demand for products that are not tested on animals, that are made from natural extracts, etc., has generated a shift away from petroleum-based moisturizers and the like.
       The contradiction continues to lie in the packaging, however. Overall, the percentage of truly sustainable packaging used for these natural products is quite small.

Sundeep Gill, vice president of research and development, Sun Deep Incorporated: We are finding suppliers on a weekly basis that have new, innovative ways of harvesting products that leave little to no ecological footprint on the environment.

Anthony Gentile, director of art and marketing, Xela Pack, Inc.: The beauty industry seems to be doing a decent job of meeting the demands for natural and sustainable products. However, it surely doesn’t seem to be leading the cause or pioneering many huge breakthroughs. The beauty industry has always been closely tied to the luxury market. And, in many cases, such as fur, the luxury market seems to be immune to such ideas as stewardship to animals and the Earth. However, it should be noted that there are some major beauty product companies that seem to be hugely committed to the cause. Hopefully they will set the benchmark in the industry.

Darrin C. Duber-Smith, president, Green Marketing, Inc.: The industry, in general, has been woefully slow to demand more sustainable packaging and natural/organic ingredients, also seen as more sustainable, from suppliers. The availability of supply severely affects what companies can do. Consumers demonstrate a healthy demand for more sustainable products from more sustainable organizations, so it is interesting to see that only a handful of companies, including Aveda and its parent company, are moving beyond simple compliance into the realm of sustainability. Engaging in such behavior reduces costs dramatically in many ways and addresses a growing target market that demands more sensitivity to health and the environment.
     The core natural/organic manufacturers, offered mostly in the exclusive natural/organic channel, have taken the lead in developing products free of synthetically derived and/or processed ingredients, and have been enjoying double-digit growth rates since the early 90s. Volumes haven’t traditionally been high enough to justify putting pressure on packaging and ingredient suppliers to provide these types of products. Now that volumes are higher and larger, mainstream players are finally getting the message—albeit at a geologic pace.
     Neither the mainstream companies nor the natural/organic companies are doing enough with regard to the three main tenets of sustainability—design for environment, pollution prevention and resource recovery. All of this is changing as we speak.

Markus Schiek, head of global marketing, and Martha Basanta, marketing manager, drom Fragrances: As consumers’ lifestyles evolve and change, so must the world around them. Beauty is no exception. As we become increasingly aware of global warming and the need to be responsible and take action with regard to the environment, this will also have an effect on how we all live our lives. This became evident a few years ago as consumers sought natural and organic food, and the food industry answered with a plethora of natural and “good for you” products. For us, it only makes sense that the next phase of this thinking will affect what we put on our bodies as much as it has been about what we put in them. More and more in recent years, there has there been a saturation of natural and organic beauty products on the market. Consumers want to do something good for themselves, and if they see the results, it’s worth it. It is our job, as an industry, to be forthright and honest about what is really natural and organic in a product. Consumers are savvy, and they want to know the truth about what goes into a product. Once we are able to do this, we will be effective as an industry.

Amarjit Sahota, director, Organic Monitor: The beauty industry is looking at green issues far more seriously than ever before. Apart from companies looking at developing natural and organic personal care products, companies are looking at reducing packaging and using environmentally friendly materials.

The call to action
What has had the greater impact thus far—regulation initiatives on chemicals, such as the REACH law from Europe and California’s Prop 65; initiatives by retailers; or consumer demand?

Zurek: Retailers seem to have had the biggest effect. We all know the effect Wal-Mart is having on sustainable packaging trends, but it’s also stores like Whole Foods and similar outlets that are creating the retail/marketing-based push towardsustainability, even before the consumer is asking for it.

Gentile: Personally, it seems to me that consumer demand has had the greatest impact thus far. And currently, there are some pretty big initiatives by retailers that seem to be driving the market. However, I don’t think we would even see those initiatives by retailers if there wasn’t such a huge—and growing—consumer demand for sustainable products.

Duber-Smith: Regulations have had very little impact, as they come late to the party. The rapidly growing number of natural/organic companies don’t use the banned ingredients as it is. What these regulations do is remind larger manufacturers and suppliers that, not only are consumers interested in what they are putting on their bodies, but the government is watching, too. Making more sustainable products will increasingly be seen as a reducer of risk for organizations as consumers, regulators, nonprofit interest groups, the media and smaller upstarts drive the market toward healthier, more environmentally responsible products.

Schiek and Basanta: Consumer demands have had a far greater impact, thus far, than regulation initiatives. In the end, consumers will really see the effects, as restrictions and guidelines are established on all goods. The regulation initiatives have a great impact on the perfumistic creativity; however, the consumer might not always be aware of the difference as she often does not read or may not understand the ingredient list on products.

The inspiration for ecology
How has innovation in both sourcing and marketing been impacted? Is the greening a new opportunity or a hurdle to overcome?

Zurek: For us, it’s a new opportunity. Yes, we’ve had to work a bit harder to source quality packaging opportunities, and we have had to quickly become experts in another area, but that knowledge also puts us in a position to work with companies we might never have had the opportunity to work with were it not for the greening push.

Gill: The global market of specialty natural ingredients is expanding. With the advent of better communications in third world countries, our suppliers now have access to raw ingredients that truly have a unique eco-responsibility message. We have always embraced new and innovative ways to improve the eco-responsibility of our formulas; every day, we are finding better solutions to the use of synthetic ingredients.

Gentile: Sourcing has become easier in that there are more suppliers focusing on sustainable and renewable products.
It is easier for us to find suppliers that are committed to environmental causes today than it was in the past. Since we have been producing environmentally conscious packaging for 20 years, we feel like the industry has finally caught on to something we’ve known for a long time. And that is the idea that you can make excellent products, keep consumers happy, and make a living while being conscious and friendly to our environment. On a more acute scale, the greening of the beauty industry has certainly widened our appeal to some segments of the beauty industry.

Duber-Smith: Green is very obviously an opportunity for any forward-thinking company. The days of putting forth whatever works best and is least expensive, regardless of side effects, are ending quickly. More chemists are working with natural ingredients, more suppliers are sourcing them, more sustainable packing is available, and templates for making manufacturing processes and distribution more sustainable are becoming available through consulting firms. This is the future, and executives have a fiduciary responsibility to pay attention and react to this paradigm shift in a way that benefits shareholders. The new paradigm is that what is good for people and the environment is also good for shareholders. That’s what sustainability is all about.

Schiek and Basanta: The green movement is both an opportunity and a hurdle. It has tremendous potential and opportunity for all. With globalization on everyone’s mind, this could encourage companies to utilize local growers in remote areas, encourage free trade, increase quality of life in these areas, all while giving back to the communities and creating a natural/organic end product. The hurdle in this movement really comes from consumers’ tolerance of what these products will be, how they work and how they smell. A 100% organic face cream may be exciting to create and get onto the market, but will people use it if it doesn’t smell like they are used to? Most studies say that they will if the product delivers results, but, in reality, the level of what odors are acceptable will take time. At the end of the day, consumer demand will drive this segment, and, if they want it, companies will find a solution.

The challenge to rise to
How has your company dealt with the trend toward sustainability and green options? What have been the challenges in meeting evolving consumer aspirations for natural and sustainable products?

Zurek: One of the biggest things we’ve had to do is to actually steer people away from certain types of packaging, such as polylactic acid (PLA), a biodegradable plastic made from corn, because it isn’t compatible with their product. The interesting part is then educating that customer as to what sustainability truly is and how other materials, though they might not be compostable, are environmentally friendly.

Gill: At Sun Deep, we always strive to produce cleaner and greener products with friendly ingredient decks and performance aesthetics. In some cases, we are driven by our clients to seek greener ways to accomplish our mission. Often in USDA organic formulas, we find that technology has not yet caught up with innovation, and we find ourselves searching for ingredients that have yet to be invented.

Gentile: Because we have been producing environmentally conscious packaging for 20 years, many people within the industry view us as leaders of the cause. Rather than rely on the past benefits of the Xela Pack and our company in general, we have continued to lead the way by developing new laminates and materials—such as our newest material made with 75% paper, of which 100% is postconsumer recycled paper, that has a white surface rather than the traditional kraft look—and researching more new materials for possible future developments. People are much more critical of our environmental claims now than they were in the past, but we see that as another opportunity to prove what we’ve known for a long time: that the Xela Pack is a great package that has many environmental benefits to offer.

Schiek and Basanta: drom has predicted this movement for quite some time. For more than 10 years now, drom has been working on and developing a program of raw materials to answer this need specifically. The result of this effort is drom Fragrances’ Pureganic program, which is redefining the degree of purity of essential oils used in fragrance manufacturing and is an effective response to the global trend toward natural products.

The upswing in efforts
Where do you see industry-wide efforts being made? Where can efforts be increased?

Zurek: Certainly, from a packaging industry standpoint, the effort has long been made to encourage recycling. Unfortunately, simple economics dictate that prices will rise when a product is in demand. Keeping sustainability a cost-effective practice will ensure more and more entities will consider moving in that direction rather than shying away because it prices them out of a marketplace.

Gill: There is a renewed interest in organic ingredients that are functional, but more strides must be made to increase the spectrum of choices for these ingredients.

Gentile: I see industry-wide efforts being made in terms of new ways to create high-end packaging with recycledmaterials. Recycled materials are being used to produce some amazing packages, and I can only imagine that this trend will continue. As far as efforts being increased, I think that product companies and consumers in general need to be better educated on the various aspects of environmental friendliness and responsibility.

Duber-Smith: Demand for this is derived from the next company downstream in the supply chain, but ultimately for the consumer. Industry has been slow to react to this demand and has failed to anticipate it.

Schiek and Basanta: Efforts can be seen across the industry toward natural and organic products. Wellness today is not merely a trend, but a lifestyle evolution. The natural and organic personal care industry has already achieved tremendous growth and shows no signs of slowing down. Efforts will be increased, with education and better technological advances pursued in order to deliver better products to consumers in the segment.

Sahota: Most efforts have been, so far, in product development—mainly by using more environmentally friendly/ethical ingredients, such as natural ingredients and organic ingredients. There can be more efforts in packaging and ingredient sourcing. Although there is no standard for fair trade cosmetics yet, companies can look at sourcing ingredients from fair trade producers in third world countries. Companies can also look at using biodegradable packaging or recyclable packaging to minimize packaging waste.

The innovations of the industry
Euromonitor International states that 2007 was a year of innovation that pulled together trends to satisfy a broad range of consumer demands and looked beyond the beauty industry for inspiration. Where have you looked for inspiration? What green innovations do you believe have made the biggest impact on the beauty industry? What innovations are you exploring?

Zurek: From a strict package design point of view, we look across markets for innovations. As a packaging supplier to many different industries, we can truly look at a cross-section of trends and look to bring a concept that worked for a pharmaceutical customer to someone in the cosmetic field.
     I think we’re most interested to see how PLA evolves over the next few years. Right now, there are a few too many restrictions to its use, but we anticipate innovations to come forth that make it much more user-friendly.
Gill: The food industry has been a great inspiration for us, as some of our skin care items are actually edible. Thefood industry innovation in eliminating certain synthetic ingredients has certainly helped us in raising the bar for green cosmetics. We are always trying to explore ingredients that have been harvested with not only eco-responsibility in mind, but socioeconomic responsibility to the rural community these ingredients are harvested from.

Gentile: Advances in recycled materials are where I believe the biggest impact has been made. For years, people could create a package out of 100% virgin plastic and they could still put info about the recyclability of the package on their artwork to make it look environmentally friendly. But even the highest estimates of consumer recycling stand at about 30%. So, what is better? To have a 100% virgin package that is recycled 30% of the time, at most? Or to have a 100% recycled package that is not recyclable?

Duber-Smith: There are several green innovations, thanks to some of the more daring chemists, including 100% natural products that are now possible—with no synthetically derived or processed ingredients, including preservatives. Aveda taking steps to green its packaging and encouraging suppliers to produce more sustainable options has made a big impact on the beauty industry.

Schiek and Basanta: As a global focus for drom, we have been looking toward technological advances to inspire us in moving forward. We’re currently making huge strides and advances in this area and will continue to explore new opportunities. Our biggest initiative in the green movement is our Pureganic program. We understood the consumer’s needs as well as perfumers’ limitations in how certain raw materials smell. By ways of traditional distillation, many raw materials do not smell true to life, and we wanted to address this. By developing a method of steam distillation, we have reduced the time it takes to recover oil and thus preserve the essential components that burn off in traditional methods. This then creates a far superior oil and a virtually new palette for perfumers to work with.
The growth of green
How has demand for naturals and sustainable products fostered product development? Is it a gradual process, or have you been forced to make large and immediate strides? Have innovations had to veer from course? For example, have innovations other than those impacting green trends had to be set aside?

Zurek: The demand for naturals and sustainable products has certainly fostered innovation. We’ve seen it in such unlikely places as makeup compactsmade from PLA. That said, we have not had to make huge jumps in thinking. We’re really just skimming the surface of this movement. There’s quite a long way to go before sustainability is an easy-to-fulfill promise.

Duber-Smith: Demand is derived from the consumer. The target market in this industry has been growing at double-digit
rates for well over 15 years. You do the math.

Gentile: We have not been forced to make any changes whatsoever, so far. Having been an environmental leader in packaging for 20 years, we probably could have stood on our reputation and current environmental benefits for quite some time. That being said, we are smart enough to realize that we have a huge lead on most packaging suppliers, and it is definitely a benefit to us to retain that lead by continuing to focus on producing the best possible packaging while paying utmost respect to the Earth and our environment. Our reputation and history of environmental stewardship allows us the luxury of examining each step we take rather than jumping on every new bandwagon concerning the environment.

Schiek and Basanta: We feel that drom has been ahead of the curve in the green initiative. Understanding the growing consumer need for health and well-being, we began our program more than 10 years ago, at the peak of the lifestyle evolution. For us, this was something we could not rush, and we wanted to make absolutely sure that the program fit the needs of consumers. Working closely with perfumers to understand their limitations set the pace for the venture. It took many years to obtain the optimal level of superior quality in oils for fine fragrance, cosmetics and toiletries.

Sahota: It has had a major impact. Large cosmetic companies are looking at developing natural and organic lines. Just this year, organic skin care products were launched under the Stella McCartney brand. Large cosmetic companies are looking at developing natural and organic products or in acquiring companies already in the segment.

To read more questions and answers from the panel, click here.

More in Industry News