EP241. Is big beauty falling behind?

It was recently reported in the beauty industry trade press that the mainstream beauty industry was at an all time innovation low. And this data came from Mintel, who reported that for the first half of 2024, only 46% of global beauty launches were genuinely new products. Now, if you Compare that to 2015, almost a decade ago, when two thirds of launches were new products, there's an interesting decline here in new product development from mainstream beauty. So what's happened? Why are they creating fewer new products? What's slowing them down? And does this mean that the big beauty brands might start to actually see decline? Is this a tipping point? And how does this link to indie beauty? Now, I knew this was a topic I wanted to explore and who better to join me than Formula Botanica's education manager, Anna Green? So settle in for today's episode as we're going to ask, is the mainstream beauty industry starting to wait for indie brands to innovate for them? Welcome to Green Beauty Conversations, in which I challenge the beauty industry to become more sustainable, champion, independent and green beauty, and encourage you to join me in changing the beauty industry for the better. I'm your host, Lorraine Dallmeyer. I'm a chartered environmentalist, biologist, and the CEO of award winning online organic cosmetic formulation school, Formula Botanica. We have tens of thousands of students in over 190 countries around the world who study with us to become organic beauty formulators and entrepreneurs. Visit our website@formulabetanica.com to try our free online formulation course. And if you want to be the first person to know what's happening in green beauty, make sure you subscribe to this podcast in your favorite podcast app. So in today's episode, I'm joined by Anna Green, Formula Botanica's education manager, longtime beauty industry expert, facialist with a focus on skin health, and regular guest on the Green Beauty Conversations podcast. Anna has a wealth of experience in understanding beauty brands, beauty trends, cosmetic ingredients, skin health, and everything to do with the wider industry. And it is always a pleasure and a privilege to have Anna on the podcast with me. So let's get started.

Hi Anna, how are you doing?

Hi, Lorraine. I'm doing really well, thank you. How are you?

I'm good, and this is a really interesting topic, so I'm thrilled that you're here today. Join me for it. So let's unpick this one together. It sounds like the number of new mainstream beauty products coming onto the market have declined compared to the numbers we were seeing pretty much a decade ago. So about a decade ago, about Two thirds of products that came onto the market were brand new. Now it's around about 40, 45, 46%. So it's been quite a big drop. Why do you think this is?

Well, it's a really interesting question because I think there's a variety of factors at play. And when you're looking at that data, first of all, it's worth thinking about what is classed as an entirely new launch versus, for example, a reformulation or an extension of an existing range. Because I think a lot of the figures that were quoted depend entirely on what we're classing as a new launch versus a reformulation. And a lot of the commentary going on was around brands investing more time in reformulating and extending existing sort of ranges, rather than entirely innovating in brand new products. And I think there's a lot of reasons why brands might want to focus on reformulating. First of all, ingredients and the availability of ingredients, the types of ingredients available on the market, they move on. We've seen a lot of innovation in ingredient technology in the last 10 years, so something that was formulated 10 years ago may now not be as relevant to the market. And so brands may want to invest that time in reformulation rather than innovation. It also seems to be that just the economic climate seems to be making brands a little bit more cautious around this idea of launching entirely new products. And so that seems to be why they're focusing in on their existing ranges, trying to shore up what they already have launched, make their processes perhaps a little bit more efficient, or work with different ingredients, focus on sustainability rather than simply putting more products out. So I think there's a lot of reasons why all of these things may be happening. We're still seeing a really good amount of new launches, though. I think that's one of the key messages that I want to drive home today from this conversation, because even if those numbers have dropped, the beauty industry still churns out a lot of new products. So I don't think we need to be too concerned.

I agree.

I do think it has a lot to do with the economic climate, but I also think there's this wariness of I'm launching a product just for the sake of it. And it's quite interesting to see. I mean, that is obviously the foundation of the beauty industry, isn't it? We constantly launch new products. I've recorded many episodes on this in the past, on the fact that I think there's something broken in beauty. If the only way that you can get attention is if you're Constantly having to launch something new. But you're right, it's about that definition of what constitutes new, what is actually innovation. Because innovation around the formulation is still innovation. Innovation around, for instance, sustainability, packaging, meeting consumer demands is still innovation. And I think some of these big players are now probably being forced into a situation that they're having to innovate in terms of ingredients, formulations, packaging, just transparency in general. I know we'll come on to this more in the rest of the discussion, but it's interesting to see. And you're right, you know, almost half of product, half of product launches are still new products. So it's still an awful lot. But it wouldn't surprise me if that number continues to get smaller actually over the years, as I think beauty will have to start to respond to the sort of consumer feeling around consumption. Something else we'll talk a bit more about in a minute. So do you think that the mainstream beauty players, so called big beauty, might perhaps be a little bit more scared nowadays of getting it wrong when they put out new products?

I think so. And I think part of that is due to some backlash because once upon a time every new product to the market was hyped up as an innovation. But now consumers and also I would say beauty industry professionals, people who work with brands, journalists and things like that, are a little bit more savvy around this idea of everything being sort of the next best thing. And so there's a lot of information out there that debunks some of this, that looks at products and goes, well, actually when. No, because this already exists elsewhere. So brands are certainly having to be a little bit more savvy about what they do and make sure that, you know, they're not overhyping something that isn't truly different or truly innovative because they've had that backlash. They face that backlash. There is a lot more accountability available now with people talking about products. Like I said, beauty journalists, a lot of them are digging perhaps a little bit deeper into what is actually truly new and different. So I think they're working in a climate where there has perhaps been too much sort of look at this, this is new. And people are a little bit tired of that part of the industry. And so there's more skepticism from the get go for a new launch. So I think brands, if you couple that sort of skepticism with also an economic climate where perhaps brands are having to think a little bit more about where their time and resources are going, then I think that is sort of a bit of a dual sword There, where, where brands are really sort of thinking carefully before they launch something new.

Yeah, yeah, I agree. And also, of course this pairs with the rise of the skin intellectual, the so called consumer who understands skincare ingredients, who feels like they've probably got a PhD in understanding cosmetic labels from having to learn what all these ingredients are. Nowadays everyone understands a little bit more about what's gone into the formulation because they feel like they've been so blinded with and honestly marketing rubbish over the decades that they've had to sort of educate themselves on this. And the thing I really enjoyed actually is so we, we first read about this decline in innovation in an article in cosmetics business, which is a magazine that we subscribe to here at Formula Botanica. And they actually quoted a product which was launched by one of the giants, Gay Lane, and they'd made these marketing claims about their ingredients following so called quantum science. It just made me laugh when I read, when I read it. And clearly I wasn't the only one who had that response because social media blew a bit in response to that. So I think nowadays it can be quite costly to come to market with a new product. When you're a bigger brand, it's obviously a lot cheaper. When you're an indie brand, I think there's more competition. But I also think the fear of getting it wrong is perhaps a little bit more embedded. And I remember, in fact, you and I recorded a podcast episode 100 episodes ago because I went and looked it up just before this episode. So it was episode 141. I think this one is 241 on the rise of the celebrity brand. And do you remember when we did that? I think it was 2022 and all the indie brands were freaking out about all these celebrities launching brands and how they would wipe out the indie sector. And here we now are two years later and realistically, a lot of those celebrity brands have bombed. Because getting it right does not just depend on how much money you throw at something. And I think there's a lot more scrutiny in getting it right. In fact, I've got a guest coming on the podcast in a few weeks actually, who's going to be talking about how retailers are now dictating what even the big brands can do, which is absolutely fascinating. So, yeah, I think maybe they're a little bit more scared than they used to be. Maybe they just have to work that little bit harder to get it right. So I guess the next question off the back of that is then, does it matter that mainstream beauty brands are Releasing fewer new products compared to before?

I don't think so. I think that there are pros and cons. And I think that for far too long, and I think we share this opinion, for far too long, the beauty industry has relied entirely on new product launches for their growth. And I think they're having to think outside of just new product launches in terms of their growth strategy and maintaining their sales. So something I read that I thought was really interesting. We're in the business of education, we educate formulators. But something that somebody was quoted as saying is that actually education itself is something that brands can invest in in terms of innovation, because it's not just launching something new, it's then educating the beauty professionals that might be using those products, who might be then passing those products onto the consumer. It's educating people in retailers, it's having those relationships. So education is a huge area where innovation is actually booming at the moment, because brands can't just rely on their old ways of selling things. And actually, when you talk about retailers, and I think this is a fascinating area, but when you talk about retailers, the landscape has changed dramatically because there are a lot more retailers available than there once were. So actually, brands are having to work harder on those relationships to get themselves seen and noticed in retailers, online and in person.

Very true. I also think that ultimately the world doesn't need thousands, millions more beauty products. We've got so many already from the big players in particular, and I think a lot of those could do with some reformulation. And I think, unfortunately for them, they're a little bit behind the curve on some of this. And they're only now starting to think about reformulating in terms of sustainability, in terms of consumer demands, in terms of more efficient ingredients sometimes as well. I mean, there's some fascinating new ingredients coming out onto the market. So there is a massive opportunity for them to reformulate. And actually, it might not be a bad thing if that number continues to go down, I suppose, although that may well open the door for more indie brands. So my question to you off the back of that, then is what do you think the opportunities are for indie brands?

I think one of the main advantages indie brands always have over the big players is how agile and how fast they can respond to the market. So they're more agile than the big players. You can think of the big players as a big ship that is just sort of going forwards. They're really going to struggle to pivot, they're going to struggle to change their strategy. Whereas we know from our graduates and our community that the indie players can be a lot more agile. They can respond to what's happening, they can respond to what consumers are wanting in the here and now in a different way. And I think that is a huge opportunity for indie brands to really sort of carve out a niche. They can see if they spot a particular gap in the market, they can respond to that and they can respond to that quickly. And that means that when new ingredients do come along and new techniques and things, they can work with those and they can put a product out in less time than one of the big giants can. So I think that is definitely an advantage and an opportunity for indie brands.

It certainly is. I mean that, that agility is amazing. And I don't think all indie brands fully appreciate how powerful that is because I think some of the big players are waiting for indie brands to innovate and to show them the way, basically. I mean, we've seen this time and time again the fact that I now go into my local supermarket and there's an aisle of shampoo bars that wouldn't be there if indie brands hadn't really pushed that over the last few years. And it's so interesting to see how they're just following that lead. And I almost wonder if Big Beauty is sort of becoming like the slightly out of touch grandparent. No disrespect to grandparents here, but you know what I mean, that they're just not don't quite have their finger on the pulse and they're waiting for Indie Beauty to show them the way perhaps. And you know, in our line of work, Anna, you know, we teach obviously online, but we work a lot, we have a lot of partnerships with external suppliers. We speak a lot, particularly to big chemical suppliers and some of the bigger brands. And the messages, the message I'm getting back from all of them at the moment is all of them want to get closer to indie beauty. It's coming back from everyone and it's really interesting how they've sort of had all their low hanging fruit and they've figured out that this is the next niche they really want to get into. And I think indie beauty could really, really, really show them the way. So it's an exciting time perhaps for indie beauty brands. What do you think?

I think so, absolutely. And I think there is an element of, as you've said, some of these suppliers and people in the industry perhaps thought that indie wasn't going to endure in the way that it has. And indie brands are standing the test of time and they are still forging ahead. So a lot of people may have thought that actually indies would disappear and the big conglomerates would be the ones left behind, but actually that's not been the case. And it's fundamentally shifted the industry.

It has.

It hasn't.

It's also why we've seen the demise of some of these celebrity brands, I suppose. Do you think that maybe then this reduction in innovation could have anything to do with the beauty industry feeling slightly more saturated for those mainstream beauty players? Because I'm not sure they've ever felt that before. They probably felt like we dominate the sector. And now all of a sudden, a market share, I mean, it's not the majority, but a market share, is being taken by indie players. But not just that. Also, retailers are now starting to really push the big players to potentially reformulate, meet their sustainability standards, meet their own internal standards on terms such as clean beauty, which may or may not actually mean anything. But nonetheless, retailers are dictating what can happen in some of these products. So I wonder if the mainstream beauty players are perhaps starting to feel like that the industry is slightly more saturated than it was before. What do you think?

I do think that there is more competition than ever for retail space. And the bigger players are perhaps feeling squeezed in ways that they weren't before, because once upon a time, you would go to any pharmacy, drugstore, whatever you like to call it, and you would see the same stands. And now there's breakthrough indie brands that are coming in and taking up retail space that once upon a time belong to the bigger players. So I think they are definitely feeling up the top with the conglomerates. You know, we're seeing the fact that, you know, certain brands that were once household staples are not now, they're not available anymore. We've. We've seen big shakeups with brands like the Body Shop having issues. Revlon as well, you know, all sorts of brands having to change their strategy, having to move with the way that the industry is going. And I think once upon a time there was this feeling of, you know, these are safe brands that will be around forever. And I don't think anybody feels that anymore because the indie players have shaken things up so much. The industry is fundamentally different to what it was before. So I think there's definitely that feeling of these brands have more competition now. They have to step up their game if they're going to remain relevant for consumers. And there's a lot more for brands to think about in terms of how they market themselves and which retailers they go with et cetera. So there's more choices for them to make. Yeah, yeah.

It's interesting because I think the indie sector has felt this way for a long time. They've often felt like the industry is so saturated I can't break through. But actually it might be flipping now to the other side of the coin where the big players are going, hang on a minute, we don't dominate quite the way we did anymore. And actually indie has more opportunity and we're having to look to them to figure out what consumers actually want because we're just not agile enough. Maybe that's the way things will go. Do you think that stricter regulatory requirements might be slowing down innovation as well?

I think that's a double edged sword. I think it could be slowing it down, but it could also be pushing it forward. So if we take for example the new, for a start, regulation and regulatory requirements are constantly changing. And that's generally a good thing for the consumer because regulations can make the industry overall safer. However, when you look at something like retinol, for example, the regulations around how much retinol is allowed in certain products is changing. It's changing in the future, but it is changing. And what we've seen as a reaction to that, I believe it's a direct reaction to that, is brands looking for alternatives that will maintain that same efficacy but will still allow them to bypass the regulation. So for example, we've seen some of the big players preemptively launch a retinal based product which is a different vitamin A derivative to retinol. It has different properties, but it's still very efficacious. And we've seen them using the retinal to bypass, you know, when they do have to then retire their retinol products that perhaps were very popular at higher strengths, they've already got something there and ready to go. So they're sort of almost forced to innovate before they then retire products, which I think is quite interesting.

It is, and it ties in with what you said right at the beginning. Is innovation just bringing a new product to market or is it innovating the entire formulation? The industry calls it reformulation and they make it sort of sound like it that you're going back in time to reformulate something that you already have. But perhaps you are innovating with it, as you say. And I think honestly, the big players have been all over regulatory compliance since the dawn of time. Really. One thing they can't do so much anymore, of course, is make all these Crazy claims and that's really being cracked down upon. But I think personally, perhaps the so called consumer regulation and possibly even retail regulation if we want to give it a name, might be slowing things down a bit more than government regulation. Social media has obviously been all over this, over consumption core, and there's been a lot of discussion on TikTok in particular from people saying we need to stop consuming so much. Do you think that might have contributed at all?

I think so. I think social media is very, very powerful in terms of the themes that we're seeing around beauty products. And I think at one point all we could see on Instagram was beauty influencers with hundreds and hundreds of products. And of course it's an unrealistic expectation, it's an unrealistic way of consuming because the amount you would consume when beauty is your job is incredibly different to the amount you consume as an average person who just needs to use skin care. It is very different. And I know that because I've worked in the industry for over 10 years and I know how you know when you're just using skin care. It's a very different expectation. So there was a backlash around all of these sort of shelfies of products and the endless need to use something different. People got very tired of that and they got irritated by the fact that people didn't seem to genuinely believe in a product. They were just moving on to the next best thing to get clicks and views. And so I think there was a lot of backlash there. I think beauty professionals who are able to give real genuine advice have stood the test of time. And those who have gone at a slower pace in terms of their recommendations and their consumption have also stood the test of time, rather than people who really promoted an excess amount of consumption that was unrealistic for consumers.

Yeah, well, it'll be interesting to see if that conversation continues to grow because it is still a little bit of a fringe debate on social media. I mean, it isn't affecting retail and sales yet, I would imagine. And I don't know if the big beauty players are fully aware of all of these conversations either, because obviously the indie brands are probably a little bit more sort of. They probably have their finger on the pulse a little bit more. But who knows how that might play out in the future. Do you think that we'll start to see things change again for mainstream beauty? Will innovation pick up again in terms of those new products, do you think?

Well, I think there's a bit of a myth I want to dispel that Innovation only comes from beauty brands. But we know that there's a whole other side to the industry because we primarily speak to formulators day in, day out. This podcast has a wider reach than that. But there is a whole aspect of the industry where a lot of innovation comes from ingredient suppliers and distributors and other parts of the industry. And I've seen no signs of that innovation slowing down. Things like Covid global sort of events might have a temporary effect on that kind of innovation, but we're still seeing these big ingredient manufacturers, smaller ingredient manufacturers, that also want to work with indie brands breaking through, creating new and interesting ingredients for formulators and brands to work with. So I think it's still an incredibly exciting industry to be in. And I think that that aspect of innovation, you know, it's almost glossed over by the brands because they want to be shown to be the ones who are doing all the innovating. But the reality of it is there's a whole 10 steps before that that happens in terms of the innovation. So it's not just the final products. There's a whole world of research and development that goes into ingredients and making those ingredients more sustainable as well. You know, these days, brands that sell ingredients will have portfolios and they will tell you chapter and verse about how their ingredient is produced, about where the, you know, the byproducts go, all sorts of things. It's fascinating that there's a whole area of innovation going on there that perhaps brands aren't even involved in, and it filters through to the brands. But I haven't seen any slowing down there. So I think that's positive for the industry. Also, I think worth mentioning again, I think it's not just the launching of new products. I think we'll see a lot more streamlining of manufacturing, for example, to make existing products more sustainable, making manufacturing more efficient, for example. The industry has relied far too long, too heavily on this idea of just new products will boost growth. And I think that is changing. Something that I found really interesting was I. There's a beauty journalist that I follow on Instagram, and she's. She's absolutely fascinating. But she went away. She was on maternity leave. She's come back and she's basically saying that she's seen a fundamental shift in the way that the brands are doing pr, that the way brands are promoting product, and I think they are redistributing a little bit resources away from some of the ways that they used to perhaps do these lavish parties and, you know, all of these things to promote New brand, their new product, some of that is being redirected away from there. So people who are in the industry are noticing the shift. There's not quite so much hype around new launches. It's more about shoring up existing ingredients and products in a different way way. So I think there's a lot going on.

Yeah, it sounds like it. And I completely agree with you on the ingredient side of things. I mean, that's an excellent point. Obviously, you and I went to in cosmetics this year, big global trade show, and you walk around there. I mean, you can walk for days and still not visit every stall. It's incredible. And there are all these ingredient suppliers from around the world and they're constantly innovating. So, yes, I suppose the mainstream beauty industry has its work cut out for it. Because if you think about it, if you have 3,000 products that you sell across multiple different brands and all of those need to be kept in check with regulations in terms of ingredients that might be changing, all of those need to still meet consumer demands and consumer expectations and retail expectations, then, yes, you will probably find yourself continuously revisiting the back catalog. And it's possible that beauty has churned out so many new products over the last decades that it's now having to sort of pause a little bit to go and actually look after all of them. It's a bit like us. I mean, we teach a suite of different courses at Formula Botanica and we can't just continuously churn out new courses. We have to go and look after the courses, that we have to make sure that they're still compliant, they're still teaching the right things, etc. And it's the same, I presume, for PT brands. So, interesting point. So to conclude, I'm going to be slightly dramatic here. Do we think this is a good thing or a bad thing? Does it perhaps spell the demise of the beauty sector? I think that's possibly a slightly dramatic. Or could this be the start of something excellent? What do you think?

I personally think that the beauty industry is going nowhere. It's. It's going to continue growing, it's going to continue to shift and change, as everything does in the world. But I don't think this is the end of innovation by any stretch of the imagination. I mean, there's still huge amounts of new product development going on. There's still a huge amount of new products going to market. I think whenever I feel that the beauty industry is being more mindful of what they're doing, whether that's Curtailing the amount of products going out or, you know, just spending more time on educating consumers so they can get the right routine for them so they don't have to continuously switch. I always think that's a good thing. I think mindfulness around how much we're consuming, what products we're we're creating and why we're doing it, I think that's really important. One of the things I love about our community is when they create their ranges, when they decide what products to put to market, they're really passionate about them. They could really tell you why they've created those specific formulations. And so that's what I love about the indie community, that passion behind it. And I think perhaps the bigger players, with their eagerness to launch so many different products, lost a bit of that passion and consumers sort of felt that shift. And so I think that's why the indie players are sort of continuing to rise amongst the beauty giants when they have a niche that works for them.

Yeah, well, perhaps this is the tipping point that we need for the beauty sector, as you say, to become more mindful and start to innovate in terms of sustainability and ingredients and packaging, all the things that we know we need so urgently and which the sector is so incredibly behind on. So perhaps exciting times ahead. Maybe we should revisit this one in a few years and see what the stats are looking like at that point. Anna, thank you so much for joining me on the podcast today. What a fascinating discussion.

Thank you for having me. As always, Lorraine, I really enjoyed it.

Thanks. See you soon.

Bye.

I would love to hear your thoughts on this episode. How do you think the indie beauty sector might be able to find even more opportunities to take market share away from the big players? Leave us a comment on our social channels as both the Formula Botanica team and I love hearing from you. And if you want to hear more about some of the topics we covered today, please do delve back into the podcast archives. So some great Examples include episode 141, which we talked about already, in which Anna and I discussed the rise of the celebrity beauty brand. And this is really interesting in context when we look back now because we recorded that episode two years ago and I think an awful lot has changed in that time, despite the initial panic about every celebrity under the sun launching a beauty brand, or episode 110, in which I put forward my call to action for rejecting fast beauty now. Beauty brands shouldn't live or die by new product development. And I've interviewed so many indie brands since that episode came out who have confirmed over and over again that they have built sustainable commercial models for their businesses by just creating a small range that stands the test of time. Or episode 144 in which I talk about the fact that I think the future of the beauty industry relies on the eco beauty pioneers. These are the personalities that are changing the beauty industry for the better and I think the future will thank these entrepreneurs who are daring to defy the norms and through innovation are finding viable, profitable and practical ways to bring beauty products to market with a minimal impact on the planet. There's a wealth of information in our old episodes and I do encourage you to go back and listen to them. Thank you for joining Anna and I for this latest episode of Green Beauty Conversations. I hope you enjoyed it. If you did, please do leave us a five star review so that other people can enjoy these conversations too. Make sure you subscribe to the podcast on Apple Podcasts or Spotify or whatever your favorite podcast app is and stay tuned for the next episode. Follow Formula Botanica at at Formula Botanica on Instagram, Facebook, YouTube, TikTok, Twitter, Pinterest, LinkedIn. We're everywhere and Come and give me a Follow Lorraine Dallmeier on Instagram and LinkedIn, visit our website@formulabotanica.com and sign up for our free online formulation course today.