What Will It Take to Give the Skincare Industry a Green Makeover?

Without delving into what "better" means when it comes to consumer products, the reality is that most green products today fall into one of two groups, both of which fail to turn the tide with mainstream consumers.

The first group is full of products that, to put it simply, are "sort of" green and typically quite good. Household cleaners are a fine example, where brand manufacturers have tweaked old formulations to remove some of the old chemicals or put the products in partially recycled containers. Synthetic low-VOC paint for your home is another example. With lower volatile organic compound levels, water-based latex paints are certainly greener than oil-based paints -- but don't go quite as far as natural paints do.

The second group is composed of products that are green but unfortunately not quite as good. Skincare is a great example. Early green conscious consumers have supported a number of niche natural brands, despite the products' shortcomings when it comes to sensory experience and efficacy. However, when it comes to mainstream consumers who prioritize beauty, green has been synonymous with "it doesn't give me the same skin results," or it plainly "doesn't feel or smell the way it should." Hence, they have largely shied away from truly natural alternatives.

The combination of green credentials and superior efficacy is the magic formula to bring sustainability to the masses. Step by step, nearly every category needs to retool and reengineer in order to get there.

Skincare is one entrenched industry that is set to retool itself. It has been around for many decades, led by companies who have followed an R&D model that has been both successful and profitable. Using predominantly inexpensive, synthetic ingredients, entrenched players have been able to keep costs low and profits high.

With growing focus on ingredients when it comes to what we eat, however, consumers are beginning to inquire about ingredients when it comes to what we put on our skin. Addressing their concerns, many brands have introduced "natural" products, replacing some of the chemical formulations with natural substitutes -- or alternatively, adding organic ingredients at the end of an exhaustive list of chemical compounds that most of us can't pronounce. In both cases, parabens, petrochemicals and synthetics largely persist -- as part of product formulas and development methodologies that have been around for many years.

To add to the challenge, natural skin care goes beyond the selection of naturally derived ingredients (like herbs and essential oils that have demonstrated efficacy): Stabilizing and preserving these "new" ingredients requires a whole new approach to research, development and manufacturing -- effectively, turning the industry's best practices upside down.

As in other industries, it will likely take an entirely new set of players with out-of-the-box thinking to take on these challenges. 

Next Page: Companies that are taking the lead.

Take Pomega as an example: The California-based skincare company has researched botanical ingredients to find natural substitutes to chemicals that deliver comparable or superior results. Starting with natural ingredients as the core of their formulations (as opposed to using them as filler), the company has effectively transformed the industry's R&D approach.  Getting there was not quick or easy: This company, like a handful of others, has taken many years to arrive at formulations free of chemicals that give women the skin results they're looking for.

Are more entrenched competitors ready to do the same? Being a virtually new science, "clean" skincare means tackling extensive challenges of stabilizing and preserving nature's ingredients. A fundamentally new approach means retiring years of development experience and risking profits. Large incumbent brand owners have sophisticated marketing machines and clear distribution strengths.  Like in other categories, however, large players in this space are geared toward growing existing brands: disruptive innovation or development of a new R&D approach is inherently not a strength.

After Clorox's highly publicized Burt's Bees acquisition, merger activity in this space came to a standstill, as it did across most industries during the economic crisis. However, recent agreements could be a sign of things to come, with skincare incumbents looking for new natural brands to nurture and grow.

In 2011 Johnson & Johnson is set to take over U.S. distribution of Korres, a Greek cosmetics brand touting natural formulations. Clarins, which has invested in Kibio's Eco-cert certified product line for a number of years, acquired the company in full in February this year, and late last year, Sanofi-Aventis acquired Laboratoire Oenobiol, the French maker of health and beauty supplements.

This is not to say all "natural" acquisition targets are what they seem. Skincare remains highly unregulated when it comes to green manufacturing practices or ingredients. Most products that call themselves organic or natural require significant investment in intellectual capital and ingredients to live up to their labels. 

The Skin Deep Cosmetic Safety Database created by the Environmental Working Group is the only comprehensive source of comparable information for products sold in the U.S. Their hope is consumers ask questions about what they put on their skin and vote with their wallets. If and when investors do the same, truly natural brands will have the fuel to flourish and help accelerate the transformation of this category.

Martin Morzynski is a principal at Marakon, a consultancy pioneering consumer-insight-based strategy development for some of the world's best known companies.

Image by Vitaly Valua