uk cosmeceutical and nutraceutical sectors
TRANSCRIPT
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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Cover Design: Truth Studio (Sheffield)
CONTENTS
Executive Summary .................................................................................................................................................... iv
Chapter One: Introduction ....................................................................................................................................... 1
Study Scope ............................................................................................................................................................... 1
Report Structure ....................................................................................................................................................... 2
Chapter Two: Market Overview of the UK Cosmeceutical and Nutraceutical Markets .................... 3
Cosmeceuticals: Scale and Economic Significance .................................................................................... 3
Nutraceuticals: Scale and Economic Significance ....................................................................................... 4
Summary ..................................................................................................................................................................... 8
Chapter Three: Market Size and Sector Breakdown ....................................................................................... 9
Nutraceuticals: Sector Breakdown .................................................................................................................... 9
Market Size ............................................................................................................................................................. 10
Cosmeceuticals: Sector Breakdown ............................................................................................................... 11
Market Size and Workforce .............................................................................................................................. 11
Leading Nutraceutical Companies ................................................................................................................. 12
Leading Cosmeceutical Companies .............................................................................................................. 14
Summary .................................................................................................................................................................. 15
Chapter Four: Workforce and Skills Profile ..................................................................................................... 16
Introduction ............................................................................................................................................................ 16
Estimated Employment in Nutraceuticals ................................................................................................... 16
Estimated Employment in Cosmeceuticals ................................................................................................ 17
Skills and Qualifications ..................................................................................................................................... 18
Gap skills analysis ................................................................................................................................................. 25
Summary .................................................................................................................................................................. 26
Chapter Five: Economic Drivers and Future Trends..................................................................................... 27
Cosmeceuticals ...................................................................................................................................................... 27
Nutraceuticals ........................................................................................................................................................ 31
Chapter Six: Conclusions and Possible Future Research Requirements .............................................. 36
Appendix One: Relevant SIC Codes ................................................................................................................... 38
Appendix Two: Illustrative Cosmeceutical and Nutraceutical Career Pathway................................. 41
EXECUTIVE SUMMARY
This report looks at the performance and prospects of two fast growing sectors
within the pharmaceutical industry – cosmeceuticals and nutraceuticals. Their
recognition as sectoral entities is not universal, as such they have not been
extensively written about. They are also not easy to define by conventional means.
Cosmeceutical is a combined term of ‘cosmetic’ and ‘pharmaceutical’.
Cosmeceuticals are cosmetic products (lotions, creams etc) which have active
ingredients such as anti-oxidants, enzymes, peptides, proteins and botanical actives
that claim to have medical benefits.
Nutraceutical is also a ‘blended’ sector combining the term ‘nutrition’ and
‘pharmaceutical’ applied to food or food products that can provide health and
medical benefits, including the prevention and treatment of disease. The two
principle product types include functional foods and vitamins, minerals and
supplements (VMS). The British Nutrition Foundation (BNF) defines functional foods
as ‘foods with health promoting and/or disease preventing properties over and above
their usual nutritional values‘. VMS products include single and multivitamins, fish
and plant oils, minerals and plant-based supplements and are sold mainly through
pharmacies, grocery multiples and health food stores.
It is fair to say that the products from both sectors are not subject to the same
testing and regulations of straight pharmaceutical or drug-based products and they
have yet to gain the full and absolute confidence of commentators and consumers
alike. Nevertheless both form a significant and growing part of the pharmaceutical
industry globally and ‘bleed’ into several other industrial sectors (see below). The
sectors cannot be easily quantified using current official labour market statistics and
they straddle many industrial sectors (See diagram).
The market intelligence in Chapter Three shows clear export growth potential for
both sectors. That said market leaders in both sectors will often have only a small
proportion of their business operating in the nutraceutical and cosmeceutical sectors.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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As the sectors become more established they will provide room for niche markets
and product focused businesses to meet the anticipated growing demand.
Chapter Four of the study provides a workforce and skills profile using largely proxy
measures given the challenges of defining the two sectors precisely using official
statistics. It is clear from available statistics that although growth is predicted the UK
is facing strong competition with its global share projected to deteriorate marginally
in nutraceuticals and significantly in cosmeceuticals.
Nutraceuticals and cosmeceuticals further education STEM provision is likely to be at
the higher end (Level 3) and in recent years there has been a marked increase in
progression to higher education courses from the FE and skills sector in STEM-related
subjects. The study claims there is a case for COGENT to continue to make the case
to employers for investing in STEM Apprenticeships. It notes that the number of
STEM qualifiers had increased over time but further research is suggested to
understand the scale and type of employer skills gaps and requirements.
Chapter Five of the report highlights key drivers, constraints and future trends.
Growth in cosmeceuticals is being driven by an ageing population and a desire to
stay/healthy and look young. It has new target groups where premium products are
being marketed and there are significant growth opportunities in new markets
despite the impact of the recession on some products/markets. There is a demand
for new ingredients generating a requirement for more rigorous testing and
environmental management. There is a trend towards mergers and acquisitions and
exploiting new technology to drive sales. The nutraceutical sector is experiencing
similar trends with the proliferation of multiple distribution channels and a very real
challenge to expand scientific research to demonstrating positive links between
consumption of functional foods/VMS products and health benefits.
The study concludes with suggestions for further research to illuminate the intricacies
of the sectors and current skills and qualifications requirements. Primary research
with employers will help to deepen our understanding of employment, recruitment
and skills requirements and help fill the gaps in intelligence which currently exist.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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CHAPTER ONE: INTRODUCTION
STUDY SCOPE
This report provides a market and employment profile of two sub-sectors of the
pharmaceutical industry – cosmeceuticals and nutraceuticals. The study provides a
snapshot of the health and prospects for these growing sectors based on easily
available desk base material. It is worth noting early on that there is no clear and
established body of evidence for these growing industries. This report attempts to
make sense of what patchy evidence is available highlighting throughout where there
are weaknesses in the data and a need for further understanding or research.
The study is supported by Cogent via an investment from the UK Commission for
Employment and Skills (UKCES) under the Employer Investment Fund Round 2 (EIF2).
The report will supplement other pharmaceutical related activities currently being
undertaken through the sector skills council.
Cogent is the expert skills body for science-based industries with a particular interest
in the skills and employment dimension of process industries. It is an employer-led
organization and works with industry to research and forecast skills needs and
develop fit-for-purpose standards, qualifications and skills solutions. Cogent’s role is
to develop and deliver activities identifying and addressing skills and training gaps.
The study has two principle components. First it provides a definition of the two
sectors highlighting their scale. Second it distills the current and future make-up of
their workforces summarising their occupational structure, key skills and
qualifications as well as their economic significance and key drivers and trends.
The research for this comparatively small study involved a desk review to define the
sectors highlighting their economic contribution as well as key influences and trends.
The report briefly describes the different components of the sectors, drivers and key
products (these aspects are well covered in the literature) as well as the sub-sector’s
capacity and potential.
Using available data (which is very limited on the skills side) the study distils the
current and future make-up of the workforce for cosmeceuticals and nutraceuticals.
This was not an easy task and it was very difficult to get a precise picture of the two
sectors given the bluntness of official data to describe these nascent industries.
Because of data availability intelligence for one-subsector is not always replicated for
the other. No reports were identified which looked at the two sub-sectors alongside
each other and there was more material on nutraceuticals than cosmeceuticals which
at times resulted in a slightly unbalanced report. This is part reflects the formal
recognition of the former and its greater size in market and employment terms.
The aim of the report is to provide a distillation of current labour market intelligence
already available to describe these sectors. Although they have been in existence in
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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various forms for many years are beginning to display signs of their future potential
even though they are not yet fully recognized as sectors in their own right.
REPORT STRUCTURE
The report is structured as follows:
Chapter 2 offers a market overview of the UK cosmeceutical & nutraceutical
markets.
Chapter 3 assesses the market size and sector breakdown.
Chapter 4 provides a workforce and skills profile.
Chapter 5 examines economic drivers and future trends
Chapter 6 makes a series of concluding observations and suggestions for
further research.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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CHAPTER TWO: MARKET OVERVIEW OF THE UK COSMECEUTICAL AND
NUTRACEUTICAL MARKETS
This chapter introduces the cosmeceutical and nutraceutical sectors giving a sense of
their global scale and make up.
COSMECEUTICALS: SCALE AND ECONOMIC SIGNIFICANCE
DEFINITION
Cosmeceutical is a combined term of ‘cosmetic’ and ‘pharmaceutical’. It refers to
cosmetic products which have active ingredients that claim to have medical benefits.
The term cosmeceuticals is generally attributed to Albert Kligman who said that it
describes a hybrid category of products found on the spectrum between drugs and
cosmetics which exerts a pharmaceutical therapeutic benefit but not necessarily a
biological benefit.
The term applies to products which are used externally such as creams or lotions.
Products defined as cosmeceutical contain bioactive ingredients such as anti-
oxidants, enzymes, peptides, proteins and botanical actives. Some dermatological
research has shown that such ingredients can result in more effective skincare
products than more traditional ones. Cosmeceutical products are not subject to the
same testing and regulations of straight pharmaceutical or drug-based products and
as described later have yet to gain the full confidence of commentators and
consumers alike. Nevertheless they form a significant part of the pharmaceutical
industry and the sector as we shall see later ‘bleeds’ into several other industries.
GLOBAL MARKET VALUE: OVERVIEW
Recent global market reports estimate the cosmeceutical industry to be worth just
over $30bn in 2011. This has risen from $24bn in 2004. It is acknowledged as the
fastest growing segment of the cosmetics and personal care industry; the global
market is likely to see a Compound Annual Growth Rate (CAGR) of 7.7% between
2012 and 20161. This is faster than the already strong growth witnessed in the
pharmaceuticals and medical technology sector which grew at a rate of 4.7% in the
last growth period (1998-2008)2.
1 Cosmecueticals market to 2018 – Technological Advances and Consumer Awareness Boost
Commercial Potential for Innovative and Premium Priced Products, GBI Research, January
2013. 2 Cogent Pharmaceuticals and Medical Biotechnology Dashboard.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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The top market for cosmeceuticals is the USA. The UK, Germany, France, Italy and
Spain are the leading European markets followed by Japan. The combined global
market share of the five European countries is 65% ($20bn). That said the Asian-
Pacific markets are anticipated to have the greatest growth potential3.
Skin and hair care products constitute major sub-sectors of the industry. For
skincare, products aimed at anti-ageing, acne prevention or sun protection are the
most prevalent. Hair growth and anti-dandruff products are the most popular hair
care products on the market. Tooth whitening and lip protection are acknowledged
as an emerging growth area within the industry. The value and make-up of the
sector is described in more detail in Chapter Four.
NUTRACEUTICALS: SCALE AND ECONOMIC SIGNIFICANCE
DEFINITION
Nutraceutical is also a ‘blended’ sector combining the term ‘nutrition’ and
‘pharmaceutical’ applied to food or food products that can provide health and
medical benefits, including the prevention and treatment of disease.
The term is used to describe products derived from food sources that can provide
health benefits beyond the basic nutritional value of food. Products are not subject
to the same regulatory obligations as straight pharmaceuticals and there is minimal
regulation over which products can use the terminology on their labels. There are
two principle product types sitting under the broad umbrella of nutraceuticals:
functional foods and vitamins, minerals and supplements (VMS).
The British Nutrition Foundation (BNF) defines functional foods as ‘foods with health
promoting and/or disease preventing properties over and above their usual nutritional
values‘. Products in this category include those with increased health boosting
ingredients (such as fortified cereals), specially developed products (e.g. cholesterol
lowering margarine) and fermented products with beneficial bacteria (e.g. probiotic
yoghurts).
VMS products include single and multivitamins, fish and plant oils, minerals and
plant-based supplements. These are mostly sold to consumers through pharmacies,
grocery multiples and health food stores. The wider supply chain for this industry
therefore is potentially very wide impinging on many industries from food and drink
to agriculture and health and retail. This is discussed further in Chapter Four.
3 Ibid.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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MARKET VALUE: EUROPE
The European nutraceutical industry was valued at $35bn in 2010 (75% larger in value
terms than the Eurpean cosmecutical industry). A global estimate by BCC Research
for the sector was $151bn in 2011. The focus within the European market is on
innovation and new products with R&D spend increasing from 0.24% of industrial
revenue in 2004 to between 0.8-1% in 20104. Innovation in ingredients and product
development is a key driver across Europe. Germany, the Netherlands and Sweden
have emerged as key EU innovation centres in Europe with the UK and Spain
acknowledged as key test markets for new products. The UK accounts for around 8%
of the total European market (in 2010), the lowest share of its main European
competitors at some $2.8bn. France and Germany account for nearly half the EU
market (44%). The UK, France, Spain and Italy represent established key markets for
nutraceutical products.
European Nutraceuticals Market: Split by Country, $bn, 2010
Source: Frost & Sullivan/FICCI
MARKET VALUE: UK
Retail sales figures for both the functional food and the VMS sectors were an
estimated £1.54bn in 2011/12. 5
4 Global Nutraceutical Industry: Investing in Healthy Living, Frost & Sullivan/FICCI.
5 This is an approximation as the data for the two sectors covers slightly different annual
periods and have different categories of retail sales outlet. See Analysing the Nutraceuticals
Market in the UK, Aruvian Research, January 2013.
$8.4, 24%
$8.4, 24%
$7.0, 20%
$4.2, 12%
$4.2, 12%
$2.8, 8%
Others
France
Germany
Switzerland
Italy
UK
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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In growth terms, the functional foods sectors grew by 8.3% to £1.13bn for the year
ending September 2012 (see next table and chart). This is a significant slowdown
from growth experienced in the year to September 2010 of 22.1% but showing a still
high growth trajectory (and at a similar pace to the cosmaceutical sector). A decline
in probiotic yoghurt drinks is attributed to this, coupled with only marginal growth in
another key sub-sector of cholesterol lowering spreads.6 Some growth has been
maintained through higher sales of fortified breakfast cereals, probiotic yoghurts and
soya milk. Overall, the slower rate of growth in the functional food sub-sector now
brings it more into line with growth in the traditional foods market.
UK Functional Foods Sector (Retail Selling Price): Change 2009/2010-2011/2012 and Share
2009/2010
£m
2010/2011
£m
2011/2012
£m
Market Share
11/12 (%)
Change 09/10 -
11/12 (%)
Breakfast cereals £240.0 £280.0 £325.0 28.9% 26.2%
Yoghurts £185.0 £264.0 £307.1 27.3% 39.8%
Yoghurt Drinks £223.2 £253.5 £230.8 20.5% 3.3%
Margarines / spreads £78.2 £83.2 £83.9 7.4% 6.8%
Soya milk £53.1 £68.5 £76.5 6.8% 30.6%
Cereal Bars £34.0 £38.0 £40.0 3.6% 15.0%
Bread £8.4 £16.5 £22.6 2.0% 62.8%
PUFA enriched eggs £13.5 £15.0 £15.0 1.3% 10.0%
Milk and Cheese £4.0 £7.0 £14.5 1.3% 72.4%
Soft drinks /water £12.6 £14.4 £11.1 1.0% -13.5%
Total £852.0 £1,040.1 £1,126.5 100% 24.4%
% Change year on year 22.1% 8.3%
Source: IRI Grocery Outlets
6 Ibid
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
2009/2010
2010/2011
2011/2012
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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There has been minimal growth since 2010 in the VMS sub-sector, again following a
marked rise between 2009 and 2010 (see next table and chart). Sales for the year
ending August 2012 were £417.2m with less than one third attributable to vitamin
products and over two-thirds accounted for by minerals and supplements7. Growth
has been driven by supplements addressing specific conditions such as glucosamine
products for joints and omega-3 fish oils (other than cod liver oil which has seen a
decrease in sales) for joints, eyes and brain. The most significant sub-sectors are
multivitamin products and fish oils.
UK VMS Sector (Retail Selling Price): Change 2009/2010-2011/2012 and Share
2009/
2010 £m
2010/
2011 £m
2011/
2012 £m
Market Share
11/12 (%)
% Change
09/10 - 11/12
Multivitamins £85.1 £85.5 £85.9 20.6% 0.9%
Fish Oils £83.5 £83.4 £80.2 19.2% -4.1%
Glucosamine £35.7 £40.2 £44.0 10.5% 18.9%
Single Vitamins £44.6 £41.8 £41.9 10.0% -6.4%
Evening Primrose & Startflower Oils £28.2 £27.7 £24.5 5.9% -15.1%
Minerals £24.1 £23.7 £24.0 5.8% -0.4%
Garlic £10.0 £10.4 £9.1 2.2% -9.9%
Ginkgo £6.8 £8.3 £5.9 1.4% -15.3%
St John's Wort £5.6 £5.3 £5.3 1.3% -5.7%
Ginseng £4.9 £3.8 £3.7 0.9% -32.4%
Other supplements * £82.5 £85.3 £92.7 22.2% 11.0&
Total £411.0 £415.4 £417.2 100% 1.5%
% Change year on year 22.1% 8.3%
Source: IRI Grocery Outlets
7 Ibid
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
2009/2010
2010/2011
2011/2012
* folic acid, coenzyme Q10, lechithin, devil's claw, valerian,
saw palmetto, ginger, echinacea, milk thistle, royal jelly etc
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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POPULAR SALES CHANNELS AND CONSUMER ATTITUDES
Sales of functional foods and drinks tend to use the same retail channels as
traditional food products following the same sales pattern. 75.9% of breakfast
cereals, 76.7% of yoghurts and 74.1% of butters and spreads were sold via the top
four grocery multiples (Tesco, Sainsbury’s Asda and Morrison’s)8. The are spread
across various outlets including smaller grocery chains, discount, co-operative and
convenience stores and independents. For the VMS market, estimates show that
pharmacies have the largest retail market share (39%). This is dominated by Alliance
Boots. Multiple grocery stores hold a steady 31% with Tesco leading this field.
Health food shops, dominated by the Holland & Barrett chain, are witnessing a slight
decline in share (24%). The final 6% is made up of mail order and online sales.
For functional foods market research9 suggests 35.2% of the population regularly
consumed probiotic yoghurts with 37.7% regularly eating cholesterol-lowering
spreads. 21.4% drank probiotic yoghurt drinks with 17.6% eating fortified bread
products. Less popular products included soya milk/soya yoghurts (5.7%). Some
interesting findings were uncovered relating to interest in functional foods, belief in
their health benefits and comparisons with consumers’ regular diets. 43.8%
expressed an interest in their potential health benefits, but 54.4% did not necessarily
believe the health claims made by product manufacturers. However, these interest
levels do not translate into action - almost 81% of respondents believe they get all
their nutritional requirements from their regular diet without the need for functional
foods. Almost 40% of respondents claimed to take a VMS product of some
description at least once a week. A larger proportion (45.3%) admitted they rarely or
never used such products, again because they believed their normal diet sufficient.
SUMMARY
Cosmeceuticals are cosmetic products (lotions, creams etc) with active ingredients
claiming medical benefits. They are a significant and fast growing part of
pharmaceuticals in the US and Europe with the Asian-Pacific markets predicted to
have the greatest growth potential. Nutraceuticals are food or food products that
can provide health/medical benefits, including the prevention and treatment of
disease. Two principle product types include functional foods and vitamins, minerals
and supplements (VMS). Innovation in ingredients and product development is a key
driver across Europe. Germany, the Netherlands and Sweden have emerged as key EU
innovation centres with the UK and Spain acknowledged as key test markets for new
products.
8 Source: TNS data
9 NEMS Market Research survey (August 2010) covering just over 1000 respondents,
representing the GB population in terms of age, status, location & household composition.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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CHAPTER THREE: MARKET SIZE AND SECTOR BREAKDOWN
Estimating employment for most industries and established sectors can be obtained
by first defining the activity through the Standard Industrial Classification (SIC) codes
and using these codes to extract employee and employment estimates from official
sources such as the Business Register and Employment Survey (BRES). The
nutraceutical and cosmeceutical economic activities however are not easily definable
as they straddle a whole series of SIC codes and activities and therefore cannot be
quantified using BRES, Annual Population Survey or other official sources. This
chapter will provide a broad description of how the two ‘sectors’ and their activities
are reflected in the SIC code system. It will also estimate the size of the global and
UK workforce using published figures of the market size of nutraceuticals and
cosmeceuticals.
NUTRACEUTICALS: SECTOR BREAKDOWN
There are 728 five digit SIC codes (SIC 2007) which classify the numerous activities
that make up our diverse economy in the UK. ONS also provide 15,603 descriptions
that represent activities contained within the 728 SIC codes. Appendix One provides
a list of activity descriptions under relevant SIC codes that the authors have
attributed to nutraceuticals. This table gives a flavour of the complexity of the sector
which cannot be quantified using BRES. The nutraceutical sector is present in
agriculture, manufacturing and services and can be broadly summarised as follows:
Food and plants are grown and sent to be processed and manufactured into
products; they are packaged and sold to agents and wholesalers before they can be
bought in stores and online. This represents 99% of the nutraceutical industry
expenditure with 1% employed in research and development compared to 34% in the
long established and highly regulated pharmaceutical industry. A further breakdown
of the nutraceuticals supply chain is provided in the following diagram of the kind of
activities undertaken within each industry.
Agriculture Growing
Food
Growing
Plants
Manufacturing Processing Food
and Plants
Producing Food
and VMS
Services Agents Wholesale Retail R&D
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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$35.0bn $37.0bn
$39.2bn $41.5bn
$43.9bn $46.4bn
$49.1bn
0
10
20
30
40
50
2010 2011 2012 2013 2014 2015 2016
Source: KADA, BCC Research
Nutraceuticals European Market ($bn) 2010 to 2016
(Projected Annual Growth Rate of 5.8%)
MARKET SIZE
In the absence of reliable workforce data KADA has adopted an approach using the
size of the market from
published sources, and a
range of productivity
levels to estimate
employment and
projected growth. As
reported in Chapter Two,
the European market was
worth $35bn in 2010.
BCC Research estimate
the global market was
worth $151bn in 2011 and
was due to grow at a rate of 6.5% to 2016. Adopting this growth rate for Europe and
the UK is probably an overestimate of the prospects for this mature market but the
US, which has a third of global sales has been forecast to grow by 5.8% per annum
over the same timeframe. At this rate the market value for Europe will be $49bn by
2016 and for the UK will increase from $2.8bn to $3.9bn (£2.5bn), 8% of the European
market. The global market will have grown to $207bn by 2016 and the UK will have a
1.9% share.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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$30.0bn $32.3bn $34.8bn
$37.5bn $40.4n
$43.5bn
0
10
20
30
40
50
2011 2012 2013 2014 2015 2016
Source: KADA, RNCOS
Cosmeceuticals Global Market 2011 to 2016
(Projected Annual Growth Rate of 7.7%)
COSMECEUTICALS: SECTOR BREAKDOWN
The cosmeceuticals supply chain is manufacturing and service sector dominated.
Manufacturing includes the processing of materials, compounds and chemicals in
preparation for products.
Items such as the
production of creams,
soaps and ointments for
skin care and hair and
dental products are part
of the industry’s output.
On the service industry
side, the sector is
focused on the
distribution and sale of
existing and the launch
of new products.
Research and
development includes
the creation of new
products such as plant
stem cell research into
skin care10.
MARKET SIZE AND WORKFORCE
As reported in
Chapter Two, the
cosmeceutical sector
is valued at $30bn
globally; is estimated
to be growing at 7.7%
per year to 2016
(RNCOS, 2013) which
makes it the fastest
growing part of the
10 See Appendix One for a list of activity descriptions under relevant SIC codes that the
authors have attributed to cosmeceuticals.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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313,000
337,000
363,000
390,000
420,000
453,000
469,000
511,000
558,000
597,000
643,000
692,000
- 200,000 400,000 600,000
2011
2012
2013
2014
2015
2016
Source: KADA, RNCOS
Projected Global Cosmeceuticals Employment
(2011-2016 Estimates of Maximum & Minimum FTE)
Maximum Minimum
personal care industry (FS Brandt, A Cazzaniga and M Hann, 2011). The size of the
global market is however only one-fifth of nutraceuticals. Almost two-thirds are
concentrated in five European countries, including the UK. The main growth in the
global market is predicted to be in Asia where India is to increase at a rate of 17% a
year, China at 13% and there is still potential in the established Japanese market.
There is also emerging demand in Brazil and Russia. The $20bn European market
which is expected to grow at around 3% (Brand et al, 2011) to 2016, is expanding at a
slower rate than the rest of the world because of the maturity of the market. The size
of the global market will rise to £43.5bn by 2016, up by 45% in just five years.
To estimate the size of the cosmeceutical workforce, the same approach was used as
that for nutraceuticals. Again, in the absence of robust data, worker production levels
of £40,000 and
£60,000 (converted
into US$s) were
adopted to provide a
minimum and
maximum base to
calculate global FTE
jobs. The estimated
global workforce in
2011 was between
310,000 and 470,000
(FTE) rising to
between 450,000 and 690,000 by 2016.
LEADING NUTRACEUTICAL COMPANIES
The following are short profiles of a selection of large and medium sized companies
that operate in the nutraceuticals sector as suppliers, manufacturers and retailers of
functional food and VMS products. The largest companies will often only have a
small proportion of their business operating in the nutraceutical sector.
Associated British Foods is a British multinational food processing and retailing group. In
2012 its turnover was £12.3bn, pre-tax profits of £970m and 102,000 employees. It produces
food and food ingredients including emulsifiers, enzymes and lactose, vegetable oils and
bread.
Alpro is a Belgian company that markets organic and non-organic, non-GM soy based food
and drink. It employs 750 people in Belgium, France, the Netherlands and the UK.
BASF: BASF is a German company and the largest chemical business in the world with a 2012
turnover of €79bn, pre-tax profits of €9bn and 113,000 employees, half of which are based in
Germany. The company operates in most chemical based industries including plastics and
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
13
engineering coatings, as well as natural gas explorations but it is also involved in
biotechnology including GMOs and GM potatoes, pesticides, plant science products and
other agricultural solutions.
Holland and Barrett is a health food chain with 700 stores in six countries selling a variety of
whole foods, some for dietary needs such as lactose and gluten intolerants but it also sells its
own brand vitamins and mineral supplements manufactured by the company itself. Holland
and Barrett is a subsidiary of NBTY, a US based vitamins and nutritional supplement
manufacturer with a turnover of $66bn (2013).
Kellogg Company is a USA food processing and manufacturing multinational which produces
cereals and convenience food such as snack bars, biscuits and crackers and vegetarian foods.
In 2012 it had a turnover of $14.2bn, pre-tax profits of $1.6bn and 31,000 employees.
Kellogg’s largest factory is in Trafford Park, UK.
Nestlé is a Swiss multinational and the largest food and beverage company in the world. In
2012 the turnover was CHF92bn (£62bn), pre-tax profits were CH14.4bn (£9.8bn) and Nestlé
employed 339,000 people in 86 countries. The company sells baby and pet food but it is best
known for its confectionary, coffees and dairy products. Its major acquisitions include Crosse
& Blackwell, Findus, Libby’s, Rowntree Mackintosh and Gerber. It also has a large stake in
L’Oréal.
Noble Foods is the leading supplier of fresh eggs in the UK. In 2012 turnover was £594m and
pre-tax profits were £14.8m. The company owns the Happy Egg Company worth £75m, Big &
Fresh, and Goldenlay Omega 3.
Vitabiotics is the largest vitamin company in the UK specialising in vitamin and mineral based
formulations. In 2012 the company had a turnover of £75.5m, pre-tax profits of £23m and 95
employees. Product lines include supplements, single vitamins, herbal remedies, and fish oil
with omega3.
Market Leaders Operating in Nutraceuticals Sector
Agnitrin Dairy Health Perception (UK) So Good International
Alpro (UK) Holland & Barrett Retail Solgar Vitamin & Herb
Associated British Foods Kellogg Superdrug Stores PLC
BASF Klosterfrau Healthcare Tesco Stores
Bayer PLC McNeil Nutritionals Tropicana UK
BHM Health Group Masterfoods Unilever PLC
Boehringer Ingelheim McVitie's United Biscuits
Cadbury Müller Dairy (UK) Vitabiotics
Chefaro UK Nestlé UK W Jordan
Coca-Cola Enterprises Noble Foods Warburtons
Dairy Crest Group PLC Onken Dairy (UK) Wassen International
Danone Potters Weetabix
Efamol Quaker Oats Wyeth Consumer Healthcare
Equazen UK Rachel's Dairy Yakult UK
Ernest Jackson & Co Seven Seas
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
14
LEADING COSMECEUTICAL COMPANIES
The following are short profiles of a selection of large and medium sized companies
that operate in the cosmeceutical sector as providers of chemicals and compounds,
manufacturers, retailers or R&D laboratories. The largest companies will often only
have a small proportion of their business operating in the cosmeceutical sector.
Bayer is a German pharmaceuticals and chemicals company with a 2011 turnover of €36.5bn,
pre-tax profits of €4.1bn and 112,000 employees. While predominantly pharmaceutical it
provides over-the-counter drugs, healthcare products and chemicals for a variety of
cosmeceutical applications.
Colgate-Palmolive is a US multinational personal care products company with a turnover of
$17bn, pre-tax profits of $3.9bn and 38,000 employees. The company is focused on the
production, distribution and provision of household, health care and personal products, such
as soaps, detergents and for oral hygiene.
Croda is a British chemicals company which supplies the cosmetics, cosmeceutical and
pharmaceutical industry. In 2012 it had a turnover of £1.05bn, pre-tax profits of £255m and
3,200 employees. The company is active in health care, ‘crop care’ and personal care
products, cosmetic creams and lotions, and dietary supplements.
Lonza is a Swiss chemicals and biotechnology company with 11,000 employees (2012). It
provides a number of products and service to the pharmaceutical and ‘life science’ industries
including organic performance chemicals and biopharmaceuticals.
Johnson & Johnson is a pharmaceutical and medical equipment multinational based in the
USA but with operations across 57 countries. In 2012 turnover was $65bn with pre-tax profits
of £12.4bn and 118,000 employees. It operates with over 230 subsidiaries and across a wide
range of well-known household products that include medication and first aid supplies but
also supply personal care items such as shampoos, skin creams and baby products.
L’Oréal is a French company and the largest cosmetics business in the world with a 2012
turnover of €22.5bn, pre-tax profits of €3.7bn and 73,000 employees worldwide. It focuses
activity on a range of hair care, skin care, sun protection, make-up, and perfumes. Among its
subsidiaries is The Body Shop chain. The multinational is also active in the dermatological,
tissue engineering and pharmaceutical fields and is a patent holder in nanotechnology.
Procter and Gamble is an American multinational company with a 2013 turnover of $84bn,
pre-tax profits of $14.5bn and employs 126,000 people. Widely known for its cleaning agents,
it is involved in personal care products in hair and health care. It has famous brands such as
Max Factor, Olay, Head and Shoulders, and BOSS Skincare. It also has an R&D department
which conducts research into ‘omics’ for skin and hair.
Shiseido is a major Japanese cosmetics company with a 2013 turnover of ¥710bn (£4.2bn), a
pre-tax loss of ¥15bn (£95m) and 27,000 employees. It has a line in hair care and skin care,
such as anti-wrinkle eye creams and cosmetics. It owns the Bare Escentuals brand.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
15
Market Leaders Operating in Cosmeceutical Sector
Allergan Colgate-Palmolive Neutrogena Corporation
Alliance Boots Croda International Obagi Medical Products
Arch Chemicals Eastman Chemicals Pacific Bioscience Laboratories
Athena Cosmetics Estee Lauder Procter & Gamble
Avon exCel Manufacturing Royal DSM
BASF Henkel Shiseido
Bayer Jan Marini Skin Research Skin Medica
Beiersdorf Johnson & Johnson Solta Medical
Biopelle La Roche-Posay LP Stiefel Laboratories
Boots UK Lonza Unilever
Candem Pharma L'Oreal
Clinique Laboratories Medicis
SUMMARY
In terms of defining the sectors:
A broad classification of the labour market activity indicates that
nutraceuticals operates in agriculture, manufacturing (processing and
production); and in services (distribution and sales) but also providing the
R&D to develop new products/expand the market. Cosmeceuticals operates
in both manufacturing and services in a similar way to nutraceuticals.
The size of the nutraceuticals and cosmeceuticals sectors cannot be quantified
using current official labour market statistics. The workforce was estimated
using a proxy measure based on the size of the market and UK productivity.
Looking at the market intelligence:
The size of the nutraceutical global market was worth $151bn (£96bn) in 2011
and $37bn (£24bn) in Europe. The annual global growth rate is 6.5% and in
Europe it is 5.8%. There is plenty of room for growth across all markets. The
number of FTE jobs in Europe could be as high as 580,000 and 2.5m globally.
Cosmeceuticals is a much smaller global sector than nutraceuticals but 65% is
concentrated in Europe with the UK having 10% of the global market in 2011.
The global market was $30bn (£19bn) and $20bn (£13bn) in Europe. Annual
global growth rates are estimated at 7.7% but only 3% in Europe. There is
significant potential in Asia, particularly India and China, but also other
emerging markets in Russia and Brazil. Employment is estimated to grow
from a maximum of 470,000 to 690,000 globally.
There is clear export growth potential for both sectors which should ensure further
growth for UK companies although market leaders will often have only a small
proportion of their business operating in the nutraceutical and cosmeceutical sectors.
That said as the sectors become more established it will provide room for niche
markets and product focused businesses to meet the growing demand.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
16
365,000
386,000
408,000
432,000
457,000
483,000
511,000
568,000
579,000
620,000
664,000
698,000
739,000
782,000
- 200,000 400,000 600,000 800,000 1,000,000
2010
2011
2012
2013
2014
2015
2016
Source: KADA, BCC Research
Projected Nutraceutical European Employment Growth
(2010-2016 Est. Maximum & Minimum FTE)
Maximum Minimum
CHAPTER FOUR: WORKFORCE AND SKILLS PROFILE
INTRODUCTION
This chapter estimates the numbers employed in the two sectors and draws on some
proxy skills and qualifications intelligence.
ESTIMATED EMPLOYMENT IN NUTRACEUTICALS
Calculating employment from the market value based on productivity levels can only
provide a rough estimate
of the sector. Our
analysis of nutraceuticals
using SIC codes reflects a
wide scope of activity
across the economy. The
UK’s average productivity
level is approximately
£50,000 per worker (full-
time equivalent, FTE).
Using levels at £40,000
and £60,000 (converted
into US$s) on either side
of the national average to calculate a maximum and minimum figure indicates that
the European employment estimate in 2010 was 370,000 and 570,000 (FTE). By 2016
employment would be between 510,000 and 780,000. The wide discrepancy is due to
the number of assumptions built into the calculation, given the lack of information
available.
Market growth in the UK at 5.8% CAGR is projected to increase employment by over
a third to £2.5bn to 2016. Full-time equivalent employment means converting the
number of part-time jobs into their full-time equivalent and then adding the full-time
jobs. On this basis we estimate a minimum of 29,000 FTE jobs and a maximum of
46,000 in 2010 in the UK rising to between 41,000 and 63,000 by 2016. Total job
numbers (total full-time and part-time) equate to a 20% increase on the FTE total
making a minimum of 49,000 and a maximum of 75,000 jobs by 2016 (see next table).
A geographical distribution is not feasible due to the lack of information and
uncertainty in the figures. However, the retail component of the sector would be
nationwide and should be consistent with concentrations of the population. An
alternative approach would be to focus on the production companies in the
nutraceutical sector and assess the job numbers based on the production locations.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
17
This would however be a major undertaking and may result in similar uncertainty
over the numbers.
UK Nutraceutical Market and Employment Projections 2010 to 2016
UK Market
Employment UK (FTE) Employment in UK
Minimum Maximum Minimum Maximum
2010 £1.82bn 29,000 46,000 35,000 55,000
2011 £1.85bn 31,000 46,000 37,000 56,000
2012 £1.98bn 33,000 50,000 39,000 60,000
2013 £2.13bn 35,000 53,000 41,000 64,000
2014 £2.23bn 37,000 56,000 44,000 67,000
2015 £2.36bn 39,000 59,000 46,000 71,000
2016 £2.50bn 41,000 63,000 49,000 75,000
Source: KADA, BCC Research
ESTIMATED EMPLOYMENT IN COSMECEUTICALS
The UK is estimated to have 10% of the $30bn global market in 2011. The UK
market, which is growing at 3% CAGR, is projected to increase to £2.2bn by 2016 and
its share of global sales will have fallen to just 5%. FTE jobs will increase by one-sixth
during those five years. In the UK in 2011 we estimate a minimum of 31,000 FTE
cosmeceutical jobs and a maximum of 47,000 rising to between 36,000 and 54,000 by
2016. Total job numbers (adding the number of full-time and part-time jobs) equate
to a 20% increase on the FTE total. This means that the estimate for 2016 amounts to
between 44,000 and 65,000 jobs (part-time and full-time numbers).
UK Cosmeceutical Market and Employment Projections 2011 to 2016
UK Market
Employment UK (FTE) Employment in UK
Minimum Maximum Minimum Maximum
2011 £1.88bn 31,000 47,000 38,000 56,000
2012 £1.93bn 32,000 48,000 39,000 58,000
2013 £1.99bn 33,000 50,000 40,000 60,000
2014 £2.05bn 34,000 51,000 41,000 62,000
2015 £2.11bn 35,000 53,000 42,000 63,000
2016 £2.17bn 36,000 54,000 44,000 65,000
Source: KADA, RNCOS & FS Brandt et.al
Again geographical distribution is not feasible for cosmeceutical for the same
reasons as those given for nutraceuticals. Both lack the information available to
provide a meaningful geographic breakdown.
A comparison between the size and growth of nutraceuticals and cosmeceuticals
would suggest that in 2011 both sectors in the UK were around the same size in jobs
and sales. By 2016 nutraceuticals will have grown larger than cosmeceuticals because
cosmeceuticals is already a mature market in Europe. However, these figures should
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
18
be treated with caution given the number of assumptions built into the calculations.
One conclusion that can be taken from this report is that both sectors have not
reached global capacity and are still projected to grow. Successful UK companies in
both sectors should clearly be targeting faster growing markets abroad.
SKILLS AND QUALIFICATIONS
As with employment it is not easy to define the sector through standard occupational
categories (SOC). Without primary research it is only possible to estimate the current
and future skills levels at a very broad level by applying skills levels within the
pharmaceuticals sector as a proxy. These figures it is suggested therefore should be
treated with caution. More fine grained occupational analysis is suggested as an area
for further research. Skills levels are clearly skewed towards the higher end with
estimated growth in employment from 8,000-11,000 for nutraceuticals to 2016 and
4,000-5,000 for cosmeceuticals.
Estimated Current Skill Levels (2013)
Nutraceuticals Cosmeceuticals % Pharma
(UK)* Minimum Maximum Minimum Maximum
S/NVQ 4+ 22550 35200 22000 33000 55
S/NVQ 3 5740 8960 5600 8400 14
S/NVQ 2 4510 7040 4400 6600 11
Below S/NVQ2 3690 5760 3600 5400 9
Trade Apprenticeships 1230 1920 1200 1800 3
Other Qualifications 1640 2560 1600 2400 4
No qualifications 1640 2560 1600 2400 4
Total Est. UK Employment 41000 64000 40000 60000 100
Source: Kada, LFS, BCC,*LFS (2009) and ESDS
Estimated Additional Future Requirements by Skill Level (2016)
Nutraceuticals Cosmeceuticals
Minimum Maximum Minimum Maximum
Total Est UK Employment 2016 49000 75000 44000 65000
S/NVQ 4+ 4400 6050 2200 2750
S/NVQ 3 1120 1540 560 700
S/NVQ 2 880 1210 440 550
Below S/NVQ2 720 990 360 450
Trade Apprenticeships 240 330 120 150
Other Qualifications 320 440 160 200
No qualifications 320 440 160 200
Estimated growth 8000 11000 4000 5000
Source: Kada, LFS, BCC,*LFS (2009) and ESDS
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
19
APPRENTICESHIPS AND INTERNSHIPS
The nutraceuticals and cosmeceuticals sectors rely heavily on STEM subjects.
However apprenticeships in the UK do not appear to be routinely considered as a
preferred route to a managerial or professional career or higher level learning in the
companies producing cosmeceuticals or nutraceuticals. Where apprentices or their
employers wish to progress there has been limited opportunity in the workplace. The
National Apprenticeship Service (NAS) is currently working with Cogent and others
on developing a cohesive STEM strategy and action plan for Apprenticeships. The
purpose of this work is to make the case to employers for investing in STEM
Apprenticeships and to provide a strategy for growth in STEM Apprenticeship starts.
NAS estimates that for all ages, at all stages (from Key Stage 4 upwards) there are
around 62,000 STEM apprenticeships each year at Intermediate and Advanced levels
and an increasing number at Level 4 and above. There is a comparable level of
intermediate and advanced apprenticeships (unlike non-STEM subjects where there is
a clear bias for level 2 intermediate starts). Advanced STEM apprenticeships are also
steadily increasing. A very rough estimate would be that between 4-6% of starts are
in nutraceuticals or cosmeceuticals.
STEM apprenticeships are recognised for their high wage returns and for their role in
transition to Registered Technician status (one of the key roles in nutraceuticals or
cosmeceuticals). The Academy of Engineering also notes that STEM qualifications
offer significant wage value, particularly when used in SET occupations11.
Several companies offering apprenticeships in the cosmeceutical and nutraceutical
sectors were identified. These cover the full range of company functions from
research and operations to finance, information systems, marketing, sales,
communications, and human resources. Examples include:
Redrose Manufacturing Ltd in County Durham - manufacturer of cosmeceutical (and
nutraceutical) products including anti-ageing creams and gels and tablet/capsule
based food supplements. They also have skincare R&D services plus specialist
packaging facility. The company recruits apprentices.
The Boot’s Support Office Apprenticeship Programme, is a two year programme with
opportunities in a range of functional teams with college for half a day a week
culminating in a Level 4 qualification.
11 FE STEM Data Project, November 2012
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
20
FE PROVISION
The Further Education (FE) and Skills Sector, has an essential role to play in STEM
education and training, improving progression through STEM related subjects and
servicing the needs of employers with a suitably qualified workforce. FE also plays an
important role in raising STEM literacy, particularly through the provision of large
numbers of numeracy qualifications. The Academy of Engineering notes12 that 25%
of all funded qualifications achieved in the FE and Skills Sector in 2010/11 were STEM
related (England Only). It notes that the number of qualifications achieved at each
qualification level varies between STEM subjects. Numeracy qualifications are
predominantly achieved at lower levels; technology, engineering and mathematics at
lower and intermediate levels (Level 2); and science and hybrid qualifications at
advanced level (Level 3). Relatively few STEM qualifications at Level 4 and above are
funded by the Skills Funding Agency in the FE and skills sector in England.
Nutraceuticals and cosmeceuticals provision is likely to be at the higher end (Level 3).
In recent years there has been a marked increase in progression to higher education
courses from the FE and skills sector in STEM-related subjects. For instance the
Academy of Engineering report13 indicates that progression in Science is particularly
pronounced – increasing by more than three times from under 1000 to 3000 between
2007/8-2010/2011. This is an encouraging trend for the nutraceuticals and
cosmeceuticals sector.
There are of course specialist internal and external vocational courses for those
involved in the two sectors. For example The Health Food Institute has a Level One
Professional Diploma Course on The Natural Products and the PAGB14 is working in
association with Wellards to deliver a PAGB Diploma in OTC (Over the Counter)
Healthcare. It covers the latest industry developments, including recent regulatory
changes and new OTC ingredients. Clearly this is wider than the nutraceuticals sector
but it does have a module on nutrition and food supplements. All of the retailers
which sell the products tend to offer in-house training on products and sales. For
instance Holland and Barrett have product advisor level training which included
learning on vitamins and minerals, supplements, herbals and aromatherapy, skin, hair
and nail health. Their Advanced Product Advisor Level training covers the circulatory
system, digestive system, endocrine system, the nervous system, fats and
carbohydrates.
12 FE STEM Data Project, November 2012
13 Op cit, p15
14 Proprietary Association of Great Britain represents the manufacturers of over-the-counter
medicines and food supplements in the United Kingdom.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
21
HE PROVISION
The illustration highlights some of selected STEM disciplines from the joint academic
coding system most relevant to nutraceuticals and cosmeceuticals. The number of
qualifiers in these subjects at all HE levels has generally increased between 2002–03
and 2009–1015 largely mirroring the overall trend in HE. The number of first degree
qualifiers increased by just over quarter (26%) accounted for principally by increases
in subjects allied to medicine and biological sciences. The number of engineers and
biologists remained relatively static. There was a large proportionate increase in
Masters qualifiers (46%) with rises in all areas except technology which decreased.
Absolute & % Change in Qualifiers in Selected STEM Subjects 2002/3-2009-10
2002/03 2009/10 % Change
Fir
st D
eg
ree
Qu
alifi
ers
fro
m U
K
HEIs
Subjects allied to medicine 22,355 30,615 37%
Biological Sciences 22,270 29,010 30%
Biology* 4,155 4,275 3%
Engineering 12,465 12,080 -3%
Technology 1,585 2,270 43%
58,675 73,975 26%
UK
Do
mic
iled
Mast
er’
s D
eg
ree
Qu
alifi
ers
fro
m U
K
HEI
Subjects allied to medicine 2,500 4,005 60%
Biological Sciences 2,830 4,260 51%
Biology* 435 635 46%
Engineering 1,920 2,635 37%
Technology 480 400 -17%
7,730 11,300 46%
Ph
D Q
ualifi
ers
fro
m U
K H
EIs
Subjects allied to medicine 640 685 7%
Biological Sciences 1,780 2,120 19%
Biology* 490 410 -16%
Engineering 760 805 6%
Technology 150 135 -10%
3,330 3,745 12%
Source: House of Lords Select Committee on Science and Technology 2nd Report of Session
2012 Higher Education in (STEM) subjects. * this is a sub set of Biological Sciences
15 House of Lords Select Committee on Science and Technology 2nd Report of Session 2012
Higher Education in (STEM) subjects.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
22
Looking at destinations it is interesting to note subjects allied to medicine has a high
proportion of degree leavers that enter work (79.6%) and a comparatively low
incidence of unemployment (5.2%). Biological sciences have the highest propensity
for the leavers to enter further study (20.8%) or work and further study (7.9%).
Destinations of full-time first degree leavers by subject area and activity 2011/2012
Source: Higher Education Statistics for the UK, 2013
Many of the companies identified in cosmeceuticals and nutraceuticals require an
undergraduate or higher degree in a related subject depending on the role. Most of
the larger nutraceutical and cosmeceutical firms offer graduate training programmes
too:
Danone has a 2 year graduate programme in Business Partnering undertaking
placements across HR, Supply Chain and Finance. It has a learning and
development programme focused on building leadership skills. Applicants
need a 2.1 degree in any discipline, a minimum of 320 UCAS points and be
geographically/internationally mobile.
eiersdorf UK, based in Birmingham with global HQ in Hamburg employs
around 200 in UK in sales, marketing, finance, supply chain & HR. It operates
a Northern Europe Graduate Programme (Beyond Borders), an Industrial
Placement Scheme and a comprehensive international PhD programme.
Understanding more detail on the ebbs and flows of HE skill requirements for the
cosmeceuticals and nutraceuticals sectors is suggested as an area of further work.
79.6
58.8
67.6
68.0
67.6
4.2
7.5
3.3
5.4
5.0
8.0
20.8
14.5
15.0
15.4
5.2
7.9
10.4
7.5
8.1
3.0
5.0
4.2
4.1
4.0
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Subjects allied to medicine
Biological sciences
Engineering & technology
Selected subjects
Total - Science subject area
Work Work & Further Study Further Study Unemployed Other
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
23
TYPICAL SKILLS REQUIREMENTS / TYPES OF QUALIFICATIONS / JOB ROLES
The development of a cosmeceutical or a nutraceutical is an in-depth project that
usually involves assistance from experienced chemists. It requires an understanding
of regulations, ingredient properties and an ability to perform proper testing for any
over-the-counter (OTC) product. Once the ingredients have been selected,
prototyping with multiple versions of the formulation is conducted. Internal testing
and prototyping afford the opportunity to work out any initial issues (such as a scent
or texture). The testing provides an opportunity to perfect the product. There are
certain testing devices clinical testing companies can use to accurately test a
product's effects and whether they match any desired marketing claims16. These
devices help formulators test a formula's effectiveness before spending significant
amounts of money for further testing.
The economic analysis suggests the sub-sectors for nutraceuticals and
cosmeceuticals are potentially very wide embracing the following industrial sectors:
R&D/testing, production/manufacturing, distribution, sales & marketing including
retail, logistics and other support functions: such finance and HR. Honing in on the
‘core’ activities of research and development/testing and production/distribution the
word cloud illustrates some current employer requirements for the sectors. Further
primary research is suggested to give a sense of scale and type of employer skills
gaps.
Cosmeceuticals and Nutraceuticals Recruitment Word Cloud
16 For example, in the cosmeceutical sector a corneometer measures the skin's moisture
content. A chromameter measures the color of skin and a cutometer measures elasticity.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
24
Jobs in research and development typically require a general or specialized
background (engineering, master's, doctorate or post-doctorate degree) in one of
the following areas:
Science & Technology (chemistry, physics, physical chemistry, material
sciences, etc.);
Life Sciences (biology, genetics, etc.);
Medical and Pharmaceutical Sciences;
Human and Social Sciences (patents, regulatory affairs, etc.).
The following table summarises some of the job roles currently being advertised by
nutraceutical or cosmeceutical companies.
Occupational Area Example Job Roles
Research and Development: (a)
invention/discovery (b) the
development of new cosmetic /
nutrient products and (c) clinical trial
teams17
.
Development or test engineer.
Senior scientific posts.
Quality operations labs technical leader.
Formulation technologist.
Food technologist / nutritionist.
Product development scientist, food chemist or nutrition
scientist.
Manufacturing Operations: includes
roles in safety, quality, manufacturing
and supply-chain efficiency. .
Production unit engineers, operatives and supervisors.
Manufacturing managers and operatives.
Technical engineers.
Import, export and shipping: handling to management.
Warehouse related operatives.
Process and project engineer.
Clinical supply chain managers.
Manufacturing engineers.
Warehouse operatives and fork lift truck drivers.
Warehouse supervisors and managers.
Nutraceuticals maintenance engineer.
Technician.
ILLUSTRATIVE CAREER PATHWAYS
There are many possible routes into nutraceuticals and cosmeceuticals as the
occupational categories are so varied. Looking at the careers pages of key employers
it is clear there are numerous potential career pathways. Appendix Two highlights, in
17 This might involve (a) creating molecules and active ingredients, concepts and products, expanding
the sphere of life sciences while focusing on consumer needs. (b) the commercialization of effective
medicines, devices, or consumer health products.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
25
a very simplistic way, several progression routes into these sub-sectors. Research and
development roles typically require degree qualified entrants – there are ways into to
sector through apprenticeships and other vocational routes but these are less
common. The entry criteria for some manufacturing and process operatives are less
stringent though many roles are underpinned by specialist engineering. Both sectors
clearly rely heavily on STEM based subjects in the development of the ‘products’ but
there are many roles that are required to support these functions around for instance
sales and marketing, logistics and packaging.
GAP SKILLS ANALYSIS
The desk base research did not uncover skills gaps’ intelligence for the two sectors
which is suggested as an area for further research. However the Cogent Skills Oracle
Report for the Pharmaceuticals Industry June 2010 does highlight some general
issues of relevance. 60% of employers reported managers vacancies were ‘hard to fill’
though were satisfied with qualification coverage across the sector. Satisfaction
ratings were highest for the use of ‘Competence Based’ and ‘Academic’ qualifications.
Health, Safety and Environment (HSE) was the most frequently reported training
undertaken, internally and externally.
88% of pharmaceutical employers use ‘Private Training’ providers; 75% use ‘FE’
providers; and 25% use ‘HE’ providers. For private training providers, satisfaction
levels were extremely high in all areas, with 100% of employers either satisfied or very
satisfied on all measures. Pharmaceuticals companies tended to resource externally
for specialist training needs (‘Leadership and Management’, 75%; and ‘Professional’,
75%). When training needs are more directly related to a job, training tends to be
internally resourced (‘HSE’, 88%; ‘Job Specific’, 88%; and ‘Competence’, 50%). The
satisfaction ratings for FE and HE were also significant (ranging between 50% and
100%), with the lower of these ratings referring to flexibility of provision. This
suggests that while employers value such provision, there is scope for FE and HE to
innovate in flexible and accessible provision, and the Skills Oracle report highlighted
a role for the Sector Skills Councils in facilitating this.
The majority of pharmaceuticals employers highlighted the importance on the supply
of apprentices and graduates (57% and 100% respectively) to their workforce (2% of
the skills supply recruited were apprentices; 5% of the skills supply recruited were
graduates). Pharmaceuticals employers invest in ‘Competence Based’ (88%) and
‘Technical’ (75%) training of the existing workforce, with 50% investing in
‘Professional/Higher Level’ training of the workforce.
71% of pharmaceuticals employers reported skills gaps among existing employees
had ‘some impact’; and 57% of employers reported that the shortage of skilled
individuals when recruiting has had ‘no impact’ on business performance.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
26
Pharmaceuticals employers were split in concluding that the economic situation for
their businesses would either ‘improve’ (57%) or ‘remain static’ (43%) within the year.
No pharmaceuticals employers concluded that the economic situation for their
businesses would worsen within the year and the market analysis suggest
cosmeceuticals and nutraceuticals appear to be equally resilient. Most
pharmaceuticals employers predicted ‘no significant change’ or an ‘increase’ in
employment in both long term (5 years ahead) – the employment predictions
identified for cosmeceuticals and nutraceuticals indicate strong growth.
SUMMARY
The size of the UK nutraceuticals market was £1.85bn in 2011 (2% of the global
figure) and the workforce was a maximum 46,000 FTE jobs. By 2016, this is projected
to be £2.5bn (1.9% of the global market) and a maximum 63,000 FTE jobs. The size
of the UK cosmeceutical market was £1.88bn in 2011, employing a maximum 46,000
FTE workers, almost the same as nutraceuticals. By 2016, the projected market in the
UK would be £2.17bn and 54,000 FTE jobs. Growing at just 3% per year UK’s share of
the global market would have fallen from 10% to just 5%.
Using pharmaceuticals as a proxy, skill levels are clearly skewed towards the higher
end with estimated growth in employment from 8,000-11,000 for nutraceuticals to
2016 and 4,000-5,000 for cosmeceuticals. Whilst the study identified apprentice
opportunities and increasing progression amongst science FE graduates
apprenticeships do not appear to be routinely considered as a preferred route to a
managerial or professional career or higher level learning for cosmeceutical or
nutraceutical companies. There is a case for COGENT to continue to work with NAS
and in making the case to employers for investing in STEM Apprenticeships and to
provide a strategy for growth in STEM Apprenticeship starts. Nutraceuticals and
cosmeceuticals FE STEM provision is likely to be at the higher end (Level 3) and in
recent years there has been a marked increase in progression to higher education
courses from the FE and skills sector in STEM-related subjects.
The number of qualifiers in these subjects at all HE levels has generally increased
between 2002–03 and 2009–1018 largely mirroring the overall trend in HE. The
sectors often require degree level entrants with some experience and ideally a
relevant specialism. Further research is suggested to understand the ebbs and flows
of HE skill requirements for the cosmeceuticals and nutraceuticals sectors and the
scale and type of employer skills gaps.
18 House of Lords Select Committee on Science and Technology 2nd Report of Session 2012
Higher Education in (STEM) subjects.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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CHAPTER FIVE: ECONOMIC DRIVERS AND FUTURE TRENDS
This chapter describes the key future drivers and constraints facing the two sectors.
COSMECEUTICALS
There are a number of factors influencing the continued growth of the cosmeceutical
sector globally, which is expected to grow at a rate of 7.7% between 2012-2016.
GROWTH OF ASIA-PACIFIC MARKETPLACE
One of the most widely acknowledged drivers is the growth potential of the Asia-
Pacific marketplace. The US and top European countries are well-established markets
which have already experienced rapid growth in this field. There is significant
untapped potential in Japan and China in skin and hair care products in particular.
The Japanese market is growing rapidly and is identifying niche specialisms in the
marketplace. In India, there is a trend towards acquisitions by global players; a recent
example is L’Oreal’s purchase of Mumbai based company Cheryl’s Cosmeceuticals.
Whilst there is undoubtedly opportunity in the Chinese market, it is also recognised
that China has the capability to build its own industry and compete in the global
marketplace on its own terms.
For consumers, the main driver for considering such products is the desire for a more
youthful appearance, particularly as people are living longer. New products appear
regularly on the market and claim to give better results than ‘standard’ or earlier
iterations of specific products. It is also apparent that consumers in the Asia-Pacific
region are interested in cosmeceutical products which are customised to address the
specific skin and hair care needs of different ethnic groups. For example, demand is
increasing for skin care products aimed at skin whitening, improving uneven skin
tone and tackling adult acne or hyper pigmentation. More gentle formulations are
also being sought across the ethnic skincare market.
Product acceptability in other countries also impacts on the approach of global
players in how they manufacture and market their products. The major
manufacturers use the country’s local representatives and sales channels to promote
their products in Asian markets in particular. Using direct local knowledge of
consumer requirements and expectations – as well as understanding of
national/regional legislation and the regulatory environment – is considered the most
effective and acceptable way of promoting products in these emerging markets.
Growth potential is also widely acknowledged in other emerging markets such as
Brazil and Latin America. The Middle East is an interesting new prospect with a
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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healthy economy and growing middle class base. There is strong demand in
particular for skin lightening products in this region.
IMPACT OF GLOBAL ECONOMIC DOWNTURN
The global economic downturn has had some negative impact on the sales of
premium anti-ageing products. The slower rate of growth in emerging economies
has also given some cause for concern. Fluctuations in global currencies can have a
major impact on pricing policies. There has also been some evidence, particularly in
the US, of consumers shifting to lower priced products sold during the downturn;
they are also opting to purchase in discount stores rather than pharmacies, beauty
salons or department store concession stands.
That said, the ‘urban middle class’ and ‘baby boomers’ in the US and Western Europe
are still perceived as having high rates of disposable income for premium products
which are still viewed as relatively affordable. They continue to be the target market
for premium cosmeceutical products. Finding ways to introduce new products to
appeal to these client groups and encourage product loyalty is a key driver for
manufacturers and retailers alike. Some of these issues are explored in the following
paragraphs. Overall, the trajectory of the economic outlook is likely to be the single
biggest influencer of sales and growth of cosmeceuticals over the next 2-3 years.
PREVENTION VS CURE: EXPANDING THE AGE RANGE FOR PREMIUM SKIN
CARE PRODUCTS
Product manufacturers are looking at ways of expanding their customer base by
focusing on the early prevention of premature ageing as well as still providing
skincare products to deal with the signs of ageing for older customers. It is
becoming increasingly common for product ranges to cover 25+, 35+, 45+ and 60+
age groups. This approach helps to engender brand loyalty from an early age and
nurture the concept of ‘lifetime consumers. ‘
DIGITAL & MOBILE MARKETING: ENABLING PERSONALISED CUSTOMER
SERVICE
Retailers and beauty salons are providing a more personalised customer experience
for consumers which help to boost sales. Overall, the industry is improving its
approach to commercialisation and marketing (including digital marketing, e-
commerce). Digital and mobile marketing in particular is proving effective in driving
consumers to the beauty counter. Text marketing campaigns can reach new
potential customers. In general, digital marketing offers a much faster turnaround
time (and therefore more cost effective approach) for marketing campaigns when
compared with advertising in glossy magazines.
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Manufacturers and retailers recognise that face-to-face consultation is still important
for skincare sales; consumers will use digital means to research options in the first
instance, but will ultimately want to purchase products at the counter. In-store gift
sets, limited edition products and new product launches have also helped to bring
customers in store. This approach is believed to have helped buck the recessionary
trend in the UK with premium products experiencing growth in the £50-£200 prices
ranges. According to market researcher NPD, this contributed to 6% growth in value
across the whole anti-ageing product market in 2011/12.
DEMAND FOR NEW INGREDIENTS & PRODUCT INNOVATION
New ingredients are continually being introduced; for example, the inclusion of anti-
oxidants has boosted the sales of anti-ageing creams. Plant stem cell based products
are seen as a revolution in the skin care industry. There is a growing call for natural
ingredients in anti-ageing products including botanicals, natural proteins and
vitamins. The ‘baby boomer’ markets in the US and Western Europe are particularly
discerning and increasingly looking for products for cosmeceutical ingredients which
can bring health and physical benefits over and above the purely aesthetic. Products
containing enzymes, co-enzymes and natural proteins are particularly popular with
these groups. Innovation to provide a more personalised and sophisticated
approach to skincare, through for example choosing ingredients based on personal
genetics to combat ageing, is being explored by some manufacturers.
The use of natural oils in hair care products is already popular and is a factor in the
growing interest in products aimed at halting the ageing effects on hair. Consumers
are looking at ways of combating the damage done to hair through the ageing
process such as increased coarseness, lack of volume and less strength and shine.
Protecting hair from free radicals is another challenge; hair care product
manufacturers are continually innovating to produce shampoos, conditioners, serum
and volumisers with natural ingredients using oils such as argan, marula, coconut and
almond. The use of emulsifiers, omega 3 and fatty acids in conditioners is also
increasing. These oils are now being increasingly introduced into skin care products
too; their anti-ageing properties are capable of crossing over into different products.
Innovation in UV absorption (in sun protection products for example) is an important
development. Products use both organic and in-organic ingredients to not just
protect against the ageing effects of sun exposure, but also to prevent skin cancer.
Demand for multi-functional products is also on the rise. As some consumers
become more price conscious, products which can address hydration and contain
anti-oxidant properties are an attractive prospect as they are capable of being used
for both skincare and cosmetic purposes.
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The aesthetic quality of products is also driving innovation; customers like their
natural skincare products to have the same texture and feel as their synthetic
counterparts. Manufacturers therefore strive to make products which are non-tacky
and non-greasy despite containing natural oils. Look and feel is considered part of
the overall effectiveness of a product and success if not necessarily judged on results
alone.
MERGERS & ACQUISITIONS
As mentioned earlier, there has been a growing trend towards mergers and
acquisition in the cosmetic sector overall, including those specialising in premium
cosmeceutical products. Acquiring smaller companies in emerging economies has
been the tactic of large, global manufacturers in particular as a means of gaining
competitive advantage in the country. This approach also enables manufacturers to
acquire companies with niche specialisms, for instance in ethical markets or premium
products aimed at specific ethnic groups. Setting up joint ventures with local
cosmetics manufacturers is also becoming more commonplace for large, global
players as a means of accessing new markets.
THE DISCERNING CONSUMER: PRODUCT SAFETY, ENVIRONMENTAL
AWARENESS, TESTING AND REGULATION
As customers become more discerning, this drives up the expectation of not just
product effectiveness, but also the testing and manufacturing process. Customers
increasingly expect the highest standards in terms of environmental and ethical
responsibility such as in packaging, employing a local workforce in emerging markets
and testing methods (i.e. non-animal testing).
The aforementioned call for more natural ingredients adds to the expectations placed
on product manufacturers. This is a challenge for manufacturers as utilising natural
products is more costly than relying on synthetic ingredients. The testing process for
natural inputs is complex and requires extensive analysis of toxicology levels and the
identification of allergens. Testing and research in general is a costly process and has
a significant bearing on product pricing strategies. The level of testing put into
premium anti-ageing products like La Prairie and Elemis for example, can place these
into the £100+ category. Producers endeavor to find ways of keeping prices within
reasonable limits (even for the premium product market), striking the right balance
between testing, use of natural ingredients, effectiveness and the end product cost.
Large pharmaceutical companies such as Procter and Gamble can use their size and
position in the global marketplace to manufacture product lines (e.g. Olay
Regenerist) that appeal to the mass market at more affordable prices.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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The role of regulation is also paramount with customers demanding that producers
substantiate any claims of product capability and results. Consumers may choose to
switch to alternative – and possibly non-premium – products if they do not come up
to scratch in all aspects of the testing, manufacturing and sales process.
GROWTH IN DEMAND FOR MALE GROOMING PRODUCTS
Whilst the consumption of cosmetics/cosmeceutical products is still dominated by
women, there is a growing demand for male skin and hair care products designed to
combat the signs of ageing. To tap into the male grooming market, the industry has
introduced a number of ingredients to tackle the ageing process. Hair products
using growth peptides (for example astressin-B), red clover extracts and hair loss
reduction ingredients are becoming more commonplace.
Interest in anti-ageing skincare products is also growing amongst the male
population, although they are perhaps less willing to spend as much on products as
women. The majority of major producers now have a ‘men’s line’ of anti-ageing
skincare products including vitamin based moisturisers, skin firming products and
anti-wrinkle creams. Other cosmeceutical ingredients prevalent in male skincare
products include phytochemicals, acids, anti-oxidants and essential oils.
NUTRACEUTICALS
AGEING POPULATION AND IMPACT ON SALES
Consumer interest in nutraceutical products is shown to rise with age, particularly
amongst women. The proportion of the population aged 45 and over is expected to
rise to 47.1% by 2031. People are being proactive in finding ways to lengthen their
lives whilst remaining healthy. Nutraceutical products are often marketed towards
the prevention of age related health issues and are appealing to older people looking
at different ways (including eating healthily and exercising) to stay fitter and healthier
for longer.
MULTIPLE DISTRIBUTION CHANNELS
Nutraceutical products are readily available in the UK via many different retail
channels. Supermarket chains, pharmacies and specialist health food stores stock all
the major brands. Availability within supermarkets in particular makes access
extremely easy for consumers who can shop for these products as part of their
regular grocery shopping. Online sales channels are becoming increasingly popular.
Large manufacturers and distributors are investing heavily in digital marketing
campaigns as a means of engaging with the consumer, educating them about
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different products and their potential benefits (and differentiating them from
competitor brands) and providing sales online.
REAL VS PERCEIVED BENEFITS OF FUNCTIONAL FOODS AND VMS
PRODUCTS
Doubts have been raised over the benefits of using functional variants of food and
drinks. For example, questions over the reduction of cholesterol that can be achieved
through eating Flora pro-activ margarine led to Unilever modifying its claims on the
product label. They are now more specific as to how often it should be consumed, in
what quantity and over what timeframe to maximise the impact on cholesterol levels
and, in turn, reduce the risk of heart disease. It also makes clear the characteristics of
those who will benefit most. Active plant sterol or stanol ingredients contained in
Benecol and Flora pro-active are reputed to be an important element of the
cholesterol reduction process. These ingredients are also available in milks, yoghurts
and yoghurt drinks. However, some concerns have been raised that there is much
still to learn about the long-term effects of consuming these products and, in
particular, the potential reaction between prescribed medication and sterols/stanols.
Consumption of probiotic yoghurts and yoghurt drinks are considered beneficial to
addressing health problems such as digestive disorders, irritable bowel syndrome,
bowel cancer or stomach allergies. Balancing the bacteria in the gut is claimed to be
crucial to protecting against such illnesses. Again, there is no clear scientific evidence
to support this. A more clear cut benefit is the relationship between eating fibre
fortified products (e.g. cereals and breads) to aid digestion and combatting
osteoporosis through eating cereals and breads fortified with calcium.
Overcoming any questionable links between the consumption of functional foods
and the related health benefits is an important driver for the future of the industry,
particularly in light of a recent slow-down in market growth.
Various studies have been conducted in recent years to attempt to quantify the
benefits of taking VMS products with varying degrees of conclusiveness. Some
studies find there is little or no benefit in using such products as a means of
combating/reducing the likelihood of certain health problems occurring; results
would suggest it is more or at least equally effective to receive the necessary vitamin
intake via a regular, balanced diet.
Again, producers of vitamins, minerals and supplements are careful to stress the
importance of taking VMS products alongside regular food as part of a balanced and
healthy diet in order to be in any way effective. Some research has revealed the
positive effects of taking vitamins A, C and E to combat ‘free radicals’ which have
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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been linked to the incidence of certain cancers, heart disease and Alzheimer’s
disease.
The Health Supplements Information Service (HSIS) has also highlighted that there
are some groups who may benefit from regular intake of such products, including the
elderly, pregnant women, young children, vegetarians/vegans, those suffering from
certain medical conditions and those who have difficulty obtaining the right level of
nutrition from their regular diet. Vitamins A and D and folic acid are recommended
for these groups. Other important studies/guidelines include:
Harvard School of Public Health (October 2008) – consuming omega-3 as part
of a balanced diet lowers risk of death from heart disease;
Guidelines from National Institute for Health & Clinical Excellence (NICE)
published in May 2007 recommended use of omega-3 fish oils to reduce risk
of secondary heart attack;
Food Standards Agency (FSA) recommended the mandatory fortification of
cereals and bread flours with folic acid to the Department of Health to
prevent the incidence of specific neural defects in babies.
REGULATION
Nutraceutical products are subject to regulation regarding any health claims
attributed to the product and, in turn, how that product is labeled. Manufacturers
cannot make medicinal claims e.g. that a specific product can prevent, treat or cure
an illness or condition. Wording on functional foods needs to be more generic,
along the lines of claiming that the product can assist in maintaining a healthy life –
as part of the pursuit of a healthy lifestyle and/or through following a calorie
controlled diet. Manufacturers must be clear on product labeling whether particular
ingredients are unsuitable for any specific groups e.g. young children, pregnant
women, older people, people with existing medical conditions.
In 2006, the European Commission published a new regulation (Regulation
1924/2006 – Nutrition and Health Claims) which allowed some health claims to be
made legitimately and for this to be stated on product labels. Other claims, however,
would need to undergo further scientific assessment to protect consumers from false
or misleading claims. To qualify for the ‘permitted list’ of recognised health claims,
an assessment must be made by the European Food Safety Authority (EFSA).
Similarly, European regulations on Fortified Foods were introduced in 2007, again
with permitted lists of vitamins and minerals which are allowable in fortified foods.
The latter set of regulations has been controversial within the manufacturer
community. An economic impact assessment commissioned by the European Health
Claims Alliance (EHCA) published in 2010 revealed concerns around the way in which
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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the EFSA carried out assessments. The report highlighted the high proportion of
negative outcomes in relation to health claims around ‘other substances’ i.e. non-
vitamin and mineral containing food supplements. Manufacturers believe many of
the EFSA decisions are unjustified as they often refer to products or substances which
have been sold legally for many years and have not been challenged under any
existing national laws relating to misleading advertising, for example.
The report found that, although the sector had not yet experienced any significant
impact via the new legislation, there had been an increase in the levels of business
uncertainty. Some companies had incurred significant costs to adjust to the
legislation, while others had halted plans for R&D or new product development.
The food supplement sector also expressed concern about the impact of the
regulation on the overall size of the EU market, the additional costs incurred for
changes in packaging/labeling and a decrease in employment generation and net
profits. Bringing products to market were expected to incur much higher costs than
previously which could prove prohibitive to new entrants and seriously hamper SME
creation/growth. Most companies felt that consumers would lose out through less
competition and product choice and higher prices.
Products sourced from outside the EU and sold via the internet or mail order would
not be subject to the same health claim regulations in the origin country, but would
still be widely available to EU consumers, effectively disadvantaging EU suppliers.
TECHNOLOGY
Functional food and drink is acknowledged as one of the most technological areas of
the food industry. The development of cholesterol lowering plant sterols and stanols
for use in various foodstuffs requires lengthy research and testing. Likewise, a
considerable amount of research and testing has led to the development of probiotic
bacteria for use in yoghurt/yoghurt drinks to improve digestion. Other key areas of
technological development include the manufacture of special soya protein for bread
and the inclusion of omega-3 fatty acids in various products to lower the risk of heart
disease.
There has been an increase in the addition of VMS products being added to food and
drinks at the manufacturing stage. This is especially prevalent in functional foods
such as breakfast cereals and bars, bread, health drinks, spreads and milk. These
additions are also subject to the new regulations on fortified foods which came into
force in 2007.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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SUMMARY OF DRIVERS AND CONSTRAINTS
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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CHAPTER SIX: CONCLUSIONS AND POSSIBLE FUTURE RESEARCH
REQUIREMENTS
Cosmeceuticals are cosmetic products (lotions, creams etc) which have active
ingredients that claim to have medical benefits. They are a significant and fast
growing part of the pharmaceutical industry in the US and Europe with the Asian-
Pacific markets predicted to have the greatest growth potential. Nutraceuticals are
food or food products that can provide health and medical benefits, including the
prevention and treatment of disease. There are two principle product types including
functional foods and vitamins, minerals and supplements (VMS). Innovation in
ingredients and product development is a key driver across Europe. Germany, the
Netherlands and Sweden have emerged as key EU innovation centres in Europe with
the UK and Spain acknowledged as key test markets for new products.
Nutraceuticals operates in agriculture by growing food and plants; in manufacturing
by processing the materials and producing final products; and in services by
distributing and selling food and VMS goods but also providing the R&D to develop
new products and expand the market. Classification of the cosmeceutical sector
indicates that it operates in both manufacturing and services in a similar way to
nutraceuticals.
Looking at the global growth trends there is clear export growth potential for both
nutraceuticals and cosmeceutical sectors which should ensure further growth for UK
companies. If the sectors become more established it will provide room for niche
markets and product focused businesses to meet the growing demand.
It is clear from the statistics that although growth is predicted the UK is facing strong
competition with its global share predicted to deteriorate marginally in nutraceuticals
and significantly in cosmeceuticals. With estimated growth in employment from
8,000-11,000 for nutraceuticals to 2016 and 4,000-5,000 for cosmeceuticals there is a
case for Cogent to continue to work with NAS and in making the case to employers
for investing in STEM Apprenticeships as this does not yet appear to be an accepted
progression route to senior positions in many of the key companies. The report
highlights that the number of STEM qualifiers had increased over time but further
research was suggested to understand the scale and type of employer skills gaps and
requirements.
The analysis drivers and constraints analysis for cosmeceuticals certainly showed an
industry which is changing rapidly with new products, markets and technologies
being driven by new target groups, an ageing population and a desire to stay healthy
and look young. With economic constraints affecting sales the nutraceutical sector is
experiencing similar trends with the emergence of multiple distribution channels.
The biggest issue facing the sector is the very real challenge to demonstrating
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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positive links between consumption of functional foods/VMS products and health
benefits and responding the legislative requirements. This is likely to result in the
expansion of scientific research.
Suggestions for further research:
A series of case studies to illuminate the subtleties and intricacies of the
sector and current skills and qualifications requirements and the development
of the two sub-sectors.
A survey with a small number of employers to deepen understanding of
employment, recruitment and skills requirements including:
o Recognition of the two sectors and scale of activity devoted them.
o A more detailed insight in the UK drivers, key markets, growth
constraints and future prospects.
o The numbers of different levels making up the sector including
L2/L3/L4 (in each of the four nations if possible).
o Vocational qualifications being taken by the industry and how
extensive these are and potential demand for apprenticeships at all
levels.
o Anticipated employment growth in the short and long term (5 years
ahead).
o Understanding the ebbs and flows of HE skill requirements for the
cosmeceuticals and nutraceuticals sectors.
o How the trends in HE STEM subjects are affecting recruitment.
o Occupational and functional analysis of the two sectors.
Discussions with employer representative bodies, and qualification providers
around key issues for the sector.
Identifying the employer requirements from the Sector Skills Councils.
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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APPENDIX ONE: RELEVANT SIC CODES
SIC
2007 NUTRACEUTICAL ACTIVITY INDUSTRY
01110 Growing of cereals (except rice) leguminous crops and oil seeds including: Agriculture
Cereal grains growing Agriculture
01130 Growing of vegetables and melons, roots and tubers including: Agriculture
Herb growing Agriculture
01280 Growing of spices, aromatic, drug & pharmaceutical crops including: Agriculture
Various …… Agriculture
01640 Seed processing for propagation including: Agriculture
Seed post-harvest processing (fruit, nuts, beverage & spice crops) Agriculture
10390 Other processing and preserving of fruit and vegetables including: Manufacturing
Fruit, nuts or vegetables preserved by immersing in oil Manufacturing
10410 Manufacture of oils and fats including: Manufacturing
Castor oil processing and crushing Manufacturing
Fish liver oil crush/refining/unrefined Manufacturing
Groundnut oil refining Manufacturing
Olive oil (crude) production Manufacturing
Soya bean crushing Manufacturing
10611 Grain milling including: Manufacturing
Cereal grains, flour, oats, meal or pellets Manufacturing
Corn or other cereal grains Manufacturing
Flour of cereal grains production Manufacturing
Oat flour and meal Manufacturing
10612 Manufacture of breakfast cereals and cereals-based foods including: Manufacturing
Bean grinding Manufacturing
Cereal based foods Manufacturing
Various others……………….. Manufacturing
10720 Manufacture of rusks, biscuits, preserved pastry goods & cakes including: Manufacturing
Crispbread Manufacturing
Oat cake Manufacturing
Snack products of puffed or extruded farinaceous or proteinaceous materials Manufacturing
10831 Tea processing including: Manufacturing
Herb tea Manufacturing
Mint tea Manufacturing
Tea extract and essence Manufacturing
10840 Manufacture of condiments and seasonings including: Manufacturing
Dried herbs (except field dried) Manufacturing
Spice (ground/purifying) Manufacturing
10860 Manufacture of homogenised food preparations & dietetic food
including:
Manufacturing
Dietary foods for special medical purposes Manufacturing
Food for particular nutritional uses Manufacturing
Foods to meet intense muscular effort, especially for sportsmen Manufacturing
Gluten-free foods Manufacturing
Low energy and energy-reduced foods Manufacturing
Low-sodium or sodium-free dietary salts Manufacturing
10890 Manufacture of other food products n.e.c. including: Manufacturing
Food products enriched with vitamins or proteins Manufacturing
Food supplements Manufacturing
Foods for persons suffering from carbohydrate metabolism disorders Manufacturing
11070 Manuf. of soft drinks; mineral waters & other bottled waters including: Manufacturing
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
39
Energy drinks Manufacturing
Milk shake base Manufacturing
Mineral water bottling Manufacturing
20590 Manufacture of other chemical products n.e.c. including: Manufacturing
Protein substances Manufacturing
21100 Manufacture of basic pharmaceutical products including Manufacturing
Medicinal active substances to be used for their pharmacological properties Manufacturing
Microbiological cultures, toxins, etc. (manufacture) Manufacturing
Mineral & pharmaceutical nutritional ingredients for food & feeding stuff Manufacturing
Provitamins, vitamins and their derivatives Manufacturing
21200 Manufacture of pharmaceutical preparations including: Manufacturing
Botanical products for pharmaceutical use Manufacturing
Homeopathic preparations Manufacturing
46170 Agents involved in the sale of food, beverages and tobacco including: Services
Herb infusions (commission agent) Services
Non-alcoholic beverages (commission agent) Services
Peptic substances, mucilages and thickeners (commission agent) Services
Spice broker (commission agent) Services
Tea exchange (commission agent) Services
46180 Agents specialised in the sale of other particular products including: Services
Pharmaceutical goods (commission agent) Services
Provitamins, vitamins and their derivatives (commission agent) Services
46210 Wholesale of grain, unmanuf tobacco, seeds & animal feeds including: Services
Grain (wholesale) Services
Oil seeds (wholesale) Services
Seeds (wholesale) Services
46310 Wholesale of fruit and vegetables including: Services
Edible nuts (wholesale) Services
Fruit and vegetables (processed) (wholesale) Services
Herbs (wholesale) Services
Preserved fruit (wholesale) Services
Pulses (wholesale) Services
46460 Wholesale of pharmaceutical goods including: Services
Provitamins, vitamins and their derivatives (wholesale) Services
46330 Wholesale of dairy products, eggs and edible oils and fats including Services
Edible oils and fats (wholesale) Services
47210 Retail sale of fruit and vegetables in specialised stores including: Services
Edible nuts (retail) Services
Herb seller (food) (retail) Services
Herbalist (food) (retail) Services
Preserved fruit and vegetables (retail) Services
47290 Other retail sale of food in specialised stores including: Services
Health foods (retail) Services
Tea merchant (retail) Services
Vegetarian foods (retail) Services
72110 Research and experimental development on biotechnology including: Services
Biotechnology research and experimental development Services
Research and experimental development on proteins and other molecules Services
The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile
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SIC
2007 COSMECEUTICAL ACTIVITY INDUSTRY
20120 Manufacture of dyes and pigments including: Manufacturing
Colours for food and cosmetics Manufacturing
Dyes for food, drink and cosmetics Manufacturing
20140 Manufacture of other organic basic chemicals including: Manufacturing
Enzymes and other organic compounds Manufacturing
20420 Manufacture of perfumes and toilet preparations Manufacturing
Cosmetic soap (manufacture) Manufacturing
Cosmetics (manufacture) Manufacturing
Face powder or cream (manufacture) Manufacturing
Skin care preparations (manufacture) Manufacturing
20530 Manufacture of essential oils including: Manufacturing
Essential oils and essence (other than turpentine) (manufacture) Manufacturing
Extracts of aromatic products (manufacture) Manufacturing
20590 Manufacture of other chemical products n.e.c. including: Manufacturing
Peptone derivatives Manufacturing
Peptones Manufacturing
Protein substances Manufacturing
21100 Manufacture of basic pharmaceutical products including: Manufacturing
Mineral and pharmaceutical nutritional ingredients Manufacturing
Provitamins, vitamins and their derivatives (manufacture) Manufacturing
21200 Manufacture of pharmaceutical preparations including: Manufacturing
Botanical products for pharmaceutical use (manufacture) Manufacturing Homeopathic preparations Manufacturing Ointment Manufacturing 46120 Agents involved in sale of fuels, ores, metals & indust. chemicals including: Services Enzymes and other organic compounds (commission agent) Services
Essential oils and mixtures of odiferous substances (commission agent) Services
Peptones/protein substances and derivatives (commission agent) Services
46170 Agents involved in the sale of food, beverages and tobacco including: Services
Herb infusions (commission agent) Services
46180 Agents specialised in the sale of other particular products including: Services
Beauty, make-up & skin-care prep. Inc’g sun tan prep’s (commission agent) Services
Cosmetics (commission agent) Services
Perfumery, cosmetic and toilet and bath preparations (commission agent) Services
Powders for cosmetic or toilet use (commission agent) Services
Provitamins, vitamins and their derivatives (commission agent) Services
Soap/organic surface-active products/preparations for soap use (comm. agent) Services
46450 Wholesale of perfume and cosmetics including: Services
Cosmetics (wholesale) Services
Soap (wholesale) Services
46460 Wholesale of pharmaceutical goods including: Services
Provitamins, vitamins and their derivatives (wholesale) Services
46750 Wholesale of chemical products including: Services
Chemical products (wholesale) Services
Enzymes (wholesale) Services
Essential oils (wholesale) Services
Oils & oth products distilling of high temp. coal tar, pitch & pitch tar (wholesale) Services
47750 Retail sale of cosmetic and toilet articles in specialised stores including: Services
Cosmetics (retail) Services
72110 Research and experimental development on biotechnology including: Services
Biotechnology research and experimental development Services
Research and experimental development on process biotechnology techniques Services
APPENDIX TWO: ILLUSTRATIVE COSMECEUTICAL AND NUTRACEUTICAL CAREER PATHWAY