The Strategic Advantages of Co-Manufacturing in the Beauty and Personal Care Industry

December 3, 2024

In 2023, the glob­al beau­ty and per­son­al care prod­ucts mar­ket size was esti­mat­ed at USD 557.24 bil­lion in 2023 and is expect­ed to grow at a CAGR of 7.7% from 2024 to 2030. As reg­u­la­tions tight­en and the demand for sus­tain­able prod­ucts grows, the indus­try is under­go­ing sig­nif­i­cant trans­for­ma­tion.

At Ground­Force Cap­i­tal, we rec­og­nize co-man­u­fac­tur­ing as a strate­gic solu­tion for com­pa­nies nav­i­gat­ing these changes, enabling them to main­tain inno­va­tion, scale effi­cient­ly, and meet evolv­ing con­sumer demands. 

Why Co-Manufacturing?

Co-man­u­fac­tur­ing enables BPC com­pa­nies to out­source key pro­duc­tion processes–ingredient sourc­ing, prod­uct for­mu­la­tion, and packaging–allowing them to focus on deliv­er­ing prod­ucts that are effec­tive, safe, and aligned with grow­ing demands for sus­tain­abil­i­ty. By lever­ag­ing the exper­tise and infra­struc­ture of estab­lished man­u­fac­tur­ers, com­pa­nies can remain agile and inno­v­a­tive with­out being bogged down by full-scale pro­duc­tion.

Navigating regulatory changes

The 2022 Mod­ern­iza­tion of Cos­met­ics Reg­u­la­tion Act (MoCRA) rep­re­sents the most sig­nif­i­cant reg­u­la­to­ry shift in the BPC indus­try since the 1938 Fed­er­al Food, Drug, and Cos­met­ic Act. These updat­ed reg­u­la­tions place strin­gent require­ments on com­pa­nies to ensure prod­uct safe­ty, ingre­di­ent trans­paren­cy, and qual­i­ty assur­ance. 

For small and mid-sized com­pa­nies, the cost of com­pli­ance can be over­whelm­ing, mak­ing it dif­fi­cult to bring prod­ucts to mar­ket. By part­ner­ing with co-man­u­fac­tur­ers who already have the infra­struc­ture in place to meet these reg­u­la­to­ry stan­dards, com­pa­nies can focus on prod­uct devel­op­ment and mar­ket­ing while ensur­ing their prod­ucts meet the lat­est safe­ty and com­pli­ance require­ments. This is espe­cial­ly cru­cial for start-ups that might oth­er­wise be barred from enter­ing the mar­ket due to the high cost of reg­u­la­to­ry com­pli­ance. For larg­er busi­ness­es, co-man­u­fac­tur­ing can help expand prod­uct lines and inno­va­tion with­out divert­ing resources from reg­u­la­to­ry over­sight. 

Meeting modern consumer expectations

Today’s beau­ty con­sumers are more informed and dis­cern­ing than ever. They demand prod­ucts that not only work but also align with their val­ues. BPC com­pa­nies are under pres­sure to deliv­er on three key fronts: 

1. Per­for­mance: Prod­ucts must deliv­er as promised – whether it’s a sun­screen pro­tect­ing from UV dam­age or water­proof mas­cara that lasts through any con­di­tion. Effi­ca­cy is non-nego­tiable.
2. Safe­ty: The age of “accept­able” side effects is over. Prod­ucts must be free from harm­ful chem­i­cals and should not cause irri­ta­tion or break­outs. Con­sumers want this peace of mind that their BPC prod­ucts are not doing more harm than good.
3. Sus­tain­abil­i­ty: Con­sumers want prod­ucts that are bet­ter for both peo­ple and the plan­et. This means using recy­clable pack­ag­ing, cru­el­ty-free ingre­di­ents, and eth­i­cal sourc­ing prac­tices.

Co-man­u­fac­tur­ing plays a crit­i­cal role in help­ing com­pa­nies meet these expec­ta­tions. Com­pa­nies such as Tata Harp­er and Brio­geo have lever­aged co-man­u­fac­tur­ing part­ner­ships to uphold their com­mit­ments to clean ingre­di­ents and trans­paren­cy, with­out com­pro­mis­ing on scale or inno­va­tion. 

Empowering small and mid-sized brands

The oper­a­tional chal­lenges of build­ing a beau­ty or per­son­al care com­pa­ny can be daunt­ing.

Co-man­u­fac­tur­ing can pro­vide cost-effec­tive access to advanced man­u­fac­tur­ing capa­bil­i­ties, empow­er­ing ear­ly-stage com­pa­nies to focus on growth and prod­uct devel­op­ment with­out man­ag­ing com­plex pro­duc­tion logis­tics. For mid-sized brands, co-man­u­fac­tur­ing offers the flex­i­bil­i­ty need­ed to han­dle sea­son­al prod­uct launch­es and inven­to­ry shifts, allow­ing them to stay nim­ble in a fast-mov­ing mar­ket.

Driving Innovation and Sustainability

Inno­va­tion is at the heart of the beau­ty indus­try, and co-man­u­fac­tur­ing can play a cru­cial role in dri­ving that. From reef-safe sun­screen to cru­el­ty-free test­ing, grow­ing brands like Super­goop! are set­ting a new stan­dard for clean beau­ty.

Through co-man­u­fac­tur­ing part­ner­ships, com­pa­nies can access cut­ting-edge tech­nolo­gies like biotech and arti­fi­cial intel­li­gence, enabling them to exper­i­ment with new for­mu­la­tions and eco-friend­ly pack­ag­ing. These inno­va­tions are not only ben­e­fi­cial for con­sumers but also for the plan­et, as they reduce the envi­ron­men­tal impact of pro­duc­tion and pack­ag­ing.

As the BPC indus­try shifts toward a cir­cu­lar econ­o­my, com­pa­nies are mov­ing away from the tra­di­tion­al lin­ear mod­el of pro­duc­tion and dis­pos­al. Instead, the focus is on reduc­ing waste and increas­ing reuse through refill­able pack­ag­ing and biodegrad­able mate­ri­als. 

This shift is gain­ing momen­tum, with the glob­al mar­ket for cir­cu­lar beau­ty prod­ucts expect­ed to reach $4.2 bil­lion by 2032​. One exam­ple is the grow­ing pop­u­lar­i­ty of refill­able pack­ag­ing, with brands like Chanel and Fen­ty Beau­ty adopt­ing these solu­tions includ­ing refill­able skin­care jars and lip­stick tubes to reduce sin­gle-use plas­tic waste. 

Accord­ing to Mintel, the demand for refill­able beau­ty prod­ucts in key mar­kets such as the U.S., UK, and France surged by 279% between 2017 and 2023​, reflect­ing a grow­ing con­sumer pref­er­ence for sus­tain­abil­i­ty, even when refills come at a high­er ini­tial cost.

Co-man­u­fac­tur­ers are at the fore­front of this move­ment, pro­vid­ing the infra­struc­ture need­ed to pro­duce biodegrad­able pack­ag­ing mate­ri­als and imple­ment refill sys­tems. This makes it eas­i­er for com­pa­nies to meet reg­u­la­to­ry stan­dards while offer­ing eco-friend­ly solu­tions. 

For exam­ple, Poly­eth­yl­ene resins, a break­through in sus­tain­able pack­ag­ing, are being devel­oped as a replace­ment for tra­di­tion­al plas­tics and are capa­ble of degrad­ing in a land­fill envi­ron­ment in less than three years​. 

The Win-Win-Win for the BPC Industry

In a grow­ing indus­try that bridges social respon­si­bil­i­ty with effi­cien­cy, co-man­u­fac­tur­ing can offer a win-win-win sce­nario for all par­ties involved:

• Com­pa­nies can focus their time on scal­ing oper­a­tions, dri­ving inno­va­tion, and main­tain­ing com­pli­ance with­out the dis­trac­tions of man­ag­ing pro­duc­tion.
• Co-man­u­fac­tur­ers can pro­vide the exper­tise and infra­struc­ture need­ed to meet reg­u­la­to­ry demands while stay­ing com­pet­i­tive in a rapid­ly evolv­ing mar­ket.
• Con­sumers ben­e­fit from safer, clean­er, and more effec­tive prod­ucts that align with their val­ues.

In an era where con­sumer expec­ta­tions and reg­u­la­to­ry pres­sures are ever-evolv­ing, co-man­u­fac­tur­ing will be key to help­ing beau­ty and per­son­al care brands stay ahead, enabling them to inno­vate, scale, and meet the grow­ing demand for sus­tain­able, effec­tive, and trans­par­ent prod­ucts.