The global personal care contract manufacturing market size was valued at USD 18.31 billion in 2021. It is projected to reach USD 36 billion by 2030, growing at a CAGR of 7.80% during the forecast period (2022-2030). Contract manufacturing is the process by which a business hires another firm to produce its personal care products. It enables business owners to launch sales of their care products without raising the money necessary to build and maintain a factory. It is anticipated that contract manufacturing of personal care products will rise as major corporations shift their attention from R&D to internal production and other promotional activities.
Additionally, as the demand for organic components rises, customers gravitate toward natural and organic personal care products, probably driving the global market expansion over the forecast period. The PCCM market for these goods has grown as a result of the rise in demand for organic personal care products.
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Highly Competitive Nature of the Personal Care Industry
Due to the intense competition in the personal care industry, businesses have been encouraged to implement tactics that are anticipated to help them expand their market share by tapping into new markets and deepening their current market penetration. As a result, businesses now use their resources for R&D and marketing initiatives. Major market players are increasingly focusing on product innovation and new product development to manufacture user-friendly products and increase their market share. The market trend points to a shift in manufacturers' priorities toward creative items and the widespread accessibility of these products.
Additionally, companies are heavily promoting personal care goods through advertising-heavy branding and marketing strategies. As a result, businesses are choosing contract manufacturing. The need for contract manufacture of personal care products is anticipated to expand due to businesses focusing less on internal manufacturing, increasing savings on financial and human resources, and increasing attention on R&D and promotional efforts. Numerous important companies have turned to contract manufacturing since it offers unique formulation and packaging services for personal care goods, manufacturing, and the newest technology capabilities.
Contract Manufacturing is a Low-Margin Business
Contract manufacturing is a fiercely competitive, challenging, low-margin industry requiring active management. The firm has a very slim margin for profitability due to many contract manufacturers fighting for low-profit margins to provide different formulators with a favorable deal. The market growth is expected to be constrained by elements including low-quality contract manufacturers passing themselves off as high-quality, loss of control over the manufacturing process, and the possibility of losing intellectual property rights. Additionally, the risk element in the firm is tuned up by high investment costs combined with low profits, which is a significant inhibitor of the expansion of the contract manufacturing market.
Growing Demand for Personal Care Products
Personal hygiene and cosmetic items are subcategories of personal care products. Products for personal hygiene are essential, but cosmetics are luxury commodities only used for aesthetic purposes. Products for personal care include everything from toothpaste and shaving cream to moisturizers, cosmetics, perfumes, and colognes. The demand for personal care products is anticipated to be driven by the introduction of new product formats and gender-specific goods. In addition, the market is expected to increase due to rising male consumer use of hair sprays, styling mousses, and deodorants, as well as increasing female consumer demand for lip colors, lip glosses, and other cosmetic items.
The main forces propelling the global cosmetics business are the rising demand for cutting-edge skincare and cosmetic treatments and product marketing methods used by companies like L'Oréal, Unilever, and Procter & Gamble Company. Global demand for personal care goods is also expected to be driven by shifting consumer habits brought on by increasing digital disclosure, tailored buying, and easy access to a wealth of information. Male grooming products are in higher demand due to the rise of conscious male consumers and their more significant concern for well-being, health, style, and hygiene.
The global personal care contract manufacturing market is segmented by service.
Based on service, the global market is bifurcated into manufacturing, custom formulation and R&D, and packaging.
The manufacturing segment is the highest contributor to the market and is expected to grow at a CAGR of 6.1% during the forecast period. It is anticipated that the growing aging population will increase demand for hair care products globally due to the growing emphasis on personal grooming. According to primary sources, more than 50% of male consumers worldwide believe that their appearance and looks are essential, and more than 25% constantly touch up their appearances. As a result, the personal care contract manufacturing market is anticipated to rise throughout the forecast period due to increased demand for personal care goods, including skincare and hair care.
The personal care contract manufacturing market is anticipated to benefit from the rising need for flexible and inventive packaging in the personal care sector. One of the main factors influencing consumers' purchasing decisions is the aesthetic value that the packaging of personal care items offers the product. Additionally, the businesses are investing in creative packaging, which is anticipated to fuel the expansion of the personal care contract manufacturing market.
The companies offer a chance for rubberized and ergonomic packaging since it keeps its shape in all gym bags and handbags; this widens the pool of potential clients and benefits the industry. For instance, Stowaway Cosmetics, a cosmetics brand with headquarters in the United States, offers their goods as "right-sized makeup for travel, the gym, and life," influencing the client to purchase. Thus, formulators and contract manufacturing firms can concentrate on creative packaging concepts, which is predicted to boost market growth over the forecast period.
The global personal care contract manufacturing market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.
Asia-Pacific Dominates the Global Market
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Asia-Pacific is the most significant shareholder in the global personal care contract manufacturing market and is expected to grow at a CAGR of 6.3% during the forecast period. The increased demand for items like deodorants and shaving cream among the younger population in emerging nations like India and China is projected to significantly impact market growth in the Asia Pacific region. Additionally, an aging population has increased the usage of personal care products and is predicted to increase the demand for aerosol valves in anti-aging cosmetics. The fact that the majority of the international players in the personal care sector are moving their manufacturing bases to China and India to lower their product prices also explains the high growth rate. The expansion of contract manufacturing in this region has also been made possible by the region's governments' initiatives to provide technologically superior infrastructure for manufacturing facilities and low labor costs.
Additionally, the contract manufacturers offer additional services, including effective personal care product distribution and sales, which broadens their market and supports their expansion during the predicted period. Over the projected period, India, which has government policies for industrial development in the country and aspires to become a hub for global manufacturing, is anticipated to drive the expansion of the contract manufacturing industry. The increase in FDI in the Indian manufacturing sector is also attributable to policies like Make in India and Skill India that assist the manufacturing industry.
Europe is expected to grow at a CAGR of 5.8% during the forecast period. The most significant market for personal care goods is in Europe, which also drives the demand for contract manufacturing. Growing consumer preference for grooming to foster good self-esteem is anticipated to fuel demand for personal care products, especially in Germany, Italy, France, Spain, and the U.K. Over the past few years, Europe has led the global market for personal care contract manufacturing, and it is projected that this trend will continue during the projection period. Personal care goods are in high demand due to consumer awareness of well-being, healthy living, and high positive self-esteem. The market is anticipated to benefit from technological developments in the skincare industry and the creation and release of novel products. The demand for personal care contract manufacturers is expected to increase over the forecast period due to significant cosmetics manufacturers like L'Oréal Deutschland GmbH and Procter & Gamble Germany GmbH in the area well as a sizable cosmetics and personal care market in the nation.
The North American personal care contract manufacturing market is anticipated to grow slower than average over the projected period due to this region's mature personal care market. Due to FMCG businesses like Proctor & Gamble, Colgate-Palmolive, and Unilever, the North American contract manufacturing market is anticipated to grow. Over the projected period, it is anticipated that the aforementioned companies' primary focus on new product developments in skincare and other personal care items will support the expansion of the contract manufacturing market. The U.S. personal care contract manufacturing market is anticipated to develop due to the rising demand for skincare products, particularly from millennials looking to delay the effects of aging.
Additionally, rising R&D investment in producing specialty formulations using organic ingredients is anticipated to fuel market expansion throughout the anticipated period. It is expected that having a strong manufacturing base in the United States will benefit personal care corporations like Johnson & Johnson, Estee Lauder, and Procter & Gamble. The product launches by significant manufacturing firms are anticipated to further fuel demand for contract manufacturing and packaging over the forecast period.
Women now make up about 53% of the workforce in Latin America, thanks to a significant increase in the employment rate among this group in recent years. The market is witnessing increased spending on high-end cosmetic products due to women's increasing disposable income. As a result, the per capita consumption of cosmetics is growing in Latin America's leading nations. It is anticipated that the Middle East's urbanization, industrialization, and population increase will all significantly contribute to the expansion of the personal care market. To lessen their dependency on the upstream energy business, governments in these regions have developed supporting policies to increase the industrial output of the personal care sectors. As a result, personal care firms may work with Middle Eastern manufacturing facilities for contract manufacturing over the projection period.
The global personal care contract manufacturing market’s major key players are