Spring

Glob a l I n d u st r y R e p or t:
Where is Cosmetic Compliance
Heading in 2019?
 Table of Contents
Summary................................................................... 2

Cosmetic Compliance Regulation

Challenges................................................................. 3

Investment Priorities.............................................. 5

Global Export Activity & Corresponding

Challenges................................................................. 7

Join Us at Cosmetic Compliance Spring!........... 9

Survey Respondent Profile.................................10

Summary
The cosmetic industry is poised to see 7% annual
growth over the next five years and is expected to
reach a market value of more than $800 billion by
2023.1 As the industry grows and welcomes new
entrants, it is more important than ever for cosmetic
stakeholders to comply with the latest regulations
regarding ingredients of concern, such as allergens,
parabens, and residual toxins.
With this in mind, the Cosmetic Compliance Team
surveyed 600+ industry leaders to uncover where
cosmetic compliance is heading in 2019. This report
classifies the most pressing issues of cosmetic brands
and solution providers, as well as a variety of other
industry players. Continue reading to uncover the
industry’s leading compliance challenges, priorities,
investments, and much more.
If you enjoy reading this exclusive report, be sure
to join us this April 24th – 26th in Los Angeles for
the Cosmetic Compliance Summit! This bi-annual
industry meeting serves as an opportunity for the
cosmetic community to come together and learn
about compliance best practices, hear case studies
from an array of players across the value chain, and
understand the current and future impact of new
regulations.

1
https://www.reuters.com/brandfeatures/venture-capital/article?id=30351

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Cosmetic Compliance Regulation Challenges
When survey respondents were asked to share their Chart 1: What are the top 3 challenges your
largest company-wide compliance challenges, the top company faces at this time?
voted inhibitor across the board was international
regulations (Chart 1 & 2). Cosmetic companies have Cosmetic Brands Solution Providers
to continuously stay up to date on new and rapidly
International 60%
changing international regulations. Failure to comply
Regulations
with new regulations can result in fines ranging 61%
from $25,000 to upwards of $250,000. For smaller
independent brands, fines like these can easily put 13%
them out of business. Unsurprisingly, when both State Regulations
18%
cosmetic brands and solution providers were asked
about the top challenge they face in their role, more
National 18%
than 50% of both parties selected international
Regulations 31%
regulations (Chart 2).

Additional company-wide challenges currently faced 5%

Regulations on
by cosmetic brands include claims substantiation Cannabis 10%
(49%), as well as testing and ingredient requirements
(40%). Respondents from solution providers also
22%
described similar challenges on a company-wide level, Product
specifically related to claims substantiation (37%) and registration 18%
safety assessments (36%).
39%
Claims substantiation is a growing industry challenge Product labeling
30%
due to the increasing popularity of “natural” and
“organic” cosmetic products. Presently, there is no
formal definition for “natural” products in cosmetics, Safety
28%
which has increased the potential risk factor for assessments 36%
claims. That being said, it’s difficult in today’s
regulatory climate to write truthful claims supported 21%
A specific
by adequate scientific evidence with no formal
country’s policies 16%
definition for “natural” cosmetic products. Ultimately,
when making claims for cosmetic products, it is
crucial for companies to carefully craft their claims 49%
Claims
to ensure that they are truthful, not misleading, and substantiation 37%
are supported by adequate substantiation (prior to
making the claim).2 Testing and 41%
ingredient
requirements 33%
Around 40% of both parties also face substantial
challenges in their roles related to testing and
ingredient requirements. This statistic can be 8%
Other
attributed to the two new bills regarding testing and 7%

2
https://www.naturalproductsinsider.com/claims/making-cosmetics-claims-fda-ftc-and-nad-standards

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Chart 2: What are the top 3 challenges you ingredient requirements that have come to light in
currently face in your role? recent years. The first bill, known as the bipartisan
Personal Care Products Safety Act 3, sponsored by
Cosmetic Brands Solution Providers Sens. Dianne Feinstein (D-CA) and Susan Collins
International 52% (R-ME), would give the FDA more oversight over
Regulations 53% the industry in general. This bill was introduced in
State Regulations 13% 2015 and did not receive much traction until very
17% recently.4 This bill would require the FDA to test at
National
21% least five ingredients a year for safety; companies
Regulations 24% would have to submit their ingredient lists to the
Regulations on 5% FDA; and companies would be required to report
Cannabis 10%
adverse events to the FDA, among other things. Sen.
Product 19% Orrin Hatch (R-UT) has also proposed a cosmetics
registration 15%
safety bill, known as the FDA Cosmetic Safety and
Product labeling 39%
31%
Modernization Act.5 The Personal Care Products
Safety Council, the professional group that represents
assessments 23%
43% cosmetics manufacturers, issued a statement last
A specific
22%
November offering its support for reform and praised
country’s policies both of them. The major difference between the two
19%
Claims
52% bills is that the Feinstein bill requires companies to
substantiation 38% pay testing fees, while the Hatch bill would fund it with
Testing and 39% congressional appropriations.6
ingredient 40%
requirements
7%
Other 4%

Learn More ABOUT ORGANIC & NATURAL PRODUCTS AT THE SUMMIT!

Main Conference Day Two | Friday, April, 26, 2019

A Healthy Focus On Organic And Natural Products

The natural and organic industry is booming. Consumers • Examine FDA and USDA areas of concern related to
want products that are ‘from the earth’. However, many ‘natural’ and ‘organic’ products
organic products can be toxic or allergenic, and some – like • Explore new regulations around ‘natural’ and ‘organic’
CBD – can’t be shipped across state or international borders. products
In this session, participants will: • Dissect how a leading cosmetic company is navigating
• Evaluate how ‘natural’ and ‘organic’ are being defined successfully through compliance
at the federal level Darryl Do, Perfumer, Delbia Do Company

3
https://www.congress.gov/bill/115th-congress/senate-bill/1113/cosponsors
4
https://www.racked.com/2017/8/9/16089886/beautycounter-politics-mlm-safe-cosmetics-skincare
5
https://www.congress.gov/bill/115th-congress/senate-bill/2003
6
https://www.racked.com/2018/4/24/17277282/kourtney-kardashian-cosmetics-regulation-feinstein-bill

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Investment Priorities
When respondents were asked to share their largest Chart 3: Over the next 18 months, what are your
investment priorities for the next 18 months, the company’s top 3 investment priorities?
majority of cosmetic brands (65%) and solution
providers (45%) both revealed testing is their top Cosmetic Brands Solution Providers
priority (Chart 3). Testing is a growing priority given
the recent passage of California’s Cruelty-Free 66%
Testing
Cosmetics Act. California passed the bill on August 45%
31st, 2018, banning the sale of any beauty products
(makeup, skin-care, body-care, and hair-care) tested 10%
Legal Services
on animals. The newly passed bill means beauty 11%
brands that haven’t yet adopted cruelty-free practices
will have until January 1, 2020, to change the way in 22%
Regulatory
which they test products or they will be barred from Services 44%
California.7

In addition, cosmetic brands are prioritizing Regulatory 19%

investments in labeling/packaging and external labs. Consulting 31%
On top of testing, solution providers are also focusing
on investments in regulatory services (44%) and 12%
Compliance
labeling/packaging (40%). As regulations continue to
Software 20%
transform, labeling and packaging is proving to be
a growing investment category due to the market
28%
growth “natural” and “organic” cosmetic products. Logistics
Just last year Canada introduced a new regulatory 21%
initiative for a Self-Care Framework.8 This framework
will aid Health Canada in its quest to update its Software/Data 29%
approach to regulating self-care products in phases. Management
33%
Phase 1 began in fall 2018; which introduced targeted
amendments to the Natural Health Products 31%
External Labs
Regulations to improve labelling of natural health
29%
products. This includes: a facts table, requirements
for risk information, which will be clearly displayed
Labeling/ 53%
and expressed in plain language. These changes are
Packaging
intended to better support consumers in selecting 40%
and safely using a product.
9%
Other
11%

7
https://www.allure.com/story/california-cruelty-free-cosmetics-act-bill

8
https://www.canada.ca/en/health-canada/corporate/about-health-canada/legislation-guidelines/acts-regulations/forward-regulatory-plan/2016-2018/
regulatory-initiative-consumer-health-products-framework.html

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Regarding compliance investment levels,
approximately half of both sides shared they have a
budget of less than $50,000 for the next 18 months
(Chart 4). This figure suggests that a fair number
of our survey respondents represent independent
brands, which are hitting the market in a massive
way. Independent brands are more capable of using
software solutions to help keep them compliant, while
larger organizations traditionally have a harder time
integrating compliance service solutions. Interestingly,
the second largest majority of both cosmetic brands
and solution providers expressed their investment
levels ranged from $51,000 to $100,000.

Chart 4: How much does your company plan to spend on compliance over the next 18 months?
Cosmetic Brands Solution Providers

49%
45%

18% 18%
13% 13% 12%
9%
7%
5%
3% 3% 2%
1% 1% 1%

Under $50k $51K - $100k $101k - $500k $501k - $1M $1.1M - $5M $5.1M - $10M $10M+ Other

Learn More ABOUT REGULATIONS AT THE SUMMIT!

Main Conference Day One | Thursday, April, 25, 2019

Regulatory Update – Consumer Product Air Quality Trends And Possible

New Regulations
The California Air Resources Board (CARB) has recently
completed its comprehensive three-year survey of over
400 categories of consumer products sold in California,
including cosmetics and other personal care products.
The survey generated sales and chemical ingredient
data for over 300,000 products from about 1,600
manufacturers and provides the technical foundation for
new CARB regulations to further reduce smog-forming
emissions from consumer products. So, what does
this regulatory work mean for you, whether you’re a
California-based cosmetics company or not? Come learn
the latest regarding sales, chemical formulations, and air
quality impacts of consumer products, and how CARB’s
new rulemaking could impact your industry. In this
newsworthy session, participants will:
• Examine some of the key findings from this three year
survey
• Learn about possible regulatory approaches CARB is
considering to reduce smog-forming emissions from
consumer products
• Identify how to participate in development of CARB’s
new air quality regulations slated to kick off in Spring
2019
Josh Berghouse, Air Pollution Specialist, State of
California

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Global Export Activity & Corresponding Challenges
The majority of cosmetic brands revealed their export
activities are currently in North America (42%), the
European Union (41%), and Asia (38%). These trends
are very similar to those of solution providers, which
revealed are focusing on exporting to the
European Union (Chart 5).
When asked about the region that presents the
leading challenge for compliance, respondents from
cosmetic brands unmasked a two way tie (36%)
between the European Union and Asia (Chart 6).
Solution providers also revealed the European Union

Chart 5: Where is the majority of your export Chart 6: Which region presents the biggest
activity currently? challenge for compliance?

Cosmetic Brands Solution Providers Cosmetic Brands Solution Providers

42% 21%
North America North America
43% 23%

41% 37%
European Union European Union
50%
41%

4%
Eastern Europe 2%
6% Eastern Europe
2%
17%
Middle East
6% 11%
Middle East
10%
11%
South America
7% 9%
South America
3%
5%
Central America
3%
6%
Central America
2% 1%
Oceania
4%
2%
Oceania
1% 4%
The Caribbean
2%
36%
38% Asia
Asia 33%
29%

3%
9% Africa
Africa 5%
7%

8% 13%
A specific country A specific country
10% 11%

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presented the biggest challenge for compliance, Chart 6: Which region presents the biggest
which is understandable given 50% of providers are challenge for compliance?
focused on exporting to the European Union.
Cosmetic Brands Solution Providers
A number of respondents also went on to disclose
they view China as their largest hurdle in exporting. 38%
International regulations, coupled with the challenge Prohibitive lists
of testing and ingredient requirements, are currently 28%
major hurdles for organizations who work in China.
China has been steadily doubling in cosmetic growth;
however, China’s strict animal testing regulations are a Import
39%
major inhibitor for both the U.S. and the Chinese. procedures
39%
To take it a step even further, we asked both groups
to disclose their largest challenge in regards to
exporting and importing. Cosmetic brands revealed 12%
a close tie here between import procedures and Safety tests
21%
prohibitive lists. 38% of solution providers exclaimed
that import procedures are the largest barrier
pertaining to exporting and importing (Chart 7). It can
11%
be deducted that a fair number of solution providers Other
experience trouble with import procedures in the 13%
European Union.

Hear CASE STUDIES AT THE SUMMIT!

Main Conference Day One | Thursday, April, 25, 2019

Case Study: Building Up Your Regulatory Programs

As an independent brand it is essential to be able to
scale your regulatory department quickly and effectively
or the competition will pass you by and you’ll be buried
in legal. However, it is possible to scale into international
markets quickly if you do it right. You just need to know
how to color within the lines, and you find that you can
comply faster than the bigger brands that are out there.
In this session, participants will:
• Outline strategies to quickly and effectively scale your
regulatory program
• Dissect core processes that need to be in place to
overcome auditing issues before they happen
• Examine the key areas where independent brands
struggle when launching their regulatory programs
Danah Mims, Director of Regulatory Compliance,
Macadamia Beauty

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 S p r i n g

Join Us!
April 24 - 26, 2019 | Los Angeles, CA

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BREAKDOWN OF SPONSORSHIP
PAST ATTENDEES OPPORUNITIES

Are you ready? If so, join us for the industry's most

comprehensive conference to address - on a global scale -
how mergers and acquisitions are reshaping the market, how Spring 2019
consumers are playing a more active role in a products life-
cycle, what ingredients are now more regulated, what new Program Themes:
regulations there are, how both independent companies and
brand leaders are scaling, and a lot more. • Explore some of the overarching industry
trends that need to be on your radar now

2019 Speakers Include: • Discuss how to prepare for a merger or

acquisition, regardless of if you’re being
acquired or interested in acquiring other
Andra Dallas Jonathan Reynolds companies
Legal, Compliance & Head of Regulatory
Acquisitions, Pulp & Technology • Compliantly market your product via
Riot and Research Charlotte Tilbury
digital channels
and Innovation Beauty Ltd.
L’Oreal
Jennifer Martin • Analyze changing regulations around the
Josh Berghouse Director Of world to determine which markets may be
Air Pollution Regulatory Affairs, easiest to break into
Specialist North America
State of California The Colgate • Review plausible alternatives for banned
Palmolive substances
Danah Mims Company
Director of • Explore key considerations for packaging,
Regulatory Kristin Adams
including a push towards green/recyclable
Compliance Founder & CEO
Macadamia Afterglow packaging
Beauty Cosmetics

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Survey Respondent Profile
Chart 8: Overall Responent Specialities Chart 9: Overall Respondent Breakdown

Cosmetic Brands Solution Providers

Producing cosmetic 74%

products 37%

Conducting research and 16%

development and safety 29%
22%
trials

Manufacturing products for 11% 43%

cosmetics to be stored in 9%

Regulating how products

14%
are made from a legal
standpoint 16%

Transporting cosmetics 8% 28%

legally and safely
8%

1%
Software solutions
13%
Cosmetic Brand
0%
Insurance Solutions
1% Solution Provider

9%
Brand Solutions  ther (Mostly comprised of manufacturers,
O
12%
consultants, suppliers, distributors, regulators)

Packaging and labeling 13%

solutions 17%

Supplying chemicals and 1%

raw materials 18%

Consulting 11%
47%

3%
Legal Counsel
6%

6%
None of the above
0%

Other 3%
3%

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