Consumer trends and regulatory compliance

With the hype around the change in consumers’ post-pandemic shopping behaviour, many industries have had to reimagine and evolve their product offering, product claims, marketing platforms and distribution channels. The personal care industry is one that is particularly affected by consumer demand for rapid innovations, product efficacy and convenience, which all contribute to a holistic shopping experience. Dershana Jackison, CTFA’s head of policy and regulatory affairs, explores how to remain complaint within the changing personal care landscape.

Some of the trends we have seen internationally are quickly becoming global and trending in South Africa too. In recent years we have seen an obvious and huge shift towards digital technology with consumers migrating to the convenience this offers. McKinsey and Company reported that “omnichannel customers shop 1.7 times more than single-channel shoppers” (March 2022) and that in-store customers will evolve to using the various channels and touchpoints that a brand or a retailer has to offer. This clearly indicates that the customer’s needs are evolving and will continue to evolve. So, a seamless connectivity between the available channels is paramount to the shopping experience. Customers also expect to have visibility of store items before they visit the store or shop online and expect quick and easy pick-up of their ordered products. Though this is an example of brands and retailers investing in their retail strategy, there are other trends that will require regulatory considerations.

COVID-19 has accelerated certain aspects already in development, such as consumers’ expectation to access product information and reviews whilst in store or browsing online. For example, a QR code is provided so that it can be scanned to access layers of online content. Though this clearly creates a new opportunity for brand owners they must continue to comply with all self-regulatory guidelines that apply to labelling, claims and advertising when using digital platforms.

Ingredient transparency is key, coupled with truthful and appropriate product claims and advertising. The CTFA Cosmetic Compendium includes updated ingredient annexes to help you stay compliant, while standards provide best practice for various product categories and testing of products. The advertising code of practice provides insight into permissible advertising and claims.

Diversity, inclusivity and sustainability

Consumers expect product variety that speaks to equity and inclusivity and the visibility and position of such products in a retailer’s planogram is key. They are increasingly aware of advertising that respects human rights, is inclusive and promotes equity. Furthermore, brands and retailers that consistently support and contribute to environmental preservation speak to a more environmentally-aware consumer – especially post-COVID. To remain relevant and competitive, suppliers, formulators and manufacturers must rise to these demands and trends. Some fragrance houses are developing unisex fragrances to promote gender equality, whilst others are developing products that meet the needs of a multiracial spectrum of consumers to address diversity and inclusivity. Yet, addressing such trends comes with a fair number of challenges in terms of ingredient choice and formulation design.

There is a growing need for natural and organic ingredients that are sustainably sourced, resulting in suppliers looking to expand their product portfolio. The Department of Forestry, Fisheries and Environment issue bioprospecting, access, and benefit sharing (BABS) permits to such suppliers to protect communities, resources and biodiversity.

To address the demand for “clean beauty”, brands include ingredient claims and claims such as “natural” or “organic” on product labels. These claims must be truthful and scientifically substantiated.

The CTFA Cosmetic Compendium includes updated ingredient annexes to help you stay compliant, while standards provide best practice for various product categories and testing of products

Implications of ingredient trends and restrictions

Suppliers are also exploring alternatives to harmful ingredients being targeted by regulators globally, as signatories to the United Nations Sustainable Development Goals. Locally, the Department of Forestry, Fisheries and Environment has published several regulations identifying chemicals that are considered harmful to the environment, which are aligned with current restrictions in the guidelines for the industry. This guideline is the CTFA Cosmetic Compendium, which aims to proactively inform and prepare industry for local upcoming regulatory changes. It also provides suppliers and formulators with a reasonable period to prepare for and comply with imminent ingredient bans or restrictions.

These regulatory amendments, together with consumer demands and product trends, require formulators to go back to the drawing board to redesign products with alternative and/or “greener” ingredients. Product development inputs such as stability testing, evaluating the efficacy of the preservative system and assessing packaging compatibility also require a rerun. Many will recognise this as a costly exercise that incurs additional financial implications for the business. Formulation redesign also affects the supply chain and ultimately the availability of a product on the market.

The other spectrum to limited ingredient use is the questionable use of “free-from” claims, where brands include this on their labelling or advertising without scientific substantiation that the omitted ingredient is unsafe. Such claims create a consumer expectation and provide misinformation which is detrimental to the industry. Furthermore, this can lead to unnecessary regulatory oversight which may reduce the available ingredient pallet for innovative product development. CTFA has informed industry on the use of such claims in very specific cases, which has been effective since 1 September 2021.

Moving towards a circular economy

Manufacturers also experience their fair share of challenges. Existing inventory of printed packaging, labels and raw materials or ingredients must be exhausted within the transition period or be discarded. They also have to navigate the sourcing and procurement of alternative ingredients and packaging components, which includes auditing and qualifying new suppliers and drafting service level agreements.

Packaging suppliers are under increased pressure to contribute to the circular economy and are therefore producing new packaging from recycled material or waste and/or supplying components that are recyclable. This is communicated to the consumer by including specific logos on the actual packaging. The challenge for packaging manufacturers is to design and produce packaging components that will protect the product throughout its shelf life or use life and still contribute positively to the circular economy and government’s waste management plan. Some brands are going one step further to educate and promote recycling mindsets amongst consumers by including the various components of the product packaging and their respective recycling instructions. Reducing packaging is key to reducing packaging waste, so using fewer components per product is the goal.

Green and eco-based claims must comply

Though there are several challenges facing the industry as these trends develop, there are many opportunities for brands to create new consumer experiences to drive market share and customer loyalty. One of the most obvious being labelling and advertising redesign. Making specific product claims that highlight the brand’s commitment to sustainability or making “green” claims is a growing arena for marketers. Here, all of the principles of responsible product claims and their supporting substantiation are applicable.

Claims must be honest and fall within the confines of the advertising code of conduct and the cosmetic code. There are certain aspects that need to be considered carefully when making new claims, like the most appropriate substantiation and test methods. The relevant organisations or testing facilities also need to be contacted to determine if they will be able to provide test protocols for the claims and to ensure that you receive the correct regulatory advice.

An industry at risk of reputational damage

As trends develop, so do claims and it is the responsibility of all industry players to ensure that the reputation of the industry is upheld as one that is responsible, honest and compliant. Reputational damage as a result of misinformation through an inappropriate or untrue product claim can have implications on the industry as a whole, as consumers lose confidence in the products offered by brands and manufacturers, ultimately impacting their growth.

Non-compliance may also serve as an incentive for regulators to further regulate the industry. Such oversight is historically known to have had an impact on limiting ingredient use, which has stifled product innovation. In addition, consumer protection laws need to be considered when designing products and their associated claims.

Here are a few tips to consider to ensure that you contribute positively within the industry:

• Will the average consumer understand the claim?

• Does the consumer have background knowledge and access to information?

• Do the claims assist consumers to make an informed purchasing decision based on their lifestyle?

You can remain compliant if you meet certain requirements – ensure your product claims are truthful, that your product is safe for consumer use, that you have an in-depth understanding of the test report, and that you are able to sufficiently substantiate all claims if you are challenged by a competitor or consumer. As much as new claims are driven by consumers, creativity and competition, companies should be equally aware of the potential risk of these claims being challenged. •