UK Cosmeceutical and Nutraceutical Sectors

The UK Cosmeceutical and Nutraceutical Sectors: Market and Employment Profile

ii

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.


v

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.


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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


2

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.


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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.


4

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.


5

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


6

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


7

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


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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.


9

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


10

$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.


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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.


12

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


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


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.


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.


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


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.


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


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


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


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


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


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


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.


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%


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%


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.


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


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.


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.


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.


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.


27

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


28

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.


29

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.


30

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.


31

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


32

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


33

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


34

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.


35

SUMMARY OF DRIVERS AND CONSTRAINTS


36

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


37

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.


38

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


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


40

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

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UK Cosmeceutical and Nutraceutical Sectors

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