Over the past 3 - 4 years, there has been a rapid convergence of several factors that have substantially implicated the raw ingredient industry and therefore the very nature of the whole skin care industry itself. All professional skin care companies, like us, have been affected by these changes to some degree and consumers should be made aware of what’s going on.

These factors discussed below, have caused change, some confusion and fragmentation amidst the ingredient industry leading to more competition, mergers and buy-outs. As a consequence, we have had no choice but to absorb and manage this evolution of the raw material vendors’ decisions and practices. While some changes have proven beneficial, others have presented complex navigational issues that have impacted aspects of our manufacturing, as well as the skin care industry as a whole.

The following information briefly highlights these key factors.

Up until a few years ago, ingredient vendors promoted novel therapeutic ingredients, such as peptides, primarily to professional brands.

Since mass market and department store brands were not capitalizing on professional ingredients, ingredient pricing and minimums were favorable to the smaller-scale professional manufacturer. But over the last few years, mass market brands due in part to lack luster sales have shifted their direction to mimicking professional brands like ourselves, and thus have put a greater demand on professional strength ingredient supplies.

While one would think this would lower ingredient pricing, the result has been just the opposite – many ingredients have reached a premium, with pricing and minimums skewed to favor the consumption of these mass manufacturers. In other words, we are now paying higher prices and committing to larger minimums for the same ingredients we use now.

Because we have built good supplier relationships, we are still able be competitive, however, increased ingredient costs and high minimums will continue to create pressure from factors separate from the overall economy.

The demand for natural and organic ingredients has escalated exponentially over the past few years, as have the certification groups vying to have their stamp on natural/organic products — USDA Certified Organic | NOP, ECOCERT and numerous others. This has put an immense strain on ingredient availability. It’s just commonsense to understand that natural and organic ingredients have a finite supply and are reliant on consistent sustainability. Additionally, many of these mass market / department store brands are now trying to go the “green” (or “greenish” I call it) route, adding additional stress to the supply. Everyone is trying to jump into the game.

As a result, these (natural/organic) ingredients have volatile pricing, with costs fluctuating between harvests, seasons and specific manufacturing needs. It is not hard to understand that there is immense pressure on ingredient vendors to keep up with demands and to create or source new innovative ingredients.

We, in turn, must do our best (keeping costs and supplies level and predictable for our clients) to adapt to the fluctuations in the natural and organic ingredient market – as fallout from these recent trends, has become exceedingly difficult.

To add to the mix, recent global regulations have also put an enormous strain on ingredient production and availability. Primarily due to the required transparency of raw ingredient formulas in export documentation, ingredient vendors now have been forced to disclose proprietary details, or have had to reformulate some ingredients in order to get them approved for export, as well as supply far larger amounts of paperwork than was necessary in the past. These costs are passed on to us, in the form of higher raw material costs. Unfortunately, we do not have control over ingredient vendors’ decisions or global trends and increased pricing.

However, we do have control over our reaction to these changes. Therefore, rest assured, if for any reason an ingredient is discontinued from our line we will immediately start researching viable replacements or newer alternatives and let everyone know the status. 

Example: We currently use an Apple MMPI ingredient in a product called SIRCUIT® Agent for the last few years, yet the ingredient producers just told us they will no longer make this ingredient. What’s the reason for the discontinuation? Everyone wants Apple Stem Cells. That’s it, end of story. We do not get a warning phase. We are simply told it is no longer available when we place our order. So…our new formula will include the new Apple Stem cells ingredient instead of Apple MMPI. Happily, I believe it’s a really good change and one we all can agree on. Apple Stem cells are amazing.

The great news for SIRCUIT® and our clients, is that our extensive use of Chiral technology has allowed us to shield ourselves from many of the effects the other skincare brands are experiencing regarding these ingredient changes. However, as you can see from the example above…everyone will, in some way, be affected (whether they tell you or not…and most unfortunately won’t).

At SIRCUIT® we are known for our ingredient savvy and are very serious about skin health. We are obsessed with new ingredients and will continue to source and introduce new products formulated with the newest ingredients available, ensuring SIRCUIT® customers stay way ahead of the curve.

We have some beautiful new products currently working through our development process right now with some new technologies and ingredients not available to the traditional skincare market. Providing all the rigorous testing and sampling goes as planned we should be able to introduce these over the next few months. So…..keep your fingers crossed (wink wink), stay tuned and thanks always for your kind support. We just thought you should know.

Cheers!

MICHAEL WOLFGEHER

Founder | CEO

SIRCUIT ® Cosmeceuticals Inc.

888.661.4544