Cosmetic sector’s plastics rethink creates new insurance needs

26/02/19 General

Cosmetic sector’s plastics rethink creates new insurance needs

The fight against plastics in the UK cosmetics industry was ramped up in January 2018, with a nationwide ban on the microbeads that were being used in ex-foliating scrubs and other cosmetics. But following the cosmetic sector’s plastics rethink, have any other trends emerged, which could create new insurance needs?

Preventing microbeads from entering the marine food chain was the prime reason for the ban and, at first, this appeared to assist the smaller cosmetics firm utilising natural materials in an artisan fashion. However, the swiftness with which the plastics issue is being tackled could now present SME cosmetic creators with new challenges.

The cosmetic manufacturing giants have rapidly addressed the plastic issue, to keep their global consumers on-side. Had they not done so, they would have been exposed to the wrath of 64% of consumers worldwide who, according to the evidence gathered by surveys such as the Edelman Earned Brand Report, are belief-driven buyers ready to ditch any brand that does not share their views and abide by their principles. Simply put, big brands cannot be seen to be doing nothing, as this would be highly detrimental to their sales.
Household names such as Head and Shoulders have now stepped up their efforts, with this well-known brand launching the world’s first recyclable shampoo bottle to be created from recycled beach plastic. Additionally, Garnier, has partnered with environmental champion, Terra Cycle, to spur on customers to recycle the plastic generated by Garnier products.

However, there are many other initiatives with which smaller businesses will struggle to compete. Take the brand MAC cosmetics, which now offers a free lipstick to those who return five used lipstick holders. Small cosmetic businesses just will not have the means to compete.

Then there is the example of Chanel, which is working with a Finnish company to create biodegradable and micro-plastic-free packaging. Other brands are quickly shedding unnecessary packaging from their products, to minimise plastic usage.

In a nutshell, whilst those reaching for ground apricot kernels, grains and bamboo may have celebrated the micro-bead ban, SME producers may now be wondering how to keep up with the brands who have cleaned-up their ethics by packaging their products in a plastics-free mode.

Any smaller business using plastic packaging may now have a dilemma when it comes to product development and evolution, especially if the costs of their specialist ingredients are higher than the unit price of ingredients used in bulk-produced global products. Others may be pondering the costs of introducing Mac-style recycling incentives.

At the heart of this dilemma lays cash-flow, particularly if new suppliers of packaging require upfront payments. Additionally, where a label such as ‘sustainable’ is applied, there is always a risk of reputational damage, should the sustainable ‘something’ fall way short of its claims, rocking consumer trust.

Trade Credit Insurance can be a vital piece of protection in such scenarios. This ensures invoices are paid on time, keeping cash flow healthy. Other useful options for businesses adapting to a plastics-free world are liability protection and also legal expenses cover, which may offer crisis PR support, if required, as well as legal help and representation, should any lawsuit emerge.

To discuss the insurance that your cosmetics business may require, you can always talk to us. Please get in touch if you want insurance that will do the job for you, rather than just applying a veneer of protection to your business.