Listen to This Episode with Sunanda Desai Here:
Innovation and uncertainty are reshaping the personal care ingredients market, driven by pressures ranging from sustainability and natural ingredient demands to regulatory shifts and the opportunities presented by AI. Sunanda Desai, Vice President at Kline + Company, joins host Victoria Meyer to discuss the factors transforming the $30 billion personal care ingredients sector. They explore how consumer trends toward well-being and neurocosmetics are redefining product development, and examine the impacts of tightening tariffs, shifting regulations, and supply chain disruptions on industry strategies.
Victoria and Sunanda address how leading companies are using digitalization and AI to drive hyper-personalization and enhance ingredient efficacy assessments, even as market adoption remains uneven. From managing uncertainty with “no regret” moves to evaluating manufacturing footprints and potential M&A, this episode offers timely insights for leaders navigating a turbulent landscape. Sunanda also shares strategic advice for industry professionals and highlights opportunities for growth despite today’s volatile environment.
Learn more about these topics this week:
- Examining the personal care ingredients market and the key trends driving the $30B industry
- How top companies respond to market volatility, tariffs, and regulations with “no regret” strategic approaches to maintain agility.
- How AI technologies are revolutionizing ingredient assessment and product personalization in personal care.
- Opportunities in Disruption: Quick wins, cross-selling, and M&A possibilities as companies reformulate products and restructure supply chains (Maybe we don’t want to mention M&A??)
- Sunnie shares advice on seizing opportunities to pivot (roles and industries) and building a successful career in chemicals and personal care.
Killer Quote: “The most important piece of advice I would give is to recognize the opportunities as they come to you and as they’re presented to you and have enough faith in yourself to take advantage of those opportunities…even if you feel like you don’t know how to kind of execute against them.” – Sunnie Desai
Watch Victoria and Sunanda’s Conversation on Youtube Here:
Personal Care Ingredients Market Trends with Sunanda Desai of Kline + Company
Welcome back to The Chemical Show, where leaders talk business. I am recording this episode in the time frame between IN Cosmetics and NYSCC Suppliers Day, and we are giving this a personal care ingredients focus. And because of that, I am speaking with an expert in the market. So Sunanda (Sunnie) Desai is the vice president at Kline + Company, where she leads the global chemicals and materials practice and oversees the firm’s advisory service in the chemical sector.
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So Sunnie is an expert in go-to market and growth strategies, and she works extensively with clients across personal and consumer care industries. We’re gonna have a great conversation about what’s happening in the personal care ingredients market. This is gonna be a great tee in to folks going to Supplier’s Day and to folks that aren’t going to Supplier’s Day, but are just interested in what’s happening. So, Sunnie, welcome to The Chemical Show.
Thank you for having me, Victoria. It’s a pleasure to be here.
I’m so glad to have you here. So let’s just start with your origin story, I love to start every episode with this. What’s your origin story? How did you get interested and engaged in chemicals and specifically in personal care and consumer care?
So I’ve always enjoyed analytical topics, and I come from a family where both of my parents have an education in mathematics and the sciences. So I have a little bit of an atypical background for the chemicals and materials industry. I actually started my career as a software developer in Silicon Valley, California. I have a math-computer science undergrad degree and really enjoyed the analytical aspect of of programming and software development. Eventually, I found my way into consulting. And I really like the energy of consulting, the aspect of solving problems, answering questions with a great degree of intensity, working in a team, I really enjoy all of those aspects of consulting, and I felt a lot of passion for chemicals, materials, and ingredients.
I think this is an industry that touches every aspect of our lives. When the opportunity came to work with Kline + Company in my two favorite areas, consulting and the industry, I took it. And, as they say, the rest is history.
Yeah, and I think that’s really cool because we don’t necessarily have a lot of data scientists or at least how about this, we didn’t used to have a lot of data scientists in the industry, and I know that’s a growing field. And I would not often think of people going from Silicon Valley to the chemical industry, even as a consultant. So I think that’s a great leap and really just kind of an interesting journey that you’ve taken. Let’s talk a little bit about Kline + Company because a lot of people may not be familiar with them.
Absolutely. Kline is a global management consulting advisory market research firm. We’ve been active in the specialty chemicals, materials, and ingredient space for 65 years. We have a global presence. We’re headquartered in New Jersey. We have offices all over in Europe and in Asia. And, essentially, from a personal care and consumer perspective, we cover the entire beauty value chain, starting from the ingredients, the raw materials, all the way down to the brand owners, the distribution, and the retailers. The business covers the entire personal care value chain.
That’s really cool. I’ve been familiar with Kline for probably about a decade. But I definitely think of Kline as specialty chemicals and really just bringing a lot of data and insight to markets and products that maybe are sometimes difficult to understand.
I will say, when people ask me for, you know, hey, do you know how to find this information? I don’t, but, let me send you over to somebody at Kline because maybe they do.
We are very good at going deep within the important aspects of the personal care ingredient space, as well as the breadth.
So with that, what are you seeing in the market today? What are the key trends that are affecting personal care ingredients in 2025 and beyond?
So, let me characterize the personal care ingredients industry. So this is about a $30 billion ingredients industry. From the manufacturer’s perspective, and if you look at it, there is the actives, specialty actives, which are very much a concept sell. You have more of the commoditized ingredients, and then you have the entire specialties, which are essentially ingredients that are highly differentiated. This is where client focuses. Now if we think about the trends that are affecting the market, sustainability continues to be an important trend in this space. And this is essentially natural ingredients.
You know, naturalness and natural ingredients are still important. The interesting aspect of sustainability, though, is the impact that sustainability has and natural ingredients have vary by ingredient category. For instance, surfactants, emollients, actives that actually have very good natural alternatives to offer and where there is an opportunity to make a claim or brand it as a natural product, definitely has much more of that push from naturals or it has that uplift. But there are certain categories like preservatives or UV ingredients where it’s a little bit difficult because there might not be suitable natural alternatives that perform at the same level of efficacy that is needed.
Yeah. And so then the brands and the formulators are making decisions based on that, based on availability and efficacy.
They are. As you know, there have been recent announcements by certain big brands such as L’Oreal have made announcements that a significant portion of their ingredient formulations are going to have natural ingredients by 2030. So there’s definitely those types of announcements and the brand owner pushes that are basically pushing the industry towards more natural ingredients.
Yeah. What other trends are you seeing?
From a consumer perspective, there’s definitely a trend towards well-being. And so what that means from a beauty perspective is neurocosmetics are actually of interest. And neurocosmetics actually are topical cosmetics. So they’re topical products that are applied to the skin, but they interact with the nervous system of the skin to essentially produce a desired effect. It could be enhanced mood. It could be relaxation. There’s different ingredients that are formulated with these products to give that. There could be neuropeptides. There could be cannabinoids. There could be different ingredients that confer this particular effect to a neurocosmetic.
Is this a generational thing? I gotta be honest, I’m a little freaked out by some of this, personally. But do you see this trend cutting across demographics, or is it localized, or is it just still starting and therefore will become widespread in a few years?
I mean, if you think about aromatherapy. There is obviously this aspect of using essential oils or other aspects to kind of enhance your surroundings, enhance your mood, and support relaxation. So there has been that movement for a while now. Now what we’re seeing is essentially using more neurocosmetics to produce that from a topical perspective.
Yeah. So who’s regulating these products? When I think about these actives and having neurological effects, how are they getting regulated differently than other personal care products? Do they, or is it all part of the same ecosystem?
Well, all the products have to meet the requirements that are mandated for any personal care product to go out into the market. So my understanding is that they’re not being FDA regulated, or I do not know if the FDA is regulating any of these, but they have to meet the basic requirements to be able to be marketed as a personal care product.
Got it, makes sense. One of the things we were talking about earlier is the role of digitization in AI, and it’s certainly a trend that is here. When we think about cutting across the industry, how do you see personal care companies and personal care ingredient manufacturers harnessing digitization and AI?
So digitization and AI is an important trend to keep track of. And, definitely, there’s various ways in which AI is actually being used. Now the aspect of it that’s been most known to people is personalization. So the use of AI driven tools to essentially, hyper-personalize offerings based on certain skin types or hair types. So that’s actually the consumer end where you’re actually targeting benefits to certain consumers. The other uses are more behind the scenes, supporting ingredient assessments to essentially really quickly assess ingredients for efficacy. They’re also essentially optimizing formulations. Now while all of these have been raised and discussed in the press as potential AI uses, at this point, it is unclear how much of this is being actually implemented within the companies that we’re looking at, but there are several high profile announcements on partnerships in the public domain between beauty brands and AI suppliers.
So we have to see how much of this really is being used.
So one of the things I’ve observed when I’ve talked to leaders across the industries, number one, everybody’s grappling with how do they really utilize and execute AI and bring it into their systems. So people are experimenting and I think that would align with perhaps what you’re saying, people are experimenting and yet the biggest companies are embracing and experimenting even more. So I was at an event recently, and somebody from Exxon, for instance, was talking about the AI and digitization that they’re using in their manufacturing sites, flying drones to get temperature readings and doing other stuff and things that companies maybe can’t necessarily dream about. I know you’ve talked about the L’Oreal example, and I’ve seen similar things from L’Oreal and Unilever and others as it relates to the consumer brands. And part of it is we need these bigger companies to lead the way and do some of this testing and figure out how it’s all gonna work so that it becomes more widespread in adoption across the industry.
Absolutely, Victoria. And that’s what it is. Market leaders will always embrace new technology first and try to see where it can take them. And then the rest of the market and the rest of the players in the space follow suit. What you’re mentioning right now was an example of that.
Yeah. So, you know, we’re sitting here in 2025 in a period of a lot of turmoil. So tariffs, regulations, we’ve got the new administration in The US, but let’s not forget we actually have new governments and new governmental leaders across the world. Right? But, certainly, if we focus in on what’s going on from reciprocal tariffs to non tariffs to pauses to others, there’s just a ton of uncertainty and maybe a bit of an uproar, it seems, at least at the biggest level. How is this affecting the companies that you work with?
So that’s a very good question. There is a significant degree of uncertainty in the market, as you say. And the most important thing for personal care companies to think about is how to manage in the face of uncertainty.
There is definitely various strategies that can be undertaken, but there is an aspect of agility and making those quick decisions based on the situations in the market and what are the no regret moves that can be made. This is an important way of thinking for a personal care industry leader. Now if we were to talk a bit more concretely about specifics, really what that would entail is when the tariff situation started, there was a lot of concern in terms of the impact. Increased costs, input costs, increased prices, all of that. Now we’re seeing some discussions where there might be some reprieve, but it’s still uncertain. So what does this mean for personal care ingredient suppliers? Well, it’s still the time to be thinking more strategically about what are those no regret moves that you can make today that will still put you in a good position regardless of what the outcome is. And some of those could be thinking about the supplier base. Is this a good time to diversify that supplier base? Is this a good time to invest in some of those relationships with contract manufacturers or enhance those relationships so that there is an opportunity to manufacture formulations in countries where those tariff and the tariff considerations might not be so harsh?
It’s also a time to think about should any ingredient or should any formulations be revisited, to maybe consider ingredients that might be negatively impacted by any future, or even current tariff restrictions. And as you know, Victoria, the devil is always in the details. I mean, if you really were to look closely at what’s in the annex, there are exemptions, and then there are not. So really understanding, are my ingredients falling within that exemption list? Starting from that point is also very important.
I think those are great. And the no regret moves, I like the way you frame that. I was speaking with a leader recently, and everybody’s always like, well, how’s business? Is business soft? Is it busy? Or whatever. But this person was like, they are so busy, and part of it is they’re doing a lot of projects with their business partners, their customers, etcetera. And I think a lot of this is around reformulations, innovations, thinking about these things that you’ve talked about, supply chain, what products you’re bringing in and how you can be more effective. So I think it’s definitely good news.
I think we’re always a little bit worried and I know that market softness is a concern. The cost of doing business and the cost of raw ingredients and the effects that has is a concern. But I think getting busy on these no regret moves is really smart.
You’re absolutely right, Victoria. In light of the current situation, it is also important to think about, are there quick wins that can be taken advantage of? Are there opportunities to cross sell? Are there inorganic opportunities that can be considered in light of these changes? So, definitely, that’s another point to keep in mind to enhance one’s position.
Yeah. Is this a busy time for Kline? Do you see a lot of clients coming to you with big questions? And if so, what are they? What are the questions that your clients are asking you today?
Yes, it is a busy time for us, and certainly, our clients are coming to us. One of the things they’re coming to us for is exactly that. What are the quick wins in the market that we can take advantage of? Are there inorganic plays that we can actually leverage? Are there opportunities for ingredients that might not have been so considered a few years ago that now become relevant in light of more considerations on price versus performance? So we’re getting questions of that nature.
Those are all really interesting, especially this piece that there may be formulations and products today that make sense that didn’t make sense two or three years ago because the circumstances are different. So I think it’s always a good reminder to revisit your pipeline because what you thought was dead, maybe is not dead. It may be alive and awake again today. The other piece you talked about, there’s inorganic growth. Do you see a lot of interest in M&A activity right now? I mean, again these periods of uncertainty, it’s hard, but do you think that’s gonna be happening if you were reading the tea leaves of the world? Should we be expecting some moves?
Certainly, I do think there is opportunity for inorganic plays in the market. I was at IN Cosmetics a few weeks ago, I guess, a month ago at this point. And it was a very vibrant show and there are a lot of players in the space. So I can absolutely see that there is an opportunity there. I just think there’s a lot of players in the industry, and I think that there is an opportunity for more consolidation in this industry. But this is my point of view.
We’ve talked about maybe some of the quick wins and the no regret moves, but what are the strategies that companies can and should be employing to be successful here in 2025 and beyond?
So that’s a big question. My points were essentially about taking advantage of the quick wins, about reconsidering formulations. Bigger picture thinking is about really reconsidering whether the manufacturing footprint needs to be changed in light of the way the world is going.
I think people are grappling with this. What the right investment profile is, what the manufacturing footprint should be. I can’t decide if we are shifting to a time of more regionalization. Certainly, regionalization of supply chain seem likely. Regionalization of manufacturing, I don’t know.
Because it’s a big investment to make or to move. To move plants and assets or to rebuild them is expensive. And depending on a company’s appetite, depending on, frankly, whether they’re public or private, because privately held companies maybe have different time horizons and different judgment calls about whether they can make those investments, whereas despite our best interest in every public company executives’ interest in telling their story and helping their investors understand, investors still, by and large, want quick returns. So navigating that is tricky.
It absolutely is tricky. And there was a lot of discussion about reconsidering manufacturing in the light of COVID. But once COVID was over, none of those changes did happen. So whether this is going to be the motivating factor is yet to be seen.
Makes sense. Alright. So, Sunnie, let’s talk about leadership. And I love to ask this question of people because I love the responses that we get and so do listeners. In fact, I hear from folks that this is one of their favorite segments of the show. So when you think about your career and how you’ve achieved what you have, what advice would you give to a young professional recently entering the industry about navigating her career in leadership?
The most important piece of advice I would give is to recognize the opportunities as they come to you and as they’re presented to you and have enough faith in yourself to take advantage of those opportunities, to take them head on even if you feel like you don’t know how to kind of execute them. And I believe that’s what I have done in the course of my career. So I started, as I said, my career in software, and then I was able to make the move to an industry that I love being in and love working in. And I was able to achieve that because I did try my best to be able to take advantage of those opportunities as they were presented to me. So that is the advice that I would give to a young professional starting out.
I love that. And I mean, it’s a bit of a, say yes even when it’s really scary.
Yes.
Awesome. Well, Sunnie, thank you for taking time to speak with me and to The Chemical Show audience today. It’s been really great to have you here.
Thank you for having me, Victoria. It was a pleasure.
Absolutely. And thank you everyone for listening. Keep listening, keep following, keep sharing, and we will talk with you again soon.
About Sunanda Desai:
Sunanda is the Vice President at Kline + Company, where she leads the Global Chemicals & Materials practice and oversees the firm’s advisory services in the chemicals sector. Kline + Company is a global market research and advisory firm that has been serving the specialty chemicals, ingredients, and materials industry for 65 years.
Sunanda brings nearly 20 years of experience in managing complex, strategic projects across international markets. Her expertise encompasses a broad range of business strategy areas, including go-to-market planning, organic and inorganic growth strategies, market mapping, white space analysis, and opportunity identification. She has a strong focus on clients within the personal and consumer care industries.