The Cosmetics Market and Indonesia’s Palm Oil Export Ban
Indonesia’s recent decision to ban exports of palm oil came as a surprise to many. A lot of focus has been given to the food industry as the price of cooking is expected to rise as a result. Yet, palm oil is an ingredient that has multiple uses, including uses in our everyday cosmetic products. How will the ban on palm oil exports affect your cosmetic routine? Below, we break down the relationship between palm oil and cosmetics and what you can expect.
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Why did Indonesia ban palm oil exports?
Accounting for over 60% of the global palm oil supply, Indonesia’s recent decision to ban palm oil exports is a surprising one to say the least. The move from Indonesia’s government comes as the Russian invasion of Ukraine continues to disrupt the price of cooking oil.
Indonesia has been left with difficulties when it comes to acquiring cooking oil. As a result, the prices of cooking oil in Indonesia have skyrocketed. This price increase was also influenced by an ongoing drought in South America.
The decision made by Indonesia's President, Joko Widodo, comes in an effort to fight the rising inflation in Indonesia. While we mostly consider palm oil as cooking oil, it is also used in cosmetics as well.
Cosmetics and palm oil
It is not a secret: the price of cooking is about to get more expensive as a result of the palm oil export ban. But, how will this affect cosmetics?
Palm oil is an ingredient that is frequently used in cosmetics. This is due to its moisturizing, softening, and texturizing qualities. In fact, you can find palm oil being used in:
Haircare products
Toothpaste
Skincare
Perfume
Soaps
Makeups
When it comes to palm oil, there are two types: crude palm oil and palm kernel oil. Crude palm oil is used for cooking while palm kernel oil is used in cosmetics. This is because palm kernel oil has a higher amount of saturated fat.
While the ban on palm oil will certainly have an effect on food, there will also be an effect on the cosmetics market. Buyers and producers can expect to see a rise in prices while cosmetic producers can also expect to deal with the headache of sourcing palm oil.
The palm oil ban’s effects on the cosmetics market?
So far, the short-term effects on food have seen a rise of 10%-15%. It is expected for the palm oil export ban to last only a few weeks. Economists predict a reversal in the decision as Indonesia begins to feel the void left by its profitable palm oil industry.
Until then, we are left waiting to see when the ban will be lifted. Currently, most skincare products contain at least one ingredient that is extracted from palm oil.
Cosmetic alternatives to palm oil
Two of the strongest substitutes for palm oil are coconut oil and babassu oil. Coconut oil is produced in Indonesia, Sri Lanka, the Philippines, Thailand, and India. The diverse spread of countries promises a more consistent supply chain which would avoid the current problem of Indonesia’s domination of the market. Coconut oil can also be used in both skincare and haircare products.
Babassu oil comes from babassu palm nuts that grow in the Amazon. Babassu oil is very similar to the palm kernel oil that is used in cosmetics. You can find babassu oil in lotions and creams, haircare products, and soaps.
Your cosmetic business and the palm oil ban
The anxieties caused by Indonesia’s palm oil ban are proof of why you should have diversity when it comes to your cosmetic brand. Relying purely on one type of ingredient, especially one where a specific country has half the market, is risky. If you currently have a cosmetic line that is using palm oil, now would be a good time to research other alternatives.
For those who are thinking about starting a cosmetic line, diversifying is key here. While it is perfectly fine to start small, as you expand you should take into consideration other ingredients and ways of producing your products.
Conclusion
The length of the palm oil ban is going to make a lot of our favorite cosmetic products go up. Both cosmetic users and manufacturers will be feeling the weight of the ban in the weeks to come. As the ban currently has no end date, it is best to prepare for the worst and begin researching ways to use palm oil alternatives.
Cosmetic brand owners should consider looking into ways to diversify their current supply. Despite the price increase, we can still expect the need for cosmetic products to still remain.
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Now that palm oil is currently disrupting the market, you’re probably looking for a way to make your cosmetic products at the same price. No customer is happy when they see their favorite product go up in price. Contact CJW Cosmetic’s OEM services and see what alternatives are out there for your cosmetic brand. We work with over 200 manufacturers to help you find the alternatives your brand needs in an ever-changing market. One of the biggest ways you can stay competitive is by staying consistent as your competitors feel the pains of inflation. Beat your competition in the price game today and contact CJW Cosmetic.
