10 tips for doing business with European buyers of natural cosmetic ingredients
To be successful in exporting your cosmetics ingredients to European buyers, there are particular characteristics that you must pay attention to. Here we highlight 9 characteristics. If you and your staff master these characteristics, you will increase your chances of becoming and remaining a successful exporter.
Contents of this page
- Adapt to the business culture in the cosmetics ingredients sector
- Carefully setting your prices and giving a quote
- Adapt your sales pitch and marketing materials
- Connect with government and non-government agencies
- Organise your product documentation
- Meet common buyer requirements
- Build long-term relationships with buyers
- Send high-quality samples to interested buyers
- Act in a professional manner when dealing European buyers
- Get practical help in our studies
1. Adapt to the business culture in the cosmetics ingredients sector
You need to know about the business culture in the cosmetics ingredients sector. A key advantage of following this recommendation is that it will help you in your dealings with your prospective buyers. Your prospective buyers will be consciously and subconsciously observing you and your behaviour, which ultimately results to an ongoing assessment of the risk of doing business with you. You must therefore always try to make a good impression; not doing so is likely to result to in you failing to do business with European buyers.
The first point to mention about the business culture is that the cosmetics ingredients sector is part of the chemicals industry. Many exporters who are already successful in the food ingredients sector often do not make it in the cosmetics ingredients sector because they do not pay enough attention to this characteristic. Even if your ingredient is of natural origin, organic certified or from the wild, the common denominator is that it is part of the chemicals sector, which concerns chemical substances and mixtures. The watchwords are safety and efficacy.
In addition to the technical language of specifications (Technical Data Sheets, Certificates of Analysis and Safety Data Sheets), there are sector-specific terms and regulations to be aware of, such as Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) exempt or REACH registered, Natural Complex Substances, INCI registered, Chemical Abstracts Service (CAS) numbers, toxicological assessments and allergen declarations. Furthermore, as the cosmetics industry is concerned about corporate social responsibility and natural origin, the language includes terms like Nagoya Protocol, Access and Benefit Sharing (ABS) compliance, Supplier Ethical Data Exchange (SEDEX) membership, Fair Trade certified, COSMOS and NaTrue approved.
Most business contacts are made by email or over the phone, which is followed by the electronic exchange of documentation, sending samples and a company audit. If there is still an interest in your product(s) after this, then a face-to-face meeting works best. This can be arranged at a trade show in Europe. The supplier and product approval and ordering processes take time and it is fine to work with the calendar of major trade fairs such as in-cosmetics. It is not necessary to be an exhibitor when you attend for the first time if the focus is to meet potential customers.
- The cosmetics ingredients sector is part of the chemicals sector. Thus, familiarise yourself with regulations and terms that apply to your ingredients. These include REACH, INCI and CAS numbers.
- Become familiar with the technical language of this sector. This will help you understand and communicate effectively with European buyers who tend to use this language.
- Ensure that some of your staff have a technical/chemicals background.
- There are many stages before you may get to discuss a purchase order. Thus, you must be patient and diligent. Do not bombard European buyers with emails and/or repeatedly call them as this is considered unprofessional in European business culture.
- Read European business cultures in Europe which provides useful information on the business culture and etiquette in each European country. Incorporate this into your approach when targeting potential buyers in a specific European country.
2. Carefully setting your prices and giving a quote
It is essential that you do not go to market until you have carefully worked out your prices and pricing strategies. Failure to do this is likely to result in you sustaining a financial loss as you may end up selling your natural ingredient for less than its production cost. This is the key reason to follow this recommendation. In addition, anytime you are likely to communicate with and/or meet buyers, it is imperative that you have your pricing information ready. This will increase your business credibility on the European market.
Setting your prices
Preparing pricing information starts with preparing accurate cost information. In so doing, questions you must answer include the following:
- What does it actually cost to procure, process and deliver your goods to a certain point in the supply chain?
- What is the break-even point for your entire business? This is the number of products you need to sell to at least cover your costs.
- What margins have you attributed above the break-even level?
If you do not know the answers to these questions, you will be at a disadvantage when presenting pricing information to existing or potential customers. Furthermore, it could result in you sustaining a financial loss.
Know the different international commercial terms (Incoterms®) for your products. Typically, buyers want to know the FOB (Free on Board) price for your goods, where the carrier is decided by the buyer. Know how to calculate this price. Also prepare price points for other Incoterms such as CIF (Cost, Insurance and Freight) and DDP (Delivered Duty Paid).
Cosmetics ingredients are sold in different size units. Ingredients can be sold in units of 25 kg up to container loads. Generally, the more expensive the ingredient, the smaller the unit size. Note that products are sold by weight, not volume, so quote on a per kg or per megatonne basis. Discounts are anticipated for larger quantities. Work these out accurately based on the higher or lower unit price for handling, transporting and warehousing the goods.
Apart from some retail prices for individual cosmetics ingredients, there are very few examples of prices for individual cosmetics ingredients published on the internet or in directories. If you find pricing information that relates to your price points, this can be a useful reference, but as it is not absolute, you should not rely on it.
Issuing a quote
European buyers of natural ingredients for cosmetics usually require prospective suppliers to provide them with quotes. This is because the quotes will contain information that will help them determine if they want to do business with the suppliers. It is important to try and keep your quote as short and as concise as possible, and ensure it does not contain any spelling and grammatical errors. According to European buyers, quotes should include:
- Product description and/or range (if you export a range of natural ingredients for cosmetics) – This should include the basic grade (conventional and/or organic), quality and certification information about your natural ingredient. You do not need to include a complete product specification because you can send it as an attachment, which is something you should do as it lends credibility to your business.
- Storage and shelf life - This is often based on industry experience. This is defined as the typical shelf life of an ingredient when it is correctly stored and handled. The typical shelf-life of a natural cosmetic ingredient begins on its date of manufacture. This is only meant as a guideline and should therefore not be regarded as an expiration date.
- Price – This should be in euros (EUR) because you are targeting European buyers. You must state which Incoterms are used for the price along with the unit used (generally, on a per kg or per megatonne basis). This is applicable to natural cosmetic ingredients in liquid form such as essential oils and in solid form such as shea butter.
- Estimated delivery/lead time – This is the estimated delivery time from the developing country you are exporting from to the European buyer. It is important to note delivery times may be longer due to the global COVID-19 pandemic, because of forced quarantine measures and restrictions on the movement of goods, among other things.
- Capacity to export – This concerns information about quantities of natural ingredients you can supply and over what period. Note that the production of some natural ingredients in developing countries has been restricted and/or completely stopped due to government lockdown measures. This may therefore affect the quantities you are able to produce and export.
- Packaging – Information about the type of packaging (for example steel drum or kraft paper bag) and size (for example in 25-kg batches) of your natural ingredient should be included here.
- Payment – Although payment terms can be indicated, they can be negotiated later.
- Quote expiry – This does not always have to be provided. However, to avoid the effects of frequent price fluctuations you can indicate that your price is not your final offer.
Figure 1: Example of a quote in the natural cosmetic ingredients sector
Source: Ecovia Intelligence
- Ensure you have your prices worked out before going to market and issuing a quote.
- Know your costs and your break-even sales before calculating your prices.
- Offer prices based on Incoterms for a range of points along the value chain.
- Remember that goods are sold by weight, not volume.
- Do not rely on pricing information available on the internet.
3. Adapt your sales pitch and marketing materials
European buyers of cosmetics ingredients are looking for ingredients that are innovative, high quality, ethical, natural, and/or have unique or interesting origins. These are key selling points to include in your sales pitch and marketing materials (online and offline) that can be applied to both existing and new ingredients. A key advantage of doing this is that it will give you a competitive advantage when you seek to enter the European market as it will set you apart from your competitors for the right reasons.
Innovation, for example, could be applied to the supply chain or the process, not necessarily to the ingredient itself or its properties. Innovative ingredients will have similar properties to existing ingredients. A new vegetable oil, for example, will be similar to other vegetable oils or a new plant extract that has proven anti-aging properties.
European buyers of natural cosmetic ingredients require ingredients of the highest quality. Buyers therefore assess the credibility of prospective suppliers based on quality management standards. Thus, if your natural ingredient has been produced in accordance with quality management standards, this will be one of its key selling points. You must therefore ensure you clearly highlight this in your sales pitch and marketing materials, for example by displaying the relevant certification logo on your website, product portfolio and catalogue.
‘Ethical’ means that at the very least you need to have policies and procedures in place which demonstrate your commitment to being responsible for managing an ethical supply chain and an ethical company. It does not necessarily mean Fair Trade certified. You could start by applying the SEDEX system to your business and supply chain.
Having a marketing story along with displaying photographs taken by a professional photographer is one of the best ways of informing prospective buyers. For example, if you have implemented Corporate Social Responsibility programmes that benefit your workers, families and communities, you should include photographs of them on your website. The small to medium-sized Ghanaian exporter of shea butter Shea Tree Ghana Limited is an example of a company which has done this.
Figure 2: Shea Tree Ghana Limited’s corporate social responsibility marketing story
Source: Shea Tree Ghana Limited
Origin is another important selling point and also underlines the need for traceability. Maybe your ingredient is harvested or grown somewhere different than the usual sources? A well-known example is the case of tea tree essential oil. For years this was known as an Australian product, until EarthOil started to produce it in Kenya and started to compete successfully with Australian sources.
Natural is a long-term trend that is still relevant and important for the cosmetics industry. It is worth highlighting that your ingredients are natural, and certification from COSMOS or from NaTrue, for example, can be an advantage. Thus, you should ensure you clearly highlight this in your sales pitch and marketing materials, for example by displaying the certification logo on your website and in your product portfolio and catalogue.
The best way to satisfy buyer requirements with your key selling points in your sales pitch and marketing materials (both offline and online) is ensuring these points are effectively and professionally communicated to prospective buyers. For example, your website should include sections which clearly inform prospective buyers who you are, why your natural ingredient is innovative and how it is sourced, processed and ethical, and the relevant certification . Furthermore, having photos taken by a professional photographer that show these features is a good idea.
Whenever possible, look to combine these selling points into one product. Zuplex is an example of a company that sells a proven anti-aging extract from an indigenous plant found in South Africa. It is harvested by a women’s organisation and sold to a processing company that complies with the Nagoya Protocol, has incorporated the women’s organisation as a shareholder and has established targets for reducing its energy and water consumption as well as its waste. This ethical approach is attractive to many companies.
- Include products in your offer that are innovative, high quality, ethically sourced, natural and with an interesting or new origin.
- Highlight these attributes in your sales pitch, in your marketing materials and on your website.
- Consider third-party certification of any of these attributes, as this is an advantage.
- Be honest. Do not make claims about features your product does not have as you will have to substantiate this at a later date. Do not claim to have certification that you do not have, for example.
4. Connect with government and non-government agencies
Being part of an export promotion programme can help increase your chances of doing business with European buyers. Putting it another way, the investments that you will likely have to make in order to meet European requirements will be more likely to yield a return when you work with expert agencies that know about exporting. These are two key advantages of following this recommendation.
Organisations implementing export promotion programmes have a structured approach to supporting exporters, including training, coaching, distance guidance, trade fair participation and matchmaking with European buyers. They hire European sector experts who advise exporters on how to meet the market requirements and buyers’ expectations. The most important European agencies operating in the cosmetics ingredients sector:
The Centre for the Promotion of Imports from developing countries (CBI) - CBI offers an export coaching programme with a comprehensive range of activities for exporters, including in-country training, company visits, coaching, distance guidance, participation in multiple trade fairs, and market information. CBI works with senior sector experts who work closely with the exporters during the export coaching programme. CBI also works with Business Support Organisations (BSOs) that help exporters develop their export businesses. The Swiss Import Promotion Programme (SIPPO) – SIPPO focuses on training and development exclusively for selected BSOs in the countries of origin, training and coaching the BSO staff to increase their capabilities to provide improved services to exporters.
The Import Promotion Desk (IPD) - IPD provides a platform where exporters from selected countries can meet European, especially German, importers. They also prepare market reports. The International Trade Centre (ITC) – ITC is a developmental agency of the United Nations for sustainable trade. The majority of its activities are intended for exporters which they help through their programmes. ITC provides export management, supply chain management, quality management, packaging, and marketing and branding programmes.
In addition, non-governmental organisations also provide support to exporters in developing countries. Africrops is a supplier and consultancy offering on-site capacity building and training in Africa.
- Actively seek out government and non-government agencies to support your export activities.
- Involve your staff in training activities, so that they acquire more skills and experience.
- Plan your investment in an export promotion programme in the same way as you would plan any other investment and be prepared to implement the recommended changes.
- Work with local business associations to access services available to other companies in your sector.
- Work pro-actively with sector experts and be prepared to share your company information, so that they can give you the most appropriate and relevant advice.
5. Organise your product documentation
A comprehensive dossier of data and information about your cosmetic ingredient will facilitate your communications with existing and prospective customers. Developing such a dossier and having a thorough understanding of the contents will enable you to anticipate their questions and meet their expectations of being a knowledgeable and reliable partner. These are two key advantages of following this recommendation.
The dossier should contain all the known data and information about the ingredient, including safety, efficacy, claims, patents, ethical and corporate social responsibility, health and safety, production, supply chain and traceability and updated price lists.
Safety Data Sheets (SDS) contain information on potential hazards, storage, and handling of ingredients. Based on the information in SDSs, European buyers will be able to make assessment of potential hazards in regard to sourcing your ingredients.
Technical Data Sheets (TDS) are also called Product Specifications. This document contains compositional data about the ingredient (all batches should conform to this) and other technical characteristics, including certifications, registrations (REACH, IECIC), reference to industry standards and tariff codes.
Certificates of Analysis (CoA) contain analytical data that relate to the product specification. CoAs include test results, dates of the tests, method used, and contact details of the laboratory (if tested by a third party). Buyers usually carry out their own tests in order to ensure safety and quality of every batch and to verify that the product matches the data in the specification.
The whole dossier is an internal document and not for circulation outside the company. However, the data and information should be used to prepare key documents such as the Product Specification, Safety Data Sheet, and promotional materials.
Grey literature should also be kept in this dossier, as well as information on where this ingredient is used in cosmetics and foods, especially information about any final-product companies using this ingredient (if available). Grey literature refers to research that is either unpublished or has been published in non-commercial form. Examples include government reports, conference proceedings, fact sheets, dissertations, maps and images, and photographs.
The development of the relationship with the buyer starts by sending product documentation and completing a supplier questionnaire. Having all the information in one place will facilitate this process.
- See CBI the study Workbook for preparing a technical dossier for cosmetic ingredients, which provides comprehensive information and guidance on preparing a technical dossier for cosmetic ingredients.
- Prepare detailed, complete and accurate product documentation to meet buyers’ requirements and expectations. Accurate and complete documentation is the fundamental basis of your business. Use the product information in the product dossier wisely. It is strictly internal. Use it to prepare public information such as product information documents and communication materials.
- Identify whether laboratories in your own country can carry out all or some of the analytical tests.
- Review the example Safety Data Sheet, Technical Data Sheet and Certificate of Analysis for patchouli essential oil.
- Do not copy SDSs from the internet. Work with laboratories and chemists to prepare your own based on your own research. Study REACH and GHS (CLP) regulations.
- Ensure you have a budget to prepare the technical documentation. Costs can be high, especially for new ingredients.
6. Meet common buyer requirements
European buyers of natural cosmetic ingredients look for quality and reliability and this is what underpins their buyer requirements. Quality covers not only the product quality, but also the company and the supply chain. Reliability covers not only logistics, but also raw materials, processing and communications. A key advantage of adhering to these guidelines is that you will likely be at an advantage in your journey to enter the European market because European buyers are your main entry points into the European market.
The quality of your product is usually presented in its Safety Data Sheet, Technical Data Sheet and Certificate of Analysis. These three documents must be well prepared and should accompany every product you are offering.
European buyers often have specific requirements of natural ingredients as regards their composition as this determines their use in cosmetics. For example, European buyers of baobab oil have specific requirements concerning its active properties, specifically its fatty acid composition, such as oleic acid, palmitic acid and linoleic acid. Thus, you should find out if buyers have specific requirements and only commit to meeting them if you can.
In addition, consistent quality is important to European buyers because it is central to the manufacturing of cosmetics. Thus, buyers prefer a consistent level of quality across all orders. They will also expect all orders to be delivered in suitable packaging based on order volumes, for example, high-quality essential oil in aluminium, lined or lacquered steel containers that can hold 25 kilograms for an order of that size.
Quality also includes an assessment of your company. A quality company pays attention to corporate social responsibility, financial strength and documenting all its operations. You will be expected to have policies and procedures in place that cover key areas of labour, health and safety, environment and doing business, with targets set and measured. SEDEX is a starting point for an ethical audit.
Having documented processing operations, using at a minimum the Hazard Analysis and Critical Control Points (HACCP) methodology, and ideally following Good Manufacturing Processes (GMP) and ISO9001 systems, are good practices that will help you stand out from other companies. Buyers are increasingly applying quality management standards to assess the credibility of prospective suppliers. Applying quality management standards lends credibility to your business as it shows your commitment to delivering high-quality ingredients, which also gives your company a positive image.
Supply chain quality is assessed by traceability, i.e. knowing where and from whom the raw materials originate. Certification schemes, such as organic and natural, have the benefit that they build in traceability. If you do not want or need organic or natural certification, consider how to offer a similar matching guarantee of traceability.
Reliability is assessed by On Time In Full (OTIF) deliveries. It is also assessed by demonstrating certainty about available quantities of raw materials, demonstrating certainty about organising the logistics and being reliable in communication.
- Make sure you deliver both quality and reliability. European buyers prefer doing business with suppliers which can reliably supply high-quality natural cosmetic ingredients.
- Make sure you have evidence about the availability of your raw materials, especially if wild harvested, and their traceability.
- Ensure that you know the production capacities of the equipment and the available surplus capacity, and that you have standard operating procedures.
- Use the SEDEX platform as a minimum to organise the presentation of your ethical performance.
- As a minimum, invest in developing HACCP quality control systems and developing standard operating procedures for the whole factory. Ideally invest in management systems such as ISO9001.
- See the CBI study what requirements must natural ingredients for cosmetics comply with to be allowed on the European market because it provides further information about the requirements European buyers tend to have in common.
7. Build long-term relationships with buyers
Once you are in business exporting your ingredients and getting paid for them, you need to build on that achievement so you can maintain the orders and find new business, or, put another way, so you can achieve sales targets for the current year and prepare sales targets for next year. A key advantage to doing so is that along with it ensuring the long-term viability of your business it may also result in higher profits.
It is important to work within the framework of performance and take appropriate actions if actual performance does not match targeted performance. Ensure that a culture of performance, targets, reward and openness is established and maintained in your company.
Targets can be established for any area of the business. Targets on the supply and processing side of the business tend to focus on cost reduction and value for money. Targets on the sales side of the business focus on sales value as well as prospective sales and the ratio of sales contacts to sales contracts. Involve your staff in developing these targets. Company owners and senior managers have a role to ensure that the targets are SMART (Specific, Measurable, Achievable, Relevant and Timed) and move the company forward towards it goals. Set up regular, weekly meetings with the department managers to review the progress against the targets, identify areas that are drifting off course and take corrective action quickly.
After every new order is placed with a new customer, it is good practice to review that order internally and identify what went well and what you can put in place to improve the entire order process in the future. This has two objectives: (1) to achieve greater efficiencies within your company and (2) to achieve better customer service.
Once per year, request that your customers provide you with an evaluation of the previous year’s business, again broadly asking the same questions about what went well and what can be improved for the future. Combine this with the annual review of orders and plans for the following year.
When you are in business with international customers, you might only receive 2 or 3 orders per year, and those might be the only communications you have with that company. That is the minimum level of communication necessary to maintain that relationship. Think about developing a newsletter or active social media to communicate with your existing and future customers. Social media and tracking website traffic in particular are essential elements of building your business. Furthermore, ask the principal contact at your customer’s business if they would like to receive an article for their own newsletter or website, so they can use it for their own communications.
- Establish a performance culture based on targets, measurement and transparency.
- Encourage frequent, open communications within the company, so that performance issues in daily business can be addressed quickly.
- Review your performance as a supplier with your customers. Take appropriate actions on the feedback.
- Review the sales performance process with your staff after every order.
- Keep your existing and new customers aware of your business through active social media and marketing communications.
8. Send high-quality samples to interested buyers
European buyers of natural cosmetic ingredients usually require prospective suppliers to provide them with samples which they will use in order to determine whether you are a suitable business partner. In particular, they will use these to determine whether your natural ingredient complies with the EU’s requirements and their buyer requirements. Samples are then tested and analysed at laboratories. A key advantage of providing samples is that it is likely to increase your chances of starting a business a relationship with European buyers. Failing to do so is likely to result in them losing interest in doing business with you.
When buyers request a sample, you should ensure you provide them with samples as per their request. This will concern the:
- type of sample (for example organic or conventional and refined or unrefined);
- quantity (for example 300 grams of refined shea butter);
- packaging (for example kraft paper bag and/or steel container)
Thus, you should ensure you send samples which are of the highest quality and the correct quantity and that you do so on time. In addition, European buyers regularly test natural ingredients they have purchased, usually on a per batch basis. You must therefore ensure you always supply natural ingredients of the highest quality. Failure to do so could result in your business relationship with European buyers ending, as you do not meet their strict quality requirements.
- Make sure you send European buyers samples as per their request. Ask buyers to clarify their request if it is not clear and/or you have any queries. Taking the initiative and being proactive are looked favourably upon in business.
- Always send and continue sending samples of the highest quality to European buyers after establishing a business relationship with them. Failure to do so could result in the termination of your business relationship with them.
9. Act in a professional manner when dealing European buyers
In Europe, behaving professionally is crucial to creating and maintaining a positive and reliable business image. A key advantage of doing so is that it gives your business credibility in addition to showing that you are reliable business partner. Meanwhile, not doing so is likely to have the opposite effect, which will likely result in European buyers losing interest in you. You should therefore ensure you always uphold a good standard of professionalism in dealings with European buyers.
Your behaviour reflects on your company and plays an important role in how European buyers perceive your business. In business several factors help to create and portray a professional business image, including:
- Dressing and behaving appropriately – This concerns dressing in appropriate business attire and behaving and speaking in a polite and courteous manner and tone.
- Punctuality – This concerns being on time for meetings and discussions as agreed. Being late is considered unprofessional.
- Being transparent – With regard to your natural ingredients this concerns taking responsibility for any mistakes. Should this happen, you must immediately take full responsibility and apologise to your European buyers. Then, you should take steps to ensure similar mistakes will not be repeated in future and inform buyers about these in order to reassure them.
- Being honest – This means refraining from making false claims about your natural ingredients as you will have to substantiate them at a later date. For example, claiming to have organic or fair trade certification, when that is not the case.
- Fulfilling agreements – This concerns meeting contractual agreements made with buyers, concerning quality, quantity and delivery, for instance. Should any changes occur, you must communicate these quickly and clearly to your buyers. In addition, you should try to work constructively with buyers to find solutions to any unexpected issues.
Competition is fierce in the European natural cosmetic ingredient sector. Buyers receive numerous requests from prospective suppliers of natural ingredients. It is therefore essential that you go above and beyond in order to win them over.
- Communicate professionally with European buyers in person or via email. Your personal communication style and the documents you submit are crucial to leaving the right impression about your business. For example, you should ensure your emails are short, concise and free of spelling and grammatical errors.
- Do not suggest using WhatsApp as a method of communication with buyers as this is not considered courteous in Europe.
- Act in a spirit of improvement in your dealings with buyers. If something goes wrong, take responsibility, apologise, take steps to ensure mistakes are not repeated in future and inform buyers about these.
10. Get practical help in our studies
CBI has carried out several studies about doing business in Europe. One key advantage of reading these studies is that they will provide you with further information about the European natural cosmetic ingredients sector which will help you gain a better understanding of it, which is essential when you are seeking to enter the European market. More importantly, these studies offer practical tips which can help you increase your chances of successfully entering the European market.
- Read CBI’s European market entry studies on several natural cosmetic ingredients. These market entry studies contain practical tips which can help you start doing business with European buyers and successfully maintain your business relationship with them.
- Read CBI’s European market analysis studies on several natural cosmetic ingredients. The market analysis chapter provides profiles of European markets with the most business potential along with examples of leading importers in those country markets.
- Read CBI’s tips for finding buyers on the European cosmetics market, which include several practical tips on finding buyers in Europe.
- Read CBI’s 8 tips for finding buyers on the European cosmetics market, which includes several practical tips on how to organise your exports that are likely to help you increase your chances of entering the European market.
This study has been carried out on behalf of CBI by Ecovia Intelligence.
Please review our market information disclaimer.