Ecological personal and household hygiene products that promote circular economy
Ecological personal and household hygiene products that promote circular economy
Business Model Description
Manufacturing environmentally friendly products that promote a pollution-free lifestyle by avoiding non-biodegradable materials, in collaboration with indigenous communities and involving local stakeholders in the production process.
Expected Impact
Encouraging a plastic-free lifestyle by consuming products crafted from natural ingredients and actively engaging in a circular economy.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Macroregion Selva
- Macroregion Centro
- Region Lima y Callao
Sector Classification
Consumer Goods
Development need
- The manufacturing sector represents 16.52% of the GDP for the year 2022(1) and employed 1.6 million people as of September 2022 (2). In December 2022, the fast-moving consumer goods sector experienced a decline of -8.3% compared to December 2021. However, over the course of the year 2022, the variation was -2.8% (3)
Policy priority
-Concerted National Plan for the Promotion and Development of Organic or Ecological Production - PLANAE 2021-2030 (7)
-National Your Company Program, created to contribute to the productivity of micro and small businesses (15)
-Haku Wiñay/Noa Jayatai Program, which provides technical and financial assistance to rural families to develop sustainable productive activities.
Gender inequalities and marginalization issues
-The employment activity rate for women was 54.5% in 2020 and 63% in 2021, which is lower than that of men at 78.4% (9)
-Income disparities affect consumption patterns: Women's average income is 69.6% of men's income (10), and in 2021, men's labor income increased by 10.7% while women's decreased by 1.1% (11)
Investment opportunities introduction
- Mass consumption continued to grow by 11.0% during the second quarter of 2022 (23)
-The projection for the growth of the Peruvian economy in 2022 is 3.3% (24)
- Entrepreneurial MIPYME Fund promotes reactivation by allocating funds for business innovation, management improvement, and market access promotion (17)
Key bottlenecks introduction
- Inflation in 2022 was 8.56%. This reduces the purchasing power of the population (15)(16)
- Political instability limits investment opportunities (21)
- Regulatory permits provided by DIGEMID slow down the establishment of companies in the sector (25)
Consumer Goods Retail
Development need
In 2019, the retail sector represented 4% of the GDP and projected a similar value for 2020 and 2021. However, in 2022, the production of consumer goods fell by 2.8%. Within this reduction, one of the few areas that experienced growth was personal hygiene products, with a 3% increase, reaching sales of USD 276.3 million (19)(1)(21).
Policy priority
- National Program for Product Diversification: aims to diversify production and enhance the competitiveness of micro and small enterprises (12).
- Law No. 29196 on the Promotion of Organic or Ecological Production: promotes the sustainable development of the sector (13).
- National Policy on Decent Employment (PED), Supreme Decree No. 013-2021-TR (14).
Gender inequalities and marginalization issues
Businesses led by women have increased and are primarily concentrated in tertiary activities such as commerce (39.8%), services (27.5%), and agriculture (26.8%). However, in the manufacturing sector, 38.7% of micro and small businesses (MYPES) are led by women, with an average age of 45 years, a level that has grown in recent years (22).
Investment opportunities introduction
MIPYME emprendedor: promotes the reactivation of micro, small, and medium-sized enterprises through non-financial instruments, including technological diffusion, fostering business innovation, improving management, and promoting access to markets. It has a fund of USD 39.9 million (23).
Key bottlenecks introduction
Delays in obtaining permits and registrations from DIGEMID (General Directorate of Medicines, Supplies, and Drugs) reduce competitiveness in the industry. Another issue lies in the supply chain: suppliers of extracts and oils face difficulties in ensuring product stability, and many of them still operate informally (21)(24).
Consumer Goods Retail
Pipeline Opportunity
Ecological personal and household hygiene products that promote circular economy
Manufacturing environmentally friendly products that promote a pollution-free lifestyle by avoiding non-biodegradable materials, in collaboration with indigenous communities and involving local stakeholders in the production process.
Business Case
Market Size and Environment
< USD 50 million
5% - 10%
There is an increasing trend in responsible consumption in Peru, with 26% of people declaring their willingness to pay more for products they consider to have a positive impact on the environment (20).
Indicative Return
5% - 10%
20% - 25%
Business plans for the development of a natural cosmetics store achieve a return on investment between 20% and 30%. (26)
Investment Timeframe
Short Term (0–5 years)
The investments in the natural cosmetics segment generally offer a return on investment period of 2 to 3 years (27)(28).
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Market - High Level of Competition
Market - Volatile
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Generating growth opportunities for communities can be achieved through employment opportunities and the promotion of the preservation of their traditions and customs.
Gender & Marginalisation
The female workforce is mainly involved in the commerce, services, and agriculture sectors, yet they consistently receive lower incomes, averaging 27.4% less than their male counterpartss (2). Additionally, 53% of women are in vulnerable jobs, compared to 43% of men (29)
Expected Development Outcome
Encourage the adoption of conscious consumption of personal use products crafted in an eco-friendly manner, benefiting from collaboration with local producers from the Amazon and Andean communities.
Gender & Marginalisation
By promoting local natural products, the aim is to generate better income for women in the communities while respecting their traditions and way of life.
Primary SDGs addressed
12.2.1 Material footprint, material footprint per capita, and material footprint per GDP
12.2.2 Domestic material consumption
There is an increasing trend in responsible consumption in Peru. 26% of people have declared their willingness to pay more for products they consider to have a positive impact on the environment (20).
The sector in the country employs over 650,000 people, including consultants, production, and marketing. (36)
Secondary SDGs addressed
Directly impacted stakeholders
People
Corporates
Public sector
Indirectly impacted stakeholders
Corporates
Public sector
Outcome Risks
A decrease in purchasing power due to an inflation crisis that affects the purchase of non-essential products.
Difficulty in the supply of raw materials due to political, social, or natural factors.
Groups of people who do not get to experience the nutraceutical benefits of products because they are not affordable within their family budget.
Impact Risks
The possibility that ancestral cultural practices in indigenous communities may be affected due to the implementation of natural cosmetology initiatives.
Groups of people may see the opportunity to produce inputs required for the business but lack knowledge of sustainable production management.
Impact Classification
What
Promotes local consumption of ecological products.
Risk
Increase in inflation leading to rising production costs and a reduction in their market share
Contribution
Provides sustainable solutions through everyday-use products, minimizing waste
Impact Thesis
Encouraging a plastic-free lifestyle by consuming products crafted from natural ingredients and actively engaging in a circular economy.
Enabling Environment
Policy Environment
National Strategic Development Plan 2050: Drives programs to enhance capacity, digital skills, and technical assistance for productive self-employment (6).
The Centers for Productive Innovation and Technology Transfer (CITE) contribute to the improvement of the productivity and competitiveness of micro, small, and medium-sized enterprises (Mipyme) and productive sectors (9).
Financial Environment
Fiscal incentives: In 2020, the Peruvian government granted tax relief measures in response to the health crisis. These measures included postponing the income tax declaration and payment, extending the declaration and payment deadline for the temporary net asset tax, releasing withholding funds, among other provisions.
Regulatory Environment
Law No. 29337 that establishes conditions for competitiveness (10)
Marketplace Participants
Private Sector
BAMBOO BALANCE
Government
MINAM
Multilaterals
Kunan
Non-Profit
NESsT, Fundación Wiese, ACCA
Target Locations
Macroregion Selva
Macroregion Centro
Region Lima y Callao
References
- (1) BCRP (2023). Notas de estudios diciembre 2022
- (2) INEI (2022). Perú Brechas de Género 2022
- (3) INEI (2022). Estadísticas con Enfoque de Género
- (4) BCRP (2023). Notas de estudios diciembre 2022
- (6) PCM (2022), Plan Estratégido de Desarrollo Nacional al 2050
- (7) MIDAGRI (2021), Plan Nacional Concertado para la Promoción y Fomento de la Producción Orgánica o Ecológica - PLANAE 2021-2030:
- (8) GOB.PE (2022). Brecha de ocupación laboral - Nota de Prensa
- (9) PRODUCE (2020), Centros de Innovación productiva y Transferencia Tecnológica (CITE)
- (10) Congreso de la República (2009). Ley N° 29337. Ley que estabece disposiciones para apoyar la competitividad productiva
- (10) BAMBOO BALANCE
- (11) KANTAR (2022). Consumo masivo continuó creciendo durante el segundo trimestre del 2022
- (12) PRODUCE (2023). Programa Nacional de Diversificación Productiva
- (13) GOB.PE (2017). Ley N° 29196, Ley de promoción de la porducción orgánica o ecológica.
- (14) GOB.PE (2021). D. S. N° 013-2021-TR. Política Nacional del Empleo Decente (PED)
- (15) BCRP (2022). Reporte de Inflación . Diciembre 2022
- (16) INEI (2023). Variación de los Indicadores de precios de la Economía. Diciembre 2022
- (17) MIDAGRI (2022). Problemas tipo de la agricultura peruana
- (18) MTPE (2022). Encuesta de Demanda Ocupacional (EDO)
- (19) BBVA Research (20219). Perú Retail
- (20) STAKEHOLDERS (2022). Consumo Responsable en el Perú
- (21) CCL (2022). Crecimiento del sector cosméticos e higiene.
- (22) GOB.PE (2021). MYPE lideradas por mujeres generan más puestos de trabajo
- (23) MEF (2023). Fondo MIPYME Emprendedor - Nota de Prensa
- (24) EL COMERCIO (2015). Perú apuesta por la cosmética en base a productos naturales
- (25) DIGEMID. Resolución N° 1906 que modifica, el Reglamento de la Decisión 516 sobre Control y Vigilancia Sanitaria de Productos Cosméticos
- (26) ESAN (2021). Plan de negocios de una tienda virtual de cosméticos naturales.
- (27) Universidad Peruana de Ciencias Aplicadas-Universidad Europea de Madrid (2015) BELLECOM Empresa comercializadora de cosméticos a través del canal de venta por internet
- (28) Universidad Peruana de Ciencias Aplicadas (2019) Glamour Makeup Boutique de Cosméticos
- (29) IDB (2021) La participación laboral de las mujeres del Perú: 10 mensajes clave y 6 recomendaciones de política