Rise of Functional and Clinical-Grade Skincare

June, 2025

The rising geopolitical and tariff-related uncertainties, in particular, amidst United States’ renewed protectionist trade stance continues to drive accelerated regionalization of supply chains. With sharply increased import duties on Chinese-origin packaging components, active ingredients, and specific finished formulations, brands are diversifying their manufacturing footprints. Accordingly, contract manufacturers in India, Vietnam, Mexico, and the US are witnessing increased business growth. Contract manufacturers are offering bundled sourcing support for packaging and formulation inputs to help clients decouple from Chinese vendors. Similarly, Mexico is emerging as a nearshoring hub, particularly for high-volume categories such as body lotions, bar soaps, and haircare products. Accordingly, contract manufacturers remaining rigid in their sourcing models and heavily dependent on Chinese subcomponents are likely to face challenges. On the other hand, companies investing in regional presence, localizing supply networks, and opt for integrated logistics coordination stand to attract multi-year deals over the near to medium term future. The rising geopolitical and tariff-related uncertainties, in particular, amidst United States’ renewed protectionist trade stance continues to drive accelerated regionalization of supply chains. With sharply increased import duties on Chinese-origin packaging components, active ingredients, and specific finished formulations, brands are diversifying their manufacturing footprints. Accordingly, contract manufacturers in India, Vietnam, Mexico, and the US are witnessing increased business growth. Contract manufacturers are offering bundled sourcing support for packaging and formulation inputs to help clients decouple from Chinese vendors. Similarly, Mexico is emerging as a nearshoring hub, particularly for high-volume categories such as body lotions, bar soaps, and haircare products. Accordingly, contract manufacturers remaining rigid in their sourcing models and heavily dependent on Chinese subcomponents are likely to face challenges. On the other hand, companies investing in regional presence, localizing supply networks, and opt for integrated logistics coordination stand to attract multi-year deals over the near to medium term future.