andemic exposed the vulnerabilities of Australia’s supply chains’ focus on overseas manufacturing. The beauty manufacturing industry is worth around $4 billion now in Australia, after years of strong growth through Covid-19. “There’s been a massive shift in brands coming to Australian manufacturing, moving away from other countries based on the last few years,” Melbourne-based manufacturer New Laboratories’ chief executive Rohan Widdison told Inside Retail.  According to Widdison, New Laboratories has seen triple digit growth for several years in a row. “I think [for a while] Australian beauty manufacturing space was known to be pretty basic, but in the last four years or so, we’ve seen a number of trends coming together to really boost the sector. It hasn’t happened by chance, though. We’ve got the talent, the resources, the logistics, the financial competitiveness, and the professional opportunities.” Retailers’ local lens According to Peta Granger, industry expert and former head of Lush Australia, it is understandable retailers and suppliers are looking for local options after the supply chain shocks seen recently.  “Retail supply chains have had a severe battering over the pandemic from peak shipping costs, [truck exhaust fluid] AdBlue issues and labour shortages, but the biggest challenge for Australian businesses remains our distance from the rest of the world,” Granger told Inside Retail.  “A local supply chain brings so many benefits: flexibility, freshness and a deeper connection to the manufacturing process, the product’s quality and the people producing them.” Plus, the pandemic has reignited a call among consumers to support local businesses and products. “Research shows that customers are willing to pay more for Australian-made products because they feel their choices are helping society and keeping local Australians in jobs,” Granger said.  Plus, making beauty products is different, according to Atelier’s Nick Benson, when compared to other manufacturing spaces. “There’s an artistry to it, which means we don’t have to compete on automation or output or anything like that,” said Benson. “And beauty manufacturing supports a high margin product, which means that brands can absorb an extra dollar or two in costs [by manufacturing locally] because the margins are so high. It’s been a bit of a perfect storm of tailwinds, really.”  “There’s a demand” What has been driving this rapid growth? According to Widdison, the industry grew throughout the Covid-19 pandemic as many brands saw Australia as a viable manufacturer after years of local investment and efforts partnering up with other markets to collaborate and grow.  “For example, we [at New Laboratories] have a relationship with Monash University’s Pharmacy and Pharmaceutical Sciences Departments, which traditionally put a lot of developers or formulators into the pharmaceutical chemistry area – but we’re now seeing a lot of people coming through that path that actually want to go into cosmetics and personal care,” Widdison said.  As a result, students coming into the space are looking at cosmetics as the industry of choice – not as a second option behind pharmaceuticals. “There’s a distinct focus on the industry from the academic side, which has the beginnings of what we see in Europe, where academia integrates with the commercial side of the industry to the benefit of both,” Widdison said.  Many industries have struggled to receive stock through international supply chains, local suppliers have seen strong growth over the past few years as shuttered borders and burdened supply chains faltered.  According to the recent Supply Chains: State of Play report by AI Group, many local suppliers have seen improved sales for a “while”, as domestic businesses buy within Australia to improve their supply chain’s resilience.  It’s not always viable for manufacturers in other industries to set up shop in Australia, but there is now enough of a concentration of beauty and cosmetics manufacturers to create the demand needed to capture the attention of overseas suppliers, ensuring a steady supply of materials. “Getting the materials hasn’t been an issue,” said Widdison. “There’s a demand, and we don’t have the ‘toilet roll’ effect where suddenly everyone wants a particular ingredient and it’s all gone.”