A supplier group is
assumed to be very powerful for following reasons. Raw materials producers do
not depend heavily on care products industry due to also food industry
existence, moreover in accordance to Euromonitor International,  Germany is Europe’s
largest market for organic packaged foods and beverages (Euromonitor International,
Switching cost of raw material vendors is high because
of the strict regulatory compliance required while sourcing raw materials. As
stated in Harvard Business Review article, “when switching costs are high, industry
participants find it hard to play suppliers off against one another” (Porter, 2008). Suppliers offer
products, that are differentiated by quality. There is no substitute existing
on the market for NOC brands, because their ideology is strongly connected to ingredients. In the Graphic 10 in Appendix the value chain of natural ingredients for cosmetics
industry is described, information is collected from CBI The
Ministry of Foreign Affairs report 2017 (CBI Ministry of
Foreign Affairs, 2017). 

providers of the organic ingredients to the factories and manufacturers are BASF, Dow Chemicals and Arch Chemicals. There is a significant threat
that suppliers may turn their business into full cycle and launch producing of own
brands targeted on the end customers. Positive effect of organic raw materials purchases
by natural cosmetic companies is the help
to agriculture and economy of developing countries. Some German cosmetic
companies work on their sustainability and corporate social responsibility,
develop manufacture processes with care of environment, development assistance organizations or support political parties. According
to Research Institute of Organic
Agriculture FiBL report, the top three countries with largest numbers of
organic producers in 2015 were: India, Ethiopia and Mexico (Willer & Lernoud, 2017).

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