By and  on March 5, 2010

BOCA RATON, Fla. — As Dan Brestle, chairman of the Personal Care Products Council, urged his fellow cosmetics executives to join the fight against what the industry group sees as a flood of unwanted and unneeded state proposals to ban product ingredients, others attending PCPC’s annual meeting here Feb. 23 to 25 sounded a call to action by uttering one word: Colorado.

The legislature in that Rocky Mountain state is discussing a bill that could, in effect, force reformulation of products, based on minute trace amounts of elements found in everyday life. As onerous as the industry finds that particular bill, it’s part of a broader swath of proposed state legislation, driven by what the industry identifies as non-governmental watchdogs and special interest groups.

“The next six months are going to be very difficult,” predicted Brestle, who was reelected as PCPC chair at the meeting. He retired last year as vice chairman and president of Estée Lauder Cos. North America and remains a consultant with the company.

Ed Shirley, vice chair of global beauty and grooming at Procter & Gamble, elaborated: “We’re getting over 100 individual state filings,” he said. Of the Colorado legislation, he observed, “imagine having to have 50 different formulas,” adding that products like Pantene, Secret and Dove would have to be reformulated because of “inconsequential trace elements.” He continued, “We’ve been around for 173 years, and at the end of the day, our brands are all we have. We already go over the line in terms of safety; we’re not going to put our brands at risk by completely reformulating them.”

Added Scott Beattie, chairman, president and chief executive officer of Elizabeth Arden, who was elected PCPC treasurer at the meeting, “The legislation in Colorado is not founded in reality. There is no way to completely eliminate every minute trace of some of these ingredients. Our legislative agenda is more important than ever.”

Lezlee Westine, president and chief executive officer of PCPC, agreed. “We have stepped up our efforts more than ever and have already impacted more than 100 pieces of legislation,” she said. “We are working closely with the Food and Drug Administration and with our global partners, especially in the European Union, Japan and Canada.”

The threat of state legislation in addition to a federal bill, introduced by Rep. John Dingell (D., Mich.) before the House of Representatives, was a current of conversation, along with the continually worrisome business climate. A number of executives said they are seeing moderate improvement in sales, with many emphasizing creating a bond with their customers as a key strategy.

“It’s gone from gwp to VIP,” said Pamela Baxter, president and ceo of LVMH Perfumes & Cosmetics North America. “The consumer has become much more pragmatic and she is very well-informed. She has to be convinced to buy.”

“This economy really makes you focus on what works,” said Jonathan Zrihen, president and ceo of Clarins Groupe USA. “We have focused on service, and have opened 15 of what we call ‘skin spa’ counters since July 2009 — eight in Bloomingdale’s and seven in Nordstrom. Our next one will open in the Chestnut Hill Bloomingdale’s in April.” Zrihen said as many as 50 of these specialized counters could be added in the next few years. As well, Clarins began lowering the prices on its cleansing products by 30 percent in February.

Heidi Manheimer, ceo of Shiseido Cosmetics America, predicted, “I don’t think we’ll see a double-digit increase, but we will see an increase.” Following a strong launch last year that exceeded expectations, she said the company learned that the customer is looking for value “on every level, not just on price.”

“I started [OPI] in a recession,” said George Schaeffer, president and ceo of OPI Products Inc. “Sometimes, it washes out competition that isn’t good. We grew last year because people wanted the security of a product they could believe in.”

Jean-Marc Plisson, ceo of Fresh Inc. at LVMH Perfumes & Cosmetics North America, noted that Fresh has been tightening distribution and finding innovative ways to service its consumers. One recent initiative, which is rolling out in Fresh’s freestanding stores now, involves mixing and dramming fragrances from Fresh’s library of retired scents. “This economy pushes you to do more for the consumer,” he said.

“There is a big myth that direct sellers are recession-proof,” said David Holl, president and ceo of Mary Kay Inc. “This economic crisis has been deep. Being globally diverse has helped, but we have really stepped up all of our efforts.”

P&G’s Shirley said the market is “still in recovery. It’s not as fragile as a year ago.” He added that retailers are honing their assortments and “we are cleaning up our own portfolio.” Shirley said reducing its earnings targets from double-digit to single-digit growth, P&G was freed up to invest in its brands while keeping costs in check. “We are going to grow share profitably. We will not chase volume at any cost.”

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