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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.
This story first appeared in the March 5, 2010 issue of WWD. Subscribe Today.
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.”
Arden’s Beattie added, “The bottom has been hit and is starting to modestly rebuild. We may not see a dramatic recovery, but instead one that is moderate and gradual.”
Caroline Pieper-Vogt, ceo of Fusion Brands America Inc., said her company’s business was ahead 28 percent in 2009. Added Roslyn Griner, senior vice president of marketing and product development for Fusion Brands Americas, “our motto is ‘transformational beauty,’ and our upcoming launches will include what we call ‘colorceutical’ products — color cosmetics with high-powered, almost pharmaceutical concentration ingredients. By spring 2011, we will be a true colorceutical company.”
Eric Horowitz, ceo of Sue Devitt Beauty, is also bullish on treatment-infused cosmetics, noting that the company plans to roll them out in Macy’s new “impulse” store concept, said to be in the testing phase in Macy’s doors on the West Coast.
The fragrance suppliers were also upbeat, noting that change seems to be in the air. “We are starting to see improvement,” said Jerry Vittoria, president of fragrances, North America, for Firmenich. “We were flat in the second half of 2009 and the last three months have been promising. We all believe 2010 is going to be a better year.” Vittoria noted that masstige fragrance brands such as Bath & Body Works seem to be weathering the storm best.
Klaus Stanz, president of fine fragrance at Symrise, said he expects the fine fragrance business to improve this year. Cosimo Policastro, executive vice president of fine fragrance for Givaudan, pointed to Marc Jacobs’ Lola, Ed Hardy’s True Religion and Beyoncé Heat as encouraging signs for the coming year, adding that marketers are looking for alternative forms of distribution and injecting a stronger element of storytelling into the marketing. He added that Givaudan will shortly announce the creation of a new iPhone app that is hooked to the fragrance market.
Bill Boraczek, senior vice president of cosmetic marketing for Coty Beauty U.S., and Karen Mileski, vice president of fragrance and personal care for Coty Beauty U.S., previewed a long lineup of initiatives, including scents from Faith Hill, Tim McGraw, Céline Dion and Nautica.
When asked his impression of the PCPC meeting, which he was attending for the first time, Frédéric Rozé, president and ceo of L’Oréal USA, said, “It’s critical; it’s important.”
The conference drew executives from 140 companies, more than last year’s 125. But fewer people attended; 411 versus 433 last year. PCPC executives attributed the slight falloff to fewer spouses and guests coming this year. However, a PCPC spokeswoman pointed out the number of first-timers at the meeting was up 40 percent.