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The Top Five Beauty Stories

Smell of Battle<br><br>NEW YORK —?Smells like a new way of doing business. <br><br>So many major fragrance launches have hit department and specialty store counters this year that the landscape may well have permanently shifted. <br><br>A large...

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Smell of Battle

NEW YORK —?Smells like a new way of doing business.

So many major fragrance launches have hit department and specialty store counters this year that the landscape may well have permanently shifted.

A large flood of fragrances — upward of 70 major launches this year, and at least an additional 20 on tap for early next year — in a sinking market is heating up the endless quest for new, new, new. Whether it’s a scent with a designer name — such as well-received entries this year from Vera Wang and Kate Spade, among others — or a new scent from a classic name, such as Chanel’s Chance, the consumer is continually being pounded with “the latest thing.”

The concern in the beauty industry: The volume of new scent — and the rapidity with which they cycle in and out of the market — is permanently changing how the fragrance business is conducted. Add that to continual pressure on margins from retailers and conditions point to a quick in-and-out scenario for many upscale fragrance manufacturers.

The scenario is a sharp change from the traditional way that the category has been marketed. In the early Eighties and before, companies might wait as long as four to five years between major launches; these days, it’s more like every 12 to 18 months —?and even the most talked-about brands can be in and out of the marketplace in less than five years.

Is this healthy for the industry? Most manufacturers say no. Camille McDonald, president and chief executive officer of Givenchy, American Designer Fragrances and Guerlain, advocates containing newness to 25 percent of a store’s assortment, leaving 75 percent for classic brands. And earlier this year, Dan Brestle, a group president of The Estée Lauder Cos., compared the new-at-all-costs strategy to a promotional strategy: “Every launch becomes the new G,” he said.

— Julie Naughton

Kao & Frieda

NEW YORK — While $450 million may be a lot to spend on a $160 million hair care business, Japan-based Kao Corp. got what it paid for in its August acquisition of John Frieda Professional Hair Care.

This story first appeared in the December 10, 2002 issue of WWD.  Subscribe Today.

Just 12 years old and already a top 10 brand, Frieda’s blockbuster products, such as Frizz-Ease, Sheer Blonde and Beach Blonde, have spawned a zillion imitators. Amazingly, Frieda, one of the last independent brands in the mass market, rose to its current brand ranking and popularity by product innovation, rather than by multimillion-dollar advertising.

The Frieda deal gave Kao entry into the competitive $4 billion hair care market, a position it vied for — and lost — when its bid for Clairol in spring 2001 was topped by Procter & Gamble. Until now, Kao’s presence in U.S. hair care had been limited to the salon market with the KMS and Goldwell brands. Kao also owns Andrew Jergens, which makes Jergens, Bioré, Curel and Ban deodorant. Overall, Kao’s beauty sales, which make up 30 percent, or $2.37 billion of Kao’s total sales, grew 5 percent for the fiscal year.

Though Andrew Jergens has much more than 12 years of industry experience, it seems the company will be taking cues from Frieda’s dynamic creative team. The responsibilities of Frieda management will now also include Jergens’ skin care business. The Cincinnati-based division will report to Frieda Professional in Connecticut.

— By Andrea M.G. Nagel

Lauder Realigns

NEW YORK — In September, The Estée Lauder Cos. took another step in its management evolution by tapping William Lauder, the 42-year-old grandson of the company’s founder, as chief operating officer. Lauder had been one of the company’s four group presidents, with responsibilities for Clinique and Origins and the company’s online business.

The announcement also triggered other key executive shifts. Philip Shearer, former group president of the international division, was named to Lauder’s former position, while the international group presidency Shearer vacated was filled by Cedric Prouve, who had been president and general manager of the Lauder affiliate in Japan since 2000. In Japan, Prouve was succeeded by Christopher Wood, formerly director and general manager of Lauder’s Korean affiliate.

In his new post, Lauder —?who joined the company in 1986 — reports to and works with Fred H. Langhammer, president and chief executive officer. When Langhammer was named ceo in January 2000, he did not name someone to fill his previous post of chief operating officer. Leonard H. Lauder, William’s father, continues as chairman.

The move signals a shift in executive positioning for the company. In June 2001, the rest of the top management was revamped with the appointment of four group presidents and several brand presidents, all with global responsibilities. It was motivated, at least in part, to speed the assimilation of ideas from around the world and spur development of individual brands on a global scale.

In September, Langhammer declared the reorganization a ringing success that has yielded “great benefits.” Now, he wants to build upon those gains, particularly since he sees Lauder’s future for the next couple of years in its ability to drive growth.

— Pete Born

Revlon Regroups

NEW YORK — Revlon’s management wheel continued to turn this year.

In February, Jack Stahl, formerly chief operating officer for Coca-Cola, became the third person to hold the chief executive post for the beleaguered cosmetics firm in five years.

Like others before him, Stahl installed his own management team, replacing Cheryl Vitali with Debra Leipman-Yale of Clairol. Liz Kenny, also of Clairol, took over Almay, succeeding Vanessa Solomon. Stahl also brought in a former Coca-Cola colleague – David Kennedy – to head up the firm’s international operations.

In a sweeping turnaround plan, intended to restore Revlon to growth after a several year sales decline, Stahl outlined four areas of emphasis. For one, he said, there would be improved execution at store level, including tailoring programs to meet specific retailer needs. The new management team was another. Efforts would also be undertaken to “reenergize the brand” and clearly define its position in the market. Lastly, there will be a concerted effort to take an integrated marketing approach with Revlon properties, such as the promotion tied to the latest James Bond movie which stars Revlon model Halle Berry. Marketing programs will be “360 degrees,” stressed Stahl, encompassing ads, in-store materials, packaging and appropriate tie-ins.

Revlon’s latest quarterly financial report, released in November, showed the company’s overall dollar market share remained flat at 22.4 percent, while debt increased 4.5 percent to $1.72 billion.

— Laura Klepacki

Mass Challenges Class

PROVIDENCE, R.I. — In a daring attempt to reclaim beauty care sales, Brooks Pharmacy began testing a service skin care department in October that brings a European flair.

Once the dominant retail venue for mass-market skin care and cosmetics, drugstore chains have watched their market share erode as discounters and other classes of trade have broken into these categories.

With an eye on leveraging drugstores’ core strength — health care — the new department at Brooks has been placed adjacent to the pharmacy. The new concept, called The Derma Skincare Center, was initiated by executives at L’Oréal’s Vichy division, which has been looking for an appropriate venue to introduce the popular European brand into the U.S.

Vichy executives were hoping to create a supportive selling environment for its products, alongside other skin care lines with similar philosophies. For now, Pierre Fabre’s Avène brand is part of the experiment, as is L’Oréal’s Dermablend, a corrective cosmetics and skin care line.

The clinical skin care department is a concept Brooks and the brand executives want to see expanded to other retailers. CVS has already said it will test the department in about a dozen stores beginning next year, and Walgreens has reportedly expressed interest as well.

The new department treats skin care as a health item, rather than taking a beauty approach, said Michel Coutu, president and chief executive officer of Brooks. “The long-term vision is to differentiate drugstores, so that we have a point of difference from 7-Eleven, Wal-Mart and Stop & Shop. We have nothing else exclusive to us,” said Coutu. “With this, we will have a special class of treatment.”

— L. K.

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