The Personal Care Products Council closed its annual meeting, held Feb. 29 through March 2 at the Breakers in Palm Beach, Fla., by opening a window to the future.
Wrap-up speaker Amee Chande, managing director, UK/Ireland and Nordics for the Alibaba Group, examined huge global opportunities for personal-care products, while PCPC executives discussed the myriad ways they are advocating for domestic and international harmonization to make commerce possible.
“2015 was a positive year for us and underscored the importance of working collaboratively to make progress,” PCPC chair Thia Breen, group president of North America for the Estée Lauder Cos., told the 420 people at the conference. This year’s attendance total was down approximately 10 percent over 2015. “Our goal is to build on that momentum in 2016, so we can inspire a beautiful future for our customers, our industry, and our communities around the world.”
And global strategies were underlined by many attendees, particularly Alibaba’s Chande, who took a laser focus on opportunities in China.
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“We’re trying to make it easier to do business everywhere and to facilitate trade across borders,” said Chande. Personal-care/beauty items and mother/baby products make up more than half of Alibaba’s cross-border (products coming from overseas) business — and that number grew 179 percent last year, said Chande, adding that 82 percent of Chinese consumers made their first cross-border purchase in 2014.
China is a particularly appealing opportunity, as the size of the beauty market is immense. “The cosmetics category alone is $65 billion in China today,” she said. “And there is 21 percent growth annually. We’ve just begun the journey in China.” By 2020, China will have more than half a billion middle-class consumers, she noted, and many are looking overseas for these products. And it’s not just luxury brands — it’s basic everyday skin cleansers, said Chande.
Because the local retail infrastructure is relatively immature, many global beauty brands sell in China through Alibaba’s T-Mall and T-Mall Global platform, said Chande. This also has the positive side effect of cutting out much of the regulatory red tape there. On T-Mall Global, the subset devoted to cross-border sales, if the product has met product safety requirements elsewhere, T-Mall and the Chinese government will allow the sale. This also allows for greater speed to market, and also allows manufacturers to test-market new innovations.
The brands retain total ownership of their products; Alibaba is creating the marketplace and the infrastructure to support global selling of those products.
Chinese consumers under the age of 35, who are exceptionally brand-aware and quality conscious are driving 65 percent of the growth of consumption via internet purchasing, said Chande; there are 300 million online shoppers in China today, and roughly 63 percent outside the traditional tier-one and tier-two markets, she added. And they are incredibly responsive to social media and interacting online, she said.
“There is an enormous opportunity because the market is interested in the category, the products and what the brands stand for,” said Chande. “The consumer is getting more sophisticated and the market is transparent. American brands need to work hard to earn the share of market. That means not just tailoring your product, but also how you engage with consumers.” Education for both skin-care and color cosmetics is another huge demand, she said.
Francine Lamoriello, executive vice president of global strategies for PCPC, noted that 15 foreign personal-care organizations representing more than 25 countries attended the conference, and the PCPC continues its quest to see that the global beauty industry will speak with one voice. The organization has created a password-protected Web site where representatives globally can share news, best practices and more.
Breen was reelected to her role as PCPC’s chairperson, while George Calvert, chief supply chain and research and development officer for Amway; Karen Fondu, president of L’Oréal Paris, and Alex Keith, president of global beauty for Procter & Gamble Co., were elected vice chairs. Robert Candelino, vice president of marketing and general manager of haircare for Unilever, was elected secretary, while David Holl, president and ceo of Mary Kay Cosmetics, was elected treasurer.
And together, they will remain diligent.
“We have our ears to the ground in every state,” said Breen, noting that a historic battleground state, California, has been actively collaborating with PCPC, notably on the Personal Care Products Council Safety Act cosponsored by U.S. Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME). One of the goals of that bill is to establish federal laws, rather than the patchwork of state and regional laws affecting the personal-care industry, said Lezlee Westine, president and chief executive officer of PCPC.
Westine highlighted last conference’s hot-button issue, microbeads, as a success. “Under Thia’s leadership, our association has achieved many imperative strategic goals — from working with policymakers and key stakeholders on the Microbead-Free Waters Act of 2015 to promoting our industry’s commitment to product safety, quality and innovation,” Westine said.
Westine also brought members up to speed about another hot-button issue from last year’s conference, the Trans-Pacific Partnership, a trade agreement among 12 Pacific Rim countries after seven years of negotiation. The countries signed the agreement on Feb. 4 in Auckland, New Zealand, although its regulations have not yet entered into force.
Executives also discussed projects their companies are currently working on.
P&G’s Keith is on a mission. She not only wants to restore the company’s Olay brand to profitable growth, but she would like to see the entire mass-market treatment category rise out of the doldrums. The mass skin-care category in mass is “stagnant,” Keith said, and its sprawl of stockkeeping units, which proliferated as brands chased sales trends, needs to be cleaned up, just as Olay has begun to do with its well-publicized drive to clean house.
Last July, the brand discontinued 16 percent of its sku’s, then continued its belt tightening by canceling product launches from July to December. When new product activity resumed in January, only five new products were introduced, instead of the usual 15. This restraint cleared out a “landing strip” on store shelves, allowing the more worthy products to shine. The clutter was not only cleaned up but P&G refocused its powerful research and development resources on the facial moisturizer category, which Keith sees as a large opportunity. One initial result was the success a new Eye Swirl product. The finding also put in the works a program to launch day and night moisturizers and an eye product for each of Olay’s main brands.
She discussed the eye category as almost a special case and a “big opportunity” on its own. Sales of these products have grown 12 percent in the prestige market and at only 6 percent in the mass market. Another ripe prospect is the facial-oil category, which is underdeveloped in the U.S. “We will innovate and be much more deliberate” with our new products, Keith said.
Perhaps the company with the highest profile, at least in bricks-and-mortar, was Unilever, which occupied an eco-friendly little house on The Breakers lawn by the sea. During a briefing on the highlights of Unilever’s main beauty brand, a team of executives discussed the strategy of Tresemme launching a volumizing collection, which was described a departure from past marketing practice. Also, the company’s foray into dry-spray deodorant with its Dove, Degree and Axe brands spurred the category in growth. “Sales are double what we projected,” said Unilever’s Candelino.
Unilever is also upgrading the positioning of Axe, which the company claims as the number-one men’s fragrance in the world. Titled, “Find Your Magic,” the new campaign is aimed at no longer helping the guy get the girl but at playing a role in finding his true self.
Nexxus is also acquiring an added persona, a Nexxus New York Salon Care brand. It is based, in part, on the fact that the brand operates a salon in the TriBeCa section of New York.
Along bungalow row, the salon-based professional brand Sexy Hair was showing off its new Strong Sexy Hair, which is designed for women suffering with damaged and thinning hair. Set for an August debut, the five-product system was designed to reduce hair breakage by 25 percent.
The brand, which is now owned by Henkel, is also introducing a new three-step shampoo, conditioner and color guard designed to retain color vibrancy for 10 weeks. The company is also putting emphasis on the men’s side of the business with a repackaged and expanded James Dean grooming line, featuring 10 sku’s. In October, the company plans to introduce Style Sexy Hair, a styling collection featuring a detox shampoo with charcoal.
Last year at PCPC, Chaz Hatfield introduced The Buddy personal appliance under the Pulsaderm label, and this year he was back with a Nutrastim laser comb designed to promote hair growth and ease thinning. Priced at $279 apiece, the device has 12 laser diodes and has won FDA approval to be marketed to both men and women, Hatfield said, noting that the company will offer male and female subbrands.
Hatfield explained that the lasers are designed to stimulate blood and oxygen flow to the hair follicles. Hatfield said it has been established that after three months of treatment, as much as 10 percent of hair could be new, and after six months, the percentage of new hair could climb to as much as 20 percent.
Hatfield is president of the new Nutrastim brand and Joel Warren of the Warren Tricomi Salon at the Plaza Hotel has signed on as creative director. Warren’s immediate focus is to create a collection of seven to 10 hair care and styling products, which are targeted for a June launch.
At least some of the attendees at this year’s meeting seemed to be in a mildly optimistic mood about the state of the beauty business. “We’re out of the gate,” said L’Oréal’s Fondu. “For the first six weeks, we are ahead of where we thought we would be with our new products.”
Jerry Vittoria, president of fragrances, North America, at Firmenich, said “we feel quietly confident. The launches that are coming are of high quality,” he said, citing Yves Saint Laurent’s Black Opium as an example.
Danyelle Boilard-Paul, executive vice president and general manager for Clarins Groupe USA, highlighted the company’s Millennial strategy, which eschews TV advertising in favor of a digital program that highlights authentic Clarins consumers in video vignettes on YouTube and Twitter. This follows the company’s move last year to develop products and messaging designed to attract this all-important demographic.
“The level of innovation is kind of off the charts,” said Pamela Baxter, president and chief executive officer of Christian Dior Beauty and the company’s couture apparel unit, when asked what is the industry’s biggest challenge this year. “More and more young people are coming into the industry,” said Baxter, who has announced her retirement this year. “There’s a lot of venture capital money. This is going to put more pressure on leading companies to be more innovative. It’s a good opportunity for some people,” she speculated. “It’s great to see so much innovation. At the end of the day, the consumers will vote.”
At the meeting, the organization also unveiled a study it had commissioned with PriceWaterhouseCoopers on the economic impact of the beauty industry.