CTFA TAKES A LOOK AT THE CYBER ECONOMY
Byline: Alev Aktar / Pete Born / Kerry Diamond
BOCA RATON, Fla. — The Cosmetic, Toiletry and Frag-rance Association may sometimes seem like magazine convention, but its focus this year had nothing to do with paper. In fact, the flavor was decidedly online.
The biggest news at the four-day annual event, which ended Saturday night, concerned Avon’s new business-to-business Internet strategy. The direct-to-consumer company is investing $60 million in the next three years to develop customized Internet sites for its representatives. There are 500,000 representatives, but not all are expected to have their own sites. There will be access to the sites via the existing Avon.com address, and they are expected to be up in July.
“We believe this is going to be the single biggest revolution in direct selling,” said Andrea Jung, president and chief executive officer of Avon. “We’re calling our representatives ‘e-representatives.”‘
The CTFA’s program of speakers featured two Internet speakers: Michael Dertouzos, director of MIT’s Laboratory for Computer Science, and Larry Downes, a technology strategist and fellow with Diamond Technology Partners.
Although registered guests from dot.com companies were few and far between — Beautyjungle.com and Fashionmall.com appeared to be the only two — America Online did have a poolside cabana.
At Avon, Jung is planning a big year, with 30 percent more new products than last year, 35 million samples and 100 percent more advertising, $40 million earmarked for the U.S. alone. She is looking for mid-to-high single-digit growth in 2000.
Of course, part of that growth will come from the Internet strategy. Jung explained that the new e-representative sites would be based on a common template. Representatives will be able to customize their pages.
According to Jung, the representatives will be offered a low-cost deal on a computer and they will receive intensive training. “We’ll recruit a different, Web-savvy and younger representative,” said Jung. “This is where high-touch and high tech come together.” Shoppers will get free shipping if they order from their e-representatives.
In other news, Jung said that Nailwear, a long-wear nail enamel packaged in a square glass bottle, is representative of the new look for Avon’s color products. She said the whole color category would be repackaged. In 2001, the entire skin care segment will be reformulated and repackaged.
New products this year will include a cooling spray for middle-aged women who are experiencinge menopause-related hot flashes, and there will be a global launch in the second half of Advanced Techniques, a line of hair care products.
At Tiffany, there is strong growth in the core fragrance brands, Tiffany and Tiffany for Men, according to Nancy Kanterman, vice president of the fragrance division and general manager.
Later this year, the company will introduce several products that build on its heritage. One is a hand-blown, numbered limited-edition crystal Tiffany perfume bottle with a sterling silver top. There will be different versions of this collectible flacon down the road, according to Kanterman.
The other new entry is a holiday set containing a Tiffany perfume bottle fitted with a glass stopper in the shape of a floret.
The Tiffany Sheer franchise will also be extended with a solid stick and a set of four mini-votive candles.
At Yves Saint Laurent, Body Kouros will be introduced in time for Father’s Day. The men’s toiletries will be sold in limited distribution.
Clarins, one of the fastest-growing skin care brands in department stores, is looking at increases in the low to mid-teens this year, according to Joseph Horowitz, president and chief executive officer of Clarins USA.
The company will introduce an eight-product skin care line targeted to teenagers and women in their 20s in May. It will be priced lower than other Clarins products and will be promoted with an ad featuring four young women.
In the color arena, Clarins will send 24 makeup artists into 100 doors to perform makeovers. The Clarins Fragrance Group, a strategic alliance with Procter & Gamble for prestige fragrances, will introduce G by Giorgio Beverly Hills. The fragrance will be launched in one door in each of 38 cities before rolling out in June.
Boss by Hugo Boss, which was launched on the Internet at Jasmin.com, will also roll out to wider distribution this spring.
This fall, Azzaro will introduce a women’s scent called Azzura.
Adipar Ltd. had news to report about the Annick Goutal fragrance franchise. Despite the untimely passing of Goutal last year after a long battle with cancer, the company is moving ahead with plans for the brand.
“The Goutal product range will be widened beyond fragrance, possibly into cosmetics and home,” said Nicholas Ratut, Adipar executive vice president and chief operating officer. “We also are looking to open an Annick Goutal boutique in SoHo later this year.”
An Annick Goutal children’s fragrance will be launched this spring in Bonpoint, the chain of high-end children’s clothing shops owned by one of Goutal’s sisters.
Later this year, Adipar will launch men’s and women’s fragrances from Burberry, a signature scent from S.T. DuPont and a new Escada scent.
Beautyjungle.com’s Deborah Goslin, executive vice president of sales and marketing for the site, and John Devine, senior vice president of sales, were making the rounds to discuss current news, including the company’s strategic partnership with the Chain Drug Marketing Association.
Beautyjungle, through its business-to-business division, will be providing CDMA’s smaller drugstores and independents with access to cosmetic and personal care products by linking them to an e-marketplace. Buyers can place online orders of any size.
Stephen I. Sadove, president of worldwide beauty care and nutritionals at Bristol-Myers Squibb Co., was talking about his ubiquitous Herbal Essences brand that now generates roughly $750 million. A new Herbal Essences hair coloring product will be unveiled in London at the end of this month, a candle line is set for an April rollout and a hand and body product will be introduced in August.
Patrick K. Firmenich, corporate vice president of fine fragrances worldwide at Firmenich Inc., said he would be spending more time in New York after doing a stint in Paris. Firmenich happily noted that the U.S. fragrance market was showing “signs of dynamism” after lagging behind Europe, which had been running as much as 7 percent ahead.
Europe is tapering off, he said, and the U.S. is perking up, rising from 1 to 3 percent and perhaps to 5 percent, which would put it on an even footing with France.
The global fine fragrance market is growing 5 to 7 percent, he added. Firmenich hosted its annual boat ride, Givaudan Roure and International Flavors & Fragrances held dinners and Quest International and Takasago International hosted receptions.
Calvin Klein executives were buoyed by the launch of their color cosmetics collection at Saks Fifth Avenue, which went 65 percent over plan the first week. As industry sources have noted in the past, Klein’s color range is expected to generate $25 million at retail the first year in 50 to 60 North American doors.
Sheila Cutner, the new president of Calvin Klein Cosmetics, noted the company plans to launch a major new women’s fragrance in fall.
There were reports circulating that the Estee Lauder brand was preparing for a major launch of a women’s fragrance in the fall.
Robert M. Phillips, a retiring Unilever director and longtime CTFA veteran, had some parting thoughts: “At times we do battle and at times we are collegial. We compete, and it always will be this way. This never will be an industry that is big and boring.”
He added, “In the end, it’s creativity that prospers.”
John R. Wendt, president of Maybelline/Laboratoires Garnier, had reason to cheer the coming of the new millennium. The latest report from A.C. Nielsen showed Maybelline in the top position in dollars for the U.S. mass cosmetics business with a 20.5 percent dollar share for the four weeks ended Feb. 19.
Maybelline had 1999 retail sales of more than $641 million, according to Nielsen.
Procter & Gamble cited figures from Information Resources Inc. in asserting that its Cover Girl brand led through last year and through Jan. 23, before being overtaken by Maybelline.
Maybelline is growing even faster overseas. “The business is exploding in China,” Wendt said.
The Garnier end of the division also gave him reason to smile. The U.S. launch of Nutrisse permanent hair color masque last July had proved so promising that the company had decided to hold off on the introduction of a new product this year to put those resources behind developing the existing business.
Marc S. Pritchard, vice president and general manager of Procter & Gamble Cosmetics, predicted, “We will continue to see a lot of action in face and in foundation.” He added that there was pervasive consumer interest in new product forms and said he believed the color cosmetics market would make a resurgence in the next year, driven by the new, rich, bold looks in fashion.
The company has been launching a spate of products in all three of its brands, Cover Girl, Oil Olay and Max Factor, which turned profitable after years of struggle.
Olay, which entered the color cosmetics market a year ago, has been adding new products this year, such as a moisture stick foundation and Total Effects, a $19.99 moisturizer. Acknowledging the lofty price, Pritchard said, “This is for people willing to spend the money to combat signs of aging.”
The new products appear to be an effort to bridge Olay’s classic skin care with the color line launched a year ago. “This reflects a strategy to create a total brand,” he said.
On the department store front, one of the growth companies has been Liz Claiborne, whose wholesale volume rocketed from $70 million four years ago to a projected $175 million by the end of this year, with the addition of three youth marketed brands — Curve, Candie’s and the upcoming Lucky You.
Neil J.Katz, president of Liz Claiborne Cosmetics, has been following a carefully mapped campaign to develop a new base of young customers.
Curve projected a sense of “adventurous group action. Candie’s is sexually potent and Lucky is retro romantic,” Katz said. The new master brand, based on the Lucky brand of jeans, will be launched in the fall, and Katz hopes it will follow the example of last fall’s Candie’s. According to industry sources, the men’s and women’s Candie’s chalked up sales of $32 million in the four months through the holidays.
The expected high point of the general business sessions was a speech by former independent counsel Ken Starr. But he delivered a soliloquy that shed no new light on his investigation. In an apparent attempt to project a family-man image, he referred repeatedly to his wife, Alice, and daughter. He also priggishly alluded to President Clinton’s affair with Monica Lewinsky — the one described in graphic detail in the Starr Report — as “the recent unpleasantness.”
After his speech, there was a question and answer period. But instead of passing around a microphone, as is the custom, the audience was asked to jot down questions — which took away the spontaneity.
Although some executives wondered what Starr had to do with cosmetics, E. Edward Kavanaugh, CTFA president, saw a parallel with the 1986 appearance by former President Nixon.
Noting that Starr had admitted to making mistakes — such as doing a lousy public relations job and taking on too many investigations — Kavanaugh said of the crowd reaction, “the response was very positive. He is a nice guy and we never saw that side of him. I think people were surprised to find out he is such a decent man.”
The CTFA president pointed out that the speakers’ lineup was politically balanced with the inclusion of Mickey Kantor, former secretary of commerce and U.S. trade representative in the Clinton administration. Kantor talked about international trade at a breakfast meeting and drew 175 people. “The war over globalization is over,” Kantor said. “We are going to be globalized, whether we like it or not. But the battles have just begun.”
Starr’s appearance spurred Kavanaugh’s thinking for next year. “What I would love to do is have Clinton, if we can afford him,” Kavanaugh said, estimating that it would cost $100,000 to $125,000.
Although it has seemed that there has been a slippage in attendance of high-profile marketing executives over the last few years, Kavanaugh appeared heartened by the fact that there were 30 more active members, meaning manufacturers, than last year. He said this year’s attendance hovered at 945 to 950, roughly similar to last year’s crowd.
Kavanaugh didn’t seem fazed by the growing prevalence of magazine publishers and reps, but he did say, “I would like to see a little less magazine intensity.”
For one thing, he added, magazines should refrain from scheduling client meetings while CTFA is holding its general business sessions.
Another chronic problem — slipping attendance at Saturday night’s Look Good. ..Feel Good black-tie banquet — may have been solved. The CTFA board turned the production of the event over to superstar party planner Robert Isabelle, who brought in a Latin orchestra and dance troupe. The pulsing salsa beat kept the executive crowd on its feet and dancing well past the customary checkout time.