Suppliers Probe Perfumery Issues
NEW YORK — “Scale is innovation’s evil twin,” said Andrea Jung, Avon’s chairman and chief executive, upon receiving the American Society of Perfumers’ Living Legend Award two weeks ago. “We have to make sure the passion and artistry in this business is never lost.”

Jung’s remarks resounded during a roundtable discussion at the ASP’s 52nd Annual Fragrance Symposium, held here May 24. One of the key issues discussed was core supplier agreements — the short list of fragrance suppliers that large fragrance marketers invite into competition for new projects. Supplier consolidation was also top of mind.

“Short term, there is cost savings [with core lists], but long term, [marketers] are not capitalizing on the best the [fragrance supply] industry has to offer,” said Cosimo Policastro, executive vice president of fine fragrances at Givaudan. And the bottom line, he added frankly, is that “we have to sell essential oils to make money for innovation.”

Panelists agreed there’s a widening gap between a handful of top fragrance suppliers and smaller supply houses, a two-tiered scenario influenced in part by consolidation and core supplier lists. “Core list decisions are governed by cost concerns,” said Jerry Vittoria, vice president and general manager of Firmenich’s perfumery division for body and home care in North America. “We can’t expect it to end.”

The panel included five other executives, namely James G. Dellas, president of Drom Fra­grances International USA; Michael O’Neill, president of Manheimer Fragrances; Christophe Maubert, president of Robertet’s fragrance division; Joy Atkinson, president of Symrise’s U.S. fragrance division, and Sean G. Traynor, president of Takasago USA.

Regulations like COLIPA’s (the European Cosmetic, Toiletry and Perfumery Association) list of 26 perfumery ingredients that are deemed allergens were discussed. “At least half [of the ingredients] have no need to be on this list,” contended Maubert. In an industry governed by self-regulation, “We are doing everything we can to generate new science to [determine what the different ingredients] do on that list,” said Traynor. “We can’t [counter] politics without science. Science and safety testing [are key to pushing back] regulation and defending every material that comes up.”

This story first appeared in the June 6, 2006 issue of WWD. Subscribe Today.

Traynor also made some foreboding remarks about Europe’s REACH legislation, which aims to require “re-regulation of all chemical ingredients in Europe” when it is phased in next year. Out of some 2,000 to 2,500 ingredients used in fragrance making, as many as 800 “will be REACH-able,” said Traynor, who estimated that additional safety evaluation of these substances will cost upward of $200 million.

In some of the symposium’s lighter moments, Bill Rancic, the winner in the first season of Donald Trump’s “The Apprentice,” spoke about his experience in establishing a $55 million online cigar business. He purveyed a three-pronged business mantra of “practical execution, agility and risk.” In contrast to Jung’s comment about larger corporations being more risk-averse, Rancic said, “Fear of failure leads to not trying — that’s the biggest failure of all.” He drew an analogy with the bumblebee, whose ratio of wing surface area to body weight would seem to prevent the insect from flying. “No one ever told the bumblebee that,” he said, “and the bumblebee flies.”
Matthew W. Evans

Walgreens Acquires Happy Harry’s
NEW YORK — One of the last remaining regional drug chains, Happy Harry’s, was purchased Monday by one of the nation’s largest retailers, Walgreen Co.

Financial terms of the agreement to merge Happy Harry’s 76 stores into Walgreens’ 5,251 drugstores were not disclosed, but it is the largest acquisition for Walgreens in the last 20 years, since its purchase of Medi Mart’s 66 units. Although Walgreens snapped up 23 Medic Drug Stores last year, the chain tends to prefer organic growth.

“Happy Harry’s presented a unique opportunity and is a solid strategic fit,” Walgreen chief executive Dave Bernauer said in a statement.

The deal with Happy Harry’s gives Walgreens several strong locations in the Delaware, Maryland and New Jersey markets, where the company is looking to expand. It also adds eight stores in Pennsylvania, where Walgreens has already established its name. Those stores will immediately be converted to Walgreens units. The other stores will retain the Happy Harry’s logo.

Happy Harry’s storefront bears the image of the chain’s late founder, Harry Levin, who’s son Alan serves as chairman and ceo. Alan Levin will continue to work with Walgreens. A Walgreens spokesman added that the roughly 200 headquarters and distribution center employees of Happy Harry’s will continue to be employed during the transition and many will be retained, although he could not provide a percentage.
Faye Brookman

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