Global beauty is a $356 billion business, but if you look past the numbers, it’s all about relationships—whether they happen to be with regulators or consumers.
In fact, two issues, government regulations and communications, pose the biggest challenges to the beauty industry, according to long-time industry veteran Dan Brestle, who is chairman of the Personal Care Product Council. Brestle, who served in a variety of positions with Estée Lauder Companies for more than 30 years, was the keynote speaker of HBA Global Expo, which took place last month in New York City.
In his opening comments, Brestle noted that the US alone accounts for $59 billion in sales, employs eight million and contributes $189 billion to the gross national product.
“And we give twice as much as any other industry to charity,” he told the audience.
As charitable and diverse as the industry may be, its history is filled with true titans in the business world, with founding fathers such as François Coty, Florence Nightingale Graham (Elizabeth Arden), Max Factor, William Procter, James Gamble and Yves Rocher.
“They all faced considerable obstacles such as two World Wars, economic crises and the demise of the urban markets,” observed Brestle. “(Meanwhile) our businesses are recovering from The Great Recession and the War on Terror.”
Long-time Estée Lauder executive Dan Brestle is chairman of the Personal Care Products Council.
Consolidation is changing the face of retail, too. Over the years, the number of regional department stores in the US has shrunk from 202 to nine, while the number of major drug store chains has slipped from 20 to three. Meanwhile, new players, such as Ulta and Sephora, are gaining share and e-commerce sales are surging, growing 19% a year and are expected to reach $1 trillion by 2015. Elsewhere, Latin America is expected to be the fastest growing region in the world during the next decade. Lastly, China will add 220 million middle class consumers in the next 10 years, and with growth like that, it’s no wonder that China has overtaken Japan as the world’s No. 2 economy.
At the same time, today's executives must overcome obstacles that have been put in place by regulators. For example, while the industry joined together to defeat The Safe Cosmetics Act of 2010, regulators re-introduced the measure earlier this month.
“The Safe Cosmetics Act of 2010 would have overwhelmed FDA,” insisted Brestle. “(A year ago) we came together to give FDA the fix it needed.”
In a statement, Lezlee Westine, president and chief executive officer of the Personal Care Product Council, said the Council agrees with Reps. Schakowsky, Markey and Baldwin about the need for certain provisions of the US Food, Drug and Cosmetic Act to be modernized in order to keep pace with evolving science and the growth of our industry.
“To that end, we are working with the House Energy & Commerce Committee leadership to propose reasonable, science-based changes to the law that will meaningfully enhance cosmetics regulation without over burdening FDA or imposing costly and unnecessary restrictions on business,” she explained.
Westine also reiterated the Council’s commitment to working with the Committee leadership to enhance FDA oversight and give the agency the information and flexibility it needs to continue to ensure consumer safety and safeguard public health. She noted that a year ago, the personal care industry was the first to propose such legislation, which would also provide the business certainty companies need to continue to innovate, grow and create new manufacturing jobs in the US.
“We are still reviewing the provisions of Rep. Schakowsky’s new bill, but we are very concerned that, as written, it contains provisions that will place unnecessary burdens on FDA and businesses of all sizes and may compromise jobs without providing meaningful benefits to consumers,” she said.
According to Westine, strong federal safety requirements already govern cosmetics and personal care products sold in the U.S.
“The safety of cosmetic and personal care products in the US is overseen by the Food and Drug Administration under the Federal Food, Drug, and Cosmetic Act (FD&C Act), which requires that all cosmetics be substantiated for safety before they are marketed, contain no prohibited ingredients, and that all labeling and packaging be in compliance with U.S. regulations. Under the FD&C Act it is a crime to market an unsafe cosmetic product," Westine concluded.
Outside the US, China is beginning to build a “Great Wall” of regulations that could block access to more than one billion consumers, according to Brestle, who urged attendees to get involved with their trade groups such as the Personal Care Product Council, the Independent Cosmetic Manufacturers and Distributors, the Japan Cosmetic Industry Association and The European Cosmetics Association (COLIPA).
The other challenge for today’s beauty executives is the rapidly evolving communications industry, said Brestle, who added that the industry has long embraced new technology. In fact, the beauty industry was the biggest advertiser on television back in the 1960s.
Brestle recalled Estée Lauder’s famous advice of “telegraph, telephone, tell a woman,” and how she would be thrilled with today’s Twitter, Facebook and Blogger communities.
“Beauty How-Tos are the fastest growing segment on YouTube,” he observed, adding that two-thirds of Americans visit social websites.
Brestle insisted that with advances in research and development leading to an array of new products, the industry has a fascinating story to tell the world.
“As we contemplate the future of the industry, let’s work together to realize beyond the wildest dreams of the people who came before us,” urged Brestle.