p&g adds the art of shaving - Drug Store News

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p&g adds the art of shaving - Drug Store News

2 • L’Oréal fetes 100 years in beauty

3 • Consumers put a lid on color cosmetics

4 • Coty smells success with Del Labs deal

5 • Revlon restructures

6 • Vichy brings ‘Oo La La’ to U.S. beauty

6 • P&G adds The Art of Shaving to portfolio

7 • Value products smooth straying hair category

8 • Max Factor drops out of U.S. market

8 • McDonald takes lead position at P&G

9 • Shopper buzz

Drug Store News www.drugstorenews.com June 2009 • 1


THE BUSINESS OF BEAUTY

L’ORÉAL FETES 100 YEARS IN BEAUTY

BY ANTOINETTE ALEXANDER

A century ago, in a small apartment

in Paris, French chemist Eugène

Schueller started a company called

“La Société Française des Teintures

Inoffensives Pour Cheveux,” which

translated means “The Safe Hair-Dye

Company of France.” With a dining

room that doubled as a demonstration

area and a kitchen as a laboratory,

the chemist, inventor and marketing

wiz for his time sought to establish

that beauty must be based on science.

He never saw the risks but

rather the possibilities, and his determination

paid off. In 1939, the company

was named L’Oréal.

Over the next 100 years, L’Oréal’s

commitment to science and innovation

laid a solid foundation for growth

worldwide. Today, the beauty giant

has more than 20 global brands, a pres-

ence in more than 130 countries and

recorded 17.5 billion euros (U.S. $24.5

billion) in consolidated sales in 2008.

“Our rigorous approach to quality

and innovation through [research and

development] will continue to be a

driving force for L’Oréal in making

beauty accessible to women and men

worldwide,” the company stated. “The

ability to address different cultures

and their specific needs has helped

broaden the concept of beauty and

made the company what it is today.”

To celebrate its 100th anniversary,

L’Oréal not only celebrated the men

and women who have made the company

a success but also supported a

number of socially responsible projects

aimed at helping those less fortunate

in more than 60 countries, according to

the company.

For example, in the United States,

17 L’Oréal facilities celebrated the

anniversary with a morning of volun-

teer projects, followed by a celebration

for all employees. More than 3,000

employees in L’Oréal USA’s facilities

in New York, New Jersey, Ohio,

Illinois, Colorado, Kentucky, Arkansas,

Tennessee, Texas and Puerto Rico

spent more than 12,000 hours giving

back in their local communities.

Employees engaged in a variety of

volunteer activities, including reading

and crafts with children, visiting seniors,

revitalizing public parks and public

buildings, preparing the unemployed

to return to the workforce, sorting

clothing at thrift shops, sorting

food and making meals at homeless

shelters, assembling bicycles for children,

walking dogs at animal shelters

and preparing hygiene kits for those

living in temporary housing.

So what’s in store for the next 100 years?

The company stated that it continues

to make greater strides in its understanding

of skin and hair, and recent

discoveries on the role of genes in cutaneous

aging are opening new investigative

horizons for its scientists. A

more thorough understanding of stem

cells’ biological behavior, which is

responsible for skin and hair regeneration

during aging, has allowed the

company to, for example, select the

active ingredients that protect them.

“We believe in a holistic vision of

beauty. We believe beauty will become

global, incorporating cosmetics used

on the surface but also those taken

orally or via the use of a device to maximize

effects or modify the skin, as

well as surgical procedures (i.e., laser

and injections),” the company stated.

“In terms of our company, L’Oréal is in

a position to anticipate these changes

and remain the beauty market leader

in these categories.”

1907: Eugène Schueller, a young French

chemist, created the first synthetic hair dye.

1908: With just 120 euros in his pocket,

Schueller registered his company and

established it in a two-bedroom apartment

on rue d’Alger. The dining room was used

as the demonstration room and the

kitchen as the laboratory.

1909: Schueller gained the backing of an

accountant from Epernay, who loaned him

4,000 euros. He moved the company to a

four-bedroom apartment on the rue du

Louvre and recruited his first employee.

1910: Schueller began to export his products

abroad.

1934: Schueller took over Monsavon, and

in 1934 launched Dop, the first mass market

shampoo without soap.

1935: The company launched the sun tan

oil Ambre Solaire.

1946: L’Oréal launched Oréol, the first

cold wave in Europe.

1953: The company Cosmair Inc. was created

and became the exclusive licensee of

the L’Oréal Group in the United States.

1960: Elnett hairspray was launched.

Elnett remains one of the most coveted

products of hairstylists around the world.

1964: Lancôme was acquired, which

transported L’Oréal into the world of toiletries,

makeup and perfume, and gave it

access to the selective channels of the

perfume sector. L’Oréal took over Garnier.

1965: Guy Laroche Perfumes were created.

1966: L’Oréal introduced Preference, its

first mass market hair color line.

1970: L’Oréal acquired Biotherm.

1973: L’Oréal introduced the “Because I’m

Worth It” ad campaign, which was created

in the United States.

1974: Lancôme was introduced in the

United States.

1975: Equalia by Vichy was created, the

first moisturizer based on an anti-dehydration

mechanism. L’Oréal had signed technical

agreements with Vichy in 1954. The

company was acquired outright in 1980.

1978: Anais Anais perfume by Cacharel

was launched.

1979: Centre International de Recherches

Dermatologiques was created at

L’Oréal: A look back

Sofia-Antipolis.

1982: Plénitude launched, representing

the entry of the L’Oréal Paris brand into

skin care. Today, Plénitude is known as

Dermo-Expertise.

1984: L’Oréal acquired Ralph Lauren

Fragrances.

1986: Niosome by Lancôme was launched.

1989: Helena Rubinstein was acquired,

and the takeover of La Roche-Posay

Pharmaceutical Labs.

1990: Lancôme women’s fragrance,

Trésor, was launched.

1993: L’Oréal acquired Redken and

Capital Soleil by Vichy, which contained

the new filter Mexoryl SX.

1994: Cosmair became a wholly owned

subsidiary of the L’Oréal Group.

1996: The L’Oréal Group acquired the U.S.

company Maybelline.

1998: L’Oréal USA acquired ethnic hair

brand Soft Sheen Products.

1999: L’Oréal acquired Maybelline in Japan.

2000: L’Oréal acquired the U.S. company

Carson, a maker of ethnic hair products,

as well as Matrix and Kiehl’s Since1851.

2001: L’Oréal acquired the U.S. company

BioMedic, which specialized in skin care

products to accompany dermatology and

plastic surgery treatments.

2002: L’Oréal acquired the U.S. company

ARTec, which marketed hair care and hair

color products for the salon industry.

2003: L’Oréal inaugurated the first ethnic

hair and skin research center in Chicago.

2005: Mexoryl was approved in the United

States. L’Oréal acquired the U.S. company

SkinCeuticals and integrated it into the

Active Cosmetics Division.

2006: L’Oréal acquired The Body Shop.

Mexoryl got FDA approval for use in the

United States.

2007: L’Oréal acquired the U.S. company

PureOlogy.

2008: L’Oréal and PPR signed a definitive

agreement for the effective transfer of

Yves Saint Laurent Beauté to L’Oréal.

2009: L’Oréal celebrated its 100th

anniversary.

Drug Store News www.drugstorenews.com June 2009 • 2


THE BUSINESS OF BEAUTY

CONSUMERS PUT A LID ON COLOR

COSMETICS: FOCUS ON EYE MAKEUP

BY ANTOINETTE ALEXANDER

Color cosmetics had a bit

of a rough go in 2008, as

beauty shoppers curbed

their spending in light of

the current economy — but

the silver lining is that

many consumers traded

down from premium color

cosmetics to mass-market

offerings to save money.

The year also proved that

the eyes still have it.

According to Euromonitor

International’s “U.S. Color

Cosmetics” report for 2009,

sales of premium color

cosmetics declined by

nearly 3% to $3.5 billion.

This made 2008

the first year premium

color cosmetics

showed a sales decline

during the review

period, according

to the research

firm. There’s no doubt

that some of that

money shifted to

mass-market retailers.

The NPD Group

and Information Resources

Inc. — through

their new point-ofsale

tracking product,

called the Beauty

Cross Channel Monitor

— found a similar

trend. Their research

found that sales of

makeup at food, drug

and mass (excluding

Walmart) rose 1% in

2008 compared with

2007 — the only beauty

category to see a lift

at mass. Meanwhile,

makeup sales at prestige

dropped 4% during

that same period.

The Beauty Cross

Channel looks at sales

performance in department

stores and the

food, drug and mass

channel (excluding

Walmart).

Maybelline’s

Lash Stiletto

mascara

Among the top performers

in 2008 was eye makeup,

which posted a 3% value

sales gain, according to

Euromonitor. Eye liner and

eye pencils showed the most

growth, at nearly 5%, thanks

in large part to a continued

emphasis on smoky eyes,

while innovation helped

fuel sales of mascara.

Eye shadow didn’t fair as

well, inching up 1%, due in

part to a lack of innovation

and a snub by some older

beauty shoppers who believe

that eyeshadow

exaggerates the lines

of the eyelids.

Whether it was vibrating

brushes or

volumizing formulas,

innovation helped

fuel sales of mascara,

which grew by 3% in

2008, according to

Euromonitor.

For example, Coty

Inc.’s Rimmel brand

introduced for 2009

the new Sexy Curves

mascara, which promises

to deliver up to

70% curlier lashes

via the breakthrough

Triple Plump brush.

The applicator’s hourglass

shape curves in

to capture the formula

for maximum lash

loading, and also

curves out to dramatically

curl and declump

lashes. The

Lash Inflation Formula

has been developed

to work in synergy

with the Triple

Plump brush. The collagen-enrichedformula

contains proteins,

vitamins and conditioners

to strengthen

and amplify lashes.

In addition, Maybelline

New York

launched earlier this year its

Lash Stiletto mascara, which

features an elastic formula

that stretches lashes for

provocative length. It is

infused with a Pro-Vitamin

B-5 formula that conditions

and smoothes for blackpatent

shine, according to

the company.

Consumers’ focus on full

eyelashes, however, hampered

sales of lip products

— namely lip plumpers —

according to Euromonitor.

With the novelty of lip

plumpers wearing off, and

with women focusing on

lush lashes, lip products

dropped by 3% in 2008. In

contrast, lip gloss sales

grew by 3%, as women con-

Cross-channel beauty sales 2008 vs. 2007

tinued to show their love of

gloss, which is easy to apply

and gives lips a sexy shine.

In facial makeup, mineral

makeup continued to be

popular among beauty shoppers,

given its more healthy

and natural positioning, but

overall, facial makeup sales

remained flat during 2008,

according to Euromonitor.

Total retail Prestige FDMx

Total beauty -2% -3% 0%

Makeup -2% -4% 1%

Skin care 0% 0% 0%

Hair care -4% 6% -4%

Women’s fragrance -5% -5% -6%

Men’s fragrance -8% -8% -6%

Source: NPD/IRI Beauty Cross Channel Monitor

Total retail = department stores, food, drug and mass (excluding Walmart)

FDMx = food, drug and mass (excluding Walmart)

Drug Store News www.drugstorenews.com June 2009 • 3


THE BUSINESS OF BEAUTY

COTY SMELLS SUCCESS WITH DEL LABS

DEAL: FOCUS ON FRAGRANCE, NAIL

BY ANTOINETTE ALEXANDER

It has been less than two

years since Coty Inc. acquired

Del Labs, and now

that the dust has settled, the

synergies are growing increasingly

evident in both its

market share of cosmetics,

nail and fragrance, and in its

efforts to enhance the shopping

experience at mass.

At this year’s National

Association of Chain Drug

Stores Annual meeting in

West Palm Beach, Fla., Coty

executives once again sat

down with Drug Store News

to share key highlights and to

talk about where the beauty

company is heading. For

retailers, the changes are

expected to unlock significant

sales growth opportunities.

Taking a quick look back,

the late 2007 acquisition of

Del enabled Coty to extend its

portfolio offering, which prior

to the deal made 68% of its

sales in fragrance. Previously,

color cosmetics accounted

for 15% of Coty’s sales, while

toiletries stood at 14% and

skin and sun care only at

3%. Through the acquisition,

Coty Beauty’s portfolio has

been bolstered with the addition

of Del’s Sally Hansen,

N.Y.C. New York Color and

La Cross brands.

Having such brands in its

fold makes Coty an even

more powerful player in the

beauty space, and the momentum

shows little sign of

slowing as the company

gears up for new launches

and initiatives, including fragrance.

In fragrance, Coty

currently holds more than a

30% share of the market.

One factor that makes

Coty unique, compared with

some of its competitors, is its

foothold in both the mass

market and prestige with fragrance,

said Mary van Praag,

SVP sales. This dichotomy

perhaps is more important

today than ever before, as research

indicated that budgetconscious

beauty shoppers

are changing their buying

habits and mass-market retailers

are turning to innovative

concepts (e.g., CVS’ new

Beauty 360 stores) to capture

their beauty dollars.

According to Coty executives,

fragrance at mass represents

a tremendous opportunity.

In fact, John Burgfechtel,

VP sales strategy,

customer marketing and

sales operations, said there is

an $85 million opportunity to

unlock fragrance at mass —

especially in today’s economic

environment where

shoppers are trading down

from department stores.

The key, however, is to

unlock the category — literally

— and to enhance the shopping

experience through imagery

and sampling. Previous

research conducted by Coty

showed that many consumers

are unfamiliar with the fragrance

department in the

retailer they most frequently

shop. Some don’t even realize

their retailer has a fragrance

department, and an even larger

percentage perceive the

retailer’s fragrance assortment

as being smaller and more

limited than it actually is.

Coty has been working

hard to change that, and this

year beauty shoppers will start

to see enhancements in the

fragrance category at mass.

It is likely that Coty will

leverage the enhanced fragrance

department to promote

its more recent successful

launches, including the

McGraw by Tim McGraw fragrance

for men and Halle by

Halle Berry. McGraw by Tim

McGraw launched in 2008,

and is expected to be a $20

million-plus franchise. Halle

by Halle Berry launched in

the spring and, according to

Coty, landed as the No. 1 new

woman’s SKU for the four

weeks ended May 24 with a

4.6% dollar share. It is expected

to generate $25 million

in annual retail sales.

Coty, a U.S. leader in both

nail color and nail treatment

with the Sally Hansen brand

— with more than a 43% share

of market in each segment,

according to Information Resources

Inc. data for the 52

weeks ended May 24 — and

the No. 2 manufacturer in

beauty tools with the La Cross

brand, has been working with

retail and market research

partners to reinvent the infamous

“Nail Wall.”

David Russell, VP cosmetic

sales strategy, stated, “The

consumer has spoken to us

through six months of

research and helped us to

reinvent what has been

known forever as the nail

wall. In spite of the fact that

this section of the cosmetic

department typically features

a lot more than just nail

products, it ended up being

called the nail wall. Through

the reinvention process, the

department has now been

dubbed the color and care

wall, more reflective of both

what’s on it, as well as how

the shopper thinks about it.”

This research currently is

being presented to customers.

A preview indicated clearly

positioned product segments,

enhanced consumer communication

and a significant

reinvigoration to an important

and growing section of

the cosmetics category.

There are opportunities to

further grow the nail care

segment, as the economy is

forcing many beauty shoppers

to forgo pricey salon visits

in lieu of at-home beauty

treatments. Because of this,

several segments of the nail

care market — namely treatments

and nail polish — are

experiencing an upswing. In

fact, nail color has been

coined the new lipstick.

According to data from

IRI, the cosmetic nail category

totaled nearly $586 million,

up 0.36% compared

with the year-ago period,

at food, drug and mass

(excluding Walmart) for the

52 weeks ended Dec. 28,

2008. Nail treatments experienced

a 4.8% boost, with

sales reaching nearly $72

million. Even more interesting

is nail polish, which

experienced a 5.2% increase,

with sales reaching $237.2

million for the period.

Drug Store News www.drugstorenews.com June 2009 • 4

Sally

Hansen’s

Insta-Dri

fast dry

nail color

“The [nail wall]

has now been

dubbed the color

and care wall,

more reflective of

both what’s on it,

as well as how

the shopper

thinks about it.”

David Russell,

Coty Inc.

Sally Hansen’s HD Hi-Definition nail color


THE BUSINESS OF BEAUTY

REVLON RESTRUCTURES

WITH COST CONTROL, NEW MANAGEMENT, NEW PRODUCTS

BY ANTOINETTE ALEXANDER

Revlon bolstered its firstquarter

net income and

trimmed debt as new product

introductions helped grow

net sales of its color cosmetics.

But the company’s turnaround

efforts continue as the

beauty giant has a new leader

at the helm and is cutting 400

positions worldwide.

One month after announcing

that Alan Ennis, former

EVP, CFO and president of

Revlon International, was

succeeding David Kennedy

as the new president and

CEO, Revlon revealed in late

May a worldwide restructuring

initiative aimed at saving

about $30 million annually.

“Today’s announcement

represents an important, necessary

and logical next step

forward for Revlon,” stated

Ennis when announcing the

restructuring. “Over the past

two years, we have built

improved and more efficient

processes and workflows,

which now allow us to take

this step to reduce annualized

costs by approximately

$30 million.”

The initiative involves

cutting about 400 positions

worldwide, including about

325 employees and 75 open

positions. As of Dec. 31,

2008, the company employed

approximately 5,600

people, according to Revlon’s

most recent annual filing

with the Securities and

Exchange Commission.

The restructuring could be

viewed as Ennis’ first stamp

on the company since

assuming the president and

CEO post on May 1. At that

time, Revlon also appointed

Chris Elshaw, who had

served as EVP and general

manager of the U.S. region,

as EVP and COO. In addition,

Steven Berns, former

CFO at Tradeweb, was hired

as EVP, CFO and treasurer.

Kennedy now serves as

Revlon’s vice chairman and

a senior EVP at MacAndrews

& Forbes Holdings.

“Alan has extraordinary

energy, the leadership skills

and strategic ability to lead

the worldwide Revlon organization

at this time and continue

to implement our strategy

most effectively,” Kennedy

told analysts during the company’s

April 30 conference

call to discuss first-quarter

results. “As you know, Alan

has been a key member of our

leadership team as CFO [and]

president of Revlon International,

and is a member of

the operating committee. In

those roles he has been closely

involved in all the key decisions

we have made over the

past few years.”

Kennedy had served as

president and CEO of

Revlon since September

2006, when he replaced Jack

Stahl. After taking the helm,

Kennedy began a restructuring

program that involved

cost control; pulling the ailing

Vital Radiance line, a

cosmetics line for mature

women; and embarking on a

round of job cuts.

The news of the most

recent senior management

changes came on the heels of

a buyout proposal from

Ronald Perelman’s firm

MacAndrews & Forbes,

owner of 75% of Revlon

stock, to buyout minority

shareholders of Revlon, a

move that would reduce the

company’s hefty debt load.

The timing may have

raised the eyebrows of some

industry observers, but a

Revlon spokesperson said,

according to published reports,

that the executive

moves had nothing to do

with the proposed buyout.

Meanwhile, Revlon posted

for the first quarter ended

March 31 a net income of $12.7

million, compared with a net

loss in the year-ago period of

$2.5 million, and reduced its

debt by $38.3 million.

Net sales for the quarter,

which were hampered by

unfavorable foreign currency

fluctuations, were $303.3

million, compared with last

year’s $311.7 million. Excluding

foreign currency

fluctuations, Revlon color

Revlon DoubleTwist mascara and ColorStay Ultimate liquid lipstick

will be introduced in the second half of 2009.

cosmetics net sales rose 8.9%.

Sales benefited from the

shipments of new products.

While the first-quarter

results were in line, at least

one industry analyst expressed

caution in light of

the slew of Revlon news and

the quality of earnings.

“With Q1 benefiting from

load-in of new products, that

raises the risk that, if the new

products are not successful

or if the launches are weaker

than planned because of the

recession, Revlon will get

heavy returns in the coming

quarters,” stated J.P. Morgan

analyst Carla Casella in a

research note.

However, Revlon’s senior

management remains optimistic

as it brings to market a

new lineup for the second

half of 2009 that features

first-to-market technology of

Revlon and Almay color cosmetics.

These introductions

include the new Revlon

ColorStay Ultimate liquid

lipstick, the first and only

one-step lip color that features

the ColorStay longwear

technology combined

with an exclusive conditioning

complex; Revlon Double-

Twist mascara, a first-tomass

2-in-1 brush that has

traditional bristles to thicken

lashes and innovative combs

to define; and the Revlon

ColorStay Mineral Mousse

makeup and Mineral Finishing

powder, which are extensions

of the Revlon

ColorStay Mineral franchise.

Under the Almay brand,

there’s the new Almay Smart

Shade Smart Balance makeup,

which is an extension of

the Almay Smart Shade franchise,

and the new Almay

Pure Blends Volumizing

mascara, which is an extension

of the Almay Pure

Blends natural collection.

Drug Store News www.drugstorenews.com June 2009 • 5


THE BUSINESS OF BEAUTY

VICHY BRINGS ‘OO LA LA’ TO U.S. BEAUTY

BY ANTOINETTE ALEXANDER

French skin care brand

Vichy Labs recently

unveiled several new products,

but what’s even more

interesting is the brand’s

potential in the U.S. skin

care market in the coming

years as it expands distri-

bution through select retail

partnerships.

A lot has changed since

Vichy made its U.S. debut in

2002 inside the Derma Skincare

Centers within select

Brooks Pharmacy locations.

Not only has Rite Aid

Vichy showcases its products by utilizing brightly lit displays with white shelving,

giving the displays a high-end, European feel.

snapped up Brooks, but

Vichy also has since partnered

with retailers Duane

Reade and CVS/pharmacy,

selling its products in select

locations that have high-end,

in-store skin care

boutiques.

In these brightly

lit European-style

boutiques, products

are showcased

on white shelving,

giving the centers an

upscale, professional

feel. A skin adviser,

often outfitted in a

white lab coat, is on

hand to create personalized

skin profiles on the spot

using high-tech computerized

equipment.

Today, Vichy is sold in

about 700 doors, a number

that likely will reach roughly

800 by year’s end, Philippe

Patsalidés, general manager

of the Active Cosmetics

Division for L’Oréal USA,

P&G ADDS THE ART OF SHAVING

TO MALE GROOMING PORTFOLIO

Procter & Gamble executives

have made it clear that

they see greater opportunities

within the men’s grooming

segment, and now the

beauty company is getting

into the retail business

through its recent acquisition

of upscale grooming

brand The Art of Shaving.

“As a leading high-end

male grooming brand, The

Art of Shaving is a perfect fit

for P&G Male Grooming,

broadening our footprint in

the prestige channel and

appealing to the high-end

male consumer with products

and services that meet

his unique wants and needs

— when and where he

shops,” P&G stated.

Financial terms of the deal

were not disclosed.

Founded in 1996, The Art of

Shaving grooming and shaving

products are sold in highend

department stores and

specialty outlets, as well as

through its 36 retail locations

in the United States. Products

also can be purchased online

at www.theartofshaving.com.

According to P&G, the

acquisition is “the natural

evolution of a strong existing

partnership.” Since opening

its doors in 1996, The Art of

Shaving has designed its

razors to fit only Gillette

blades. In addition, over the

past two years, the two

brands have partnered on

the co-design and marketing

of The Fusion Chrome Collection

of premium razors

and accessories.

P&G executives have ex-

pressed their desire to place a

much greater focus on men,

and as part of that effort, the

company is reorienting its

beauty business by gender, as

opposed to around product

categories. It also set up the

Male Grooming Zone at

the National Association of

Chain Drug Stores Annual

meeting in April in West

Palm Beach, Fla., where men

could get pampered with

Gillette products.

Meanwhile, the company

has been causing quite a stir

with its series of instructional

videos on YouTube on “manscaping,”

defined as basically

shaving below the belt. The

videos promote the use of

Gillette blades, razors and

such other products as body

wash and after-shave balms.

told Drug Store News. The

Vichy brand was founded in

France in 1931, and was

acquired outright in 1980.

Patsalidés said the company

would like to take the

Vichy Labs’

Liftactiv CxP

brand nationwide, but it will

be through partnerships

with select retailers. He

noted that in the next five

years, there is a potential to

be in 3,500 doors.

Even in today’s economy,

women have demonstrated

that skin care is one area they

still are likely to spend money

on, and Vichy appears to be

reaping the benefits.

Vichy currently represents

about 20% of facial skin care

sales within the 700 doors in

which it is sold. Patsalidés

said that the

skin care category

at mass

grew by 6%,

so Vichy has

grown three

times faster

than the

mass market.

On the product

front, Vichy

recently launched

several new skin care

offerings, including the

new NeOvadiol SPF 15

intensive densifying brightening

cream for mature skin,

Aqualia Thermal Light and

Mat for 24-hour moisturization

and Liftactiv CxP Bio-

Lifting Daily Care.

P&G recently acquired The Art of Shaving, an upscale grooming brand established in

1996 that has been partnering with Gillette over the past two years to co-design and

market The Fusion Chrome Collection of premium razors and accessories.

Drug Store News www.drugstorenews.com June 2009 • 6


THE BUSINESS OF BEAUTY

VALUE PRODUCTS SMOOTH

STRAYING HAIR CATEGORY

BY ANTOINETTE ALEXANDER

The hair care segment has lost

some of its volume in recent years,

thanks in large part to the recession

and a lack of blockbuster product

launches. However, the good news

is that consumers are increasingly

looking for value — rather than

buying based on specialized formulations

regardless of price — and

mass-market retailers are well positioned

to reap the benefits.

According to Euromonitor International’s

2009 “U.S. Hair Care

Report,” U.S. hair care value sales

slipped by 2% in 2008 — a drop

driven by declines in shampoo, conditioner

and styling product sales.

Actually, the slowdown in U.S. hair

care sales can be traced back to the

second half of 2007, as the major

hair care product launches and

relaunches of 2006 ran through.

Then factor in the economic crunch.

The silver lining is that consumers

are changing the way they shop for

hair care. Instead of snapping up

pricey premium salon brands that

tout new features or specialized formulations,

shoppers increasingly are

scouting for value. Manufacturers

are heeding the call and are developing

products that offer a cheaper

alternative to salon hair care.

For example, L’Oréal Paris

brought to retail earlier this year its

new EverPure, a sulfate-free hair

color care system that is positioned

as the first line to feature such ingredients,

quality and expertise in the

mass market. The EverPure collection,

priced between $6.99 and

$8.99, is free of harsh sulfates, harsh

surfactants and harsh salts that can

dull color and damage hair.

Also this year, Procter & Gamble

Beauty introduced its new Pantene

Pro-V Nature Fusion line. The line

has two collections: Moisture Balance

and Smooth Vitality shampoos and

conditioners (SRP $3.99). There also

is a Pantene Pro-V Nature Fusion

treatment product (SRP $5.99).

The new Pantene Pro-V Nature

Fusion line also taps into the popularity

of natural or nature-inspired

personal care products. Natural or

organic-positioned formulas have

gained popularity among consumers,

but the economy has

prompted many shoppers also to

take a value approach to “natural”

hair care.

“This dynamic enabled Organix

from Vogue International to reach

sales of just over $50 million in 2008,

after just two years on the market,”

Euromonitor stated. “The modestly

priced L’Oréal’s Garnier Fructis

brand, which claims to have natural

active ingredients, also benefited.”

There were, however, two growth

subsectors in 2008, according to

Euromonitor’s data: perms and

relaxants, and hair color. Perms and

relaxants rose 3% in 2008, as manufacturers

and retailers placed a

greater emphasis on the unique hair

care needs of ethnic consumers,

namely African-Americans. The natural/organic

trend has been especially

pronounced in the ethnic hair

care segment as these shoppers tend

to desire gentler treatments.

For 2009, SoftSheen-Carson developed

a string of new products,

including the new Roots

of Nature line. The naturalbased

hair care line is

designed to battle severely

damaged hair with a

combination of green

tea and shea butter.

In addition, Alberto-

Culver launched for

2009 several new products.

For example, its

Motions Marula Natural

Therapy collection now

includes Marula Natural

Therapy strengthening

shampoo, strengthening conditioner

and strengthening

thermal oil treatment.

Meanwhile, hair colorants

rose 1% during 2008, according

to Euromonitor, as more women

opted to color their hair at home

in lieu of costly salon treatments.

Contributing to the growth was

the 2008 launch of P&G’s Perfect

10 by Nice ’n Easy, touted as the

biggest home hair care innovation

in more than 50 years. It has a suggested

retail price of $13.99.

What makes the product unique,

according to P&G, is the lightening

system, called AminoGlycine. The

system took nearly 10 years to

develop, with 18 filed patents. The

attributes of AminoGlycine that

make it work more effectively:

It takes 10 minutes,

compared with 20

minutes to 30 minutes;

has 10 times less alkalinity

than conventional

technology;

more selectively

targets melanin

pigments; is less

likely to react

with hair protein

fibers;

and helps to

control damaging

free

radicals.

Drug Store News www.drugstorenews.com June 2009 • 7


THE BUSINESS OF BEAUTY

MAX FACTOR DROPS OUT OF U.S. MARKET

BY ANTOINETTE ALEXANDER

HUNT VALLEY, Md. — The Max

Factor legacy is coming to an

end — at least in the United

States — as Procter & Gamble

will stop selling the makeup

brand in the United States in

first quarter 2010. The company

will shift that focus to its

CoverGirl brand.

While Max Factor is the

leading cosmetics brand in

more than 20 countries, and

the No. 2 cosmetics brand in

such key markets as the

United Kingdom and Russia,

it represents a small portion

of the P&G cosmetic business

in the United States,

P&G stated. According to

reports, the brand generates

more than $1 billion in sales

worldwide in more than 70

countries, but its U.S. dollar

share is about 1.2%.

P&G has announced plans to stop selling its Max Factor makeup brand in the United States

and focus its resources on continuing to grow the CoverGirl cosmetics brand.

“Max Factor is a strong,

profitable brand and remains

one of P&G Beauty &

Grooming’s key engines for

growth. However, we are

choosing to discontinue the

U.S. Max Factor brand,

which has different products,

packaging and distribution

channels than the

Max Factor brand marketed

around the world,” stated

Virginia Drosos, president of

global female beauty at

P&G. “P&G is fully committed

to profitable growth and

leadership in cosmetics, both

in the United States and

globally. This is the right

decision to further strengthen

our cosmetics business

because it allows us to focus

our U.S. resources on continuing

to grow the No. 1 brand

in the region — CoverGirl.”

Since it was officially

founded in 1909, the brand

has developed countless

makeup innovations and

has become synonymous

with beauty and fashion to

millions of women in all

parts of the world. In fact, it

became the first motion-picture

makeup in 1914, and

the word “makeup” was

coined by Max Factor.

P&G acquired the brand

from Revlon in 1991 for $1.14

billion. Over the years, P&G

has worked to leverage the

brand’s theatrical heritage.

In 2005, it signed Carmen

Electra to represent the

brand and more recently in

2008, it tapped supermodel

Gisele Bundchen as the new

face of Max Factor.

MCDONALD TAKES LEAD POSITION AT P&G

CINCINNATI — On July 1, a new

leader will officially be at the

helm at Procter & Gamble, as

Robert McDonald, currently

COO, takes over as president and

CEO. He succeeds A.G. Lafley,

who will become chairman.

“A.G. Lafley has led the

transformation of P&G over the

past nine years,” stated Jim

McNerney, presiding director of

P&G’s board. “P&G is a far

more consumer-driven, externally

focused and innovative

company than it was a decade

ago. P&G’s organization is

world-class. The board is confident

that A.G. and Bob have made the right

choices to deal with the current economic realities

and have built the leadership team to guide

P&G through the decade ahead. It’s the right

time for Bob to step up as CEO. The board is also

pleased that A.G. will continue to serve full-time

as P&G’s chairman.”

McDonald, who also has been appointed a

member of P&G’s board, has nearly 30 years of

brand building, market development, global

business unit and global operations leadership

experience across the company.

McDonald, a West Point graduate who served

Robert McDonald

as a U.S. Army captain, joined

P&G in 1980. He rose through

the ranks quickly, managing

such brands as Solo, Cascade,

Tide and Dawn. In the 1990s,

McDonald spent his time in Asia

as P&G expanded its reach

beyond North America.

In 2004, McDonald was appointed

vice chairman global

operations and has served as

COO for the past two years.

During his tenure at P&G,

Lafley has revitalized the company

and coordinated the $57 billion

acquisition of Gillette Co., creating

a consumer products powerhouse

with more than 20 billion-dollar brands.

The recession has hampered P&G’s business as

consumers curb spending, and in May the company

issued a lower-than-expected earnings

forecast for fiscal 2010. But at least one source

told the Wall Street Journal that Lafley’s departure

has been in the works for at least two or

three years and is not related to any dissatisfaction

with his performance.

“I’ve worked with Bob for most of my career at

P&G, and he and I have worked side-by-side

over the past decade,” Lafley stated. “He believes

in P&G’s purpose and P&G’s people to his core.

“The board is confident that

A.G. [Lafley] and [Robert

McDonald] have made the right

choices to deal with the current

economic realities and have

built the leadership team to

guide P&G through the decade

ahead. It’s the right time for

Bob to step up as CEO.” Jim McNerney,

P&G

He has broad experience in every facet of P&G’s

business and in virtually every part of the world.

He has a strong and consistent track record of

business results and has been an integral member

of my leadership team. He thinks strategically

and operates systemically. He has my complete

confidence and support.”

Drug Store News www.drugstorenews.com June 2009 • 8


THE BUSINESS OF BEAUTY

How has the economy altered your beauty regimen? Are there areas, such as

makeup or hair care, where you have traded down for cheaper alternatives?

“No, I haven’t cut back.”

– Toni C., 23,

Queens, N.Y.

“I haven’t changed

anything.”

– Moises R., 32, Mexico

“Yes — makeup. I stopped

using Dior foundation and

started trying the brands at

Duane Reade.”

– Rebecca M., 21,

New York

“Yes, I’ve switched makeup

and hair products. You have

to go for a bargain, or whatever

you find on sale, and

not buy the more expensive

brands on the market.”

– Margaret D., 41,

New Jersey

“I’m one of those people if I

want something, I’ll get it. I

don’t care about the price.”

– Hayley C., 17, London

“No, actually. I’ve just used

the same brand of cosmetics

I’ve always used.”

– Marina K., 14, Brazil

“Yes — hair. I get cheaper

highlights and use a different

haircutter. I now go to a

neighborhood where haircuts

are half the price of

what I was paying. I haven’t

cut back on beauty products

though.”

– Sandy C., 64,

“With hair care, I don’t care

how much. I guess I have cut

back with makeup though.

Instead of going to Sephora,

I go to Duane Reade.”

– Candey V., 23,

Brooklyn, N.Y.

Brooklyn Heights, N.Y.

“No, I haven’t made any

changes. I really don’t

put anything in my hair

besides shampoo and

conditioner, and I just use

mascara or shadow sometimes

for makeup.”

– Kristian V., 30,

Bronx, N.Y.

“I’ve definitely cut back on

hair products. I used to use

Garnier Fructis, but now I’ve

just been using store brand.”

– Allison W., 21,

Massachusetts

Drug Store News www.drugstorenews.com June 2009 • 9

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