The Twenty-First's Second Decade-Whither the Beauty Industry?

By Taylor, Marilyn L.; Coates, Theresa L. et al. | Business Case Journal, Winter 2014 | Go to article overview

The Twenty-First's Second Decade-Whither the Beauty Industry?


Taylor, Marilyn L., Coates, Theresa L., Anyansi-Archibong, Chi, Tanaka, Norihito, Business Case Journal


As the Beauty (or T&C, Toiletries and Cosmetics, NAICS code 325620) Industry headed into the second decade of the twenty-first century, executive teams in many of the companies took stock of what lay ahead and how to steer their firms toward optimal growth and profitability. The industry's competitors confronted significant growth opportunities, especially in the developing countries such as BRIC (Brazil, Russia, India, and China) as well as other smaller markets in the Southeast Asian region. However, there were a number of challenges including increasingly stringent government policies regarding product development (especially safety), monitoring, packaging and labeling. Product development would have to take into consideration the differing needs and preferences of various ethnic populations and cultural differences. Marketing would have to consider the distribution channels and mores of the various countries. In addition, T&C companies would need to monitor the continuing turmoil in certain regions and consider the current and anticipated situations in those various areas. In addition, there were opportunities for individual companies to expand through mergers and acquisitions.

This industry note consists of sections on the history of the beauty industry, the overall world market through the industry's four segments (bath and shower, hand and body, cosmetics, and fragrances); regional and country markets by segment; the major competitors in the four segments; suppliers and buyers for the segments; and regulations affecting the industry. Appendices provide profiles of ten major firms in one or more of the segments--Avon, Beiersdorf, Coty, Estee Lauder, Kao, L'Oreal, Procter and Gamble (P&G), Sara Lee, Shiseido, and Unilever. (See Appendices A-K.) Key challenges for executives in the individual companies revolved around which markets to target for expansion, what products and services to offer into which markets, and who should merge with whom.

History of the Beauty Industry

Cosmetics have existed in some form for thousands of years. Some date the use of beauty products as early 10,000 BC. The earliest documented use of cosmetics occurred around 4000 BC in ancient Egypt. The earliest beauty products included kohl for use around the eyes, rogue for cheeks and lips, white face paint, and oil perfumes.

Oil-based perfumes were first used during bathing and to mask odors. By the nineth century, alcohol-based perfume had been developed. Brought into Europe by the Crusaders and traders, these perfumes were less expensive and quickly gained popularity. Exotic scents from blending different ingredients (e.g., oils, flowers, roots, or fruits) penetrated the market in Europe and then America. Beginning in the sixteenth century, France became one of the main manufacturing centers for cosmetics, especially perfumes. Some of the major perfumeries traced their histories to origins in France during the eighteenth century. However, the modern economic history of the industry was dated to the nineteenth century.

After the Napoleonic Wars concluded in Europe in 1815, entrepreneurs, often immigrants such as Helena Rubinstein and Elizabeth Arden, appeared in various European countries. The entrepreneurs and their newly forming companies developed beautifully packaged fragrances. In addition, the entrepreneurs introduced new hair and skin care products. In the early years, the use of beauty care products were associated with prostitutes, an issue that luxury brands as well as wide-spread popular brands successfully overcame in the twentieth century. The beauty products market was dominated by small businesses well into the twentieth century and continued its resilient growth trajectory through the two great world wars and the Great Depression of the 1930s.

Natural oils, flowers, roots, and mineral pigments were the ingredients for early beauty products. These were mixed with gums and resins as bases for the cosmetics. …

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