Cosmair, Inc.

views updated

Cosmair, Inc.

575 Fifth Avenue
New York, New York 10017
U.S.A.
(212) 818-1500
Fax: (212) 984-4056

Private Company
Incorporated: 1953
Employees: Over 3,800
Sales: $1.2 billion
SICs: 2844 Toilet Preparations

Cosmair, Inc. manufactures and markets a wide range of cosmetics, hair preparations, and perfumes as the sole United States licensee of France’s cosmetic mogul, L’Oréal S.A. It has grown to become a power in the beauty products industry through marketing expertise, research and development, and a vast distribution network. The company’s products are widely accepted and can be found in beauty salons, department stores, specialty stores, drug stores, and mass merchandising outlets across the United States.

Cosmair was founded in 1953 as a distributor of L’Oréal hair styling preparations to American beauty salons. It was formed as a U.S. licensee between Jacques Corrèze, who was Cosmair’s chairman for 38 years, and L’Oréal. Cosmair’s 20 employees produced and distributed hair care preparations to U.S. beauty parlors, allowing American women to use the same hair coloring formulas that their French counterparts had utilized since 1907. By the end of the 1960s, Cosmair had firmly established a position in the American market. It began marketing French designer Guy Laroche’s perfume line in 1966, and in 1967 it became the U.S. licensee for Lancôme, a respected line of color cosmetics, fragrances, sun products, and skin treatments.

Lancôme was initially developed in 1935 by French fragrance merchant Armand Petitjean, who coined the name and the product’s rose logo after an excursion to ancient Le Chateau de Lancôme in France. The line, known for its quality and elegent packaging, has remained one of Cosmair’s strongest divisions. Lancôme’s product names, printed in both English and French, created a French mystique popular with upscale buyers. In addition, Cosmair rigorously trained its counter salespeople to maintain Lancôme’s reputation as a competitive, prestigious brand. The salespeople built a broad base of loyal clientele by recommending Lancôme products for specific cosmetic problems and conducting in-store “mini-facials” to demonstrate the Lancôme product line. Customers were also given samples of skin care and cosmetics as “promotional gifts-with-purchase.” Lancôme’s reputation was also enhanced by the opening of the Institut de Beauté in 1977. Based on L’Oréal’s original Parisian Instituí founded in 1936, the premier “salon” provided expert skin applications and treatments. Although Lancôme was unprofitable in America from 1971 to 1978, the division experienced meteoric growth in the following years “growing in volume at the rate of 40%-50% a year” as reported in Barron’s by Gigi Mahon.

In the 1970s Cosmair successfully expanded into a broader segment of the American hair care market, turning to consumers who wanted hair care and hair color mixtures that could be applied at home. The L’Oréal Hair Care Division debuted a major new product line called Preference with the now famous slogan, “Because you’re worth it.” Preference was heavily advertised and marketed towards potential buyers in food, drug, and large discount stores. Later the brands Excellence and Colorations—hair care, permanent wave, and hair colorant supplies—were added and marketed under the Professional Salon group.

L’Oréal Chairman and CEO Francois Dalle, the well-known French entrepreneur, appointed Lindsay Owen-Jones as President and CEO of Cosmair in 1981. Owen-Jones developed a new vision of growth for Cosmair based on his marketing and strategic acumen, and proved a primary force in shaping the company into the successful organization it is today. Cosmair experienced unprecedented changes in the 1980s, and sales tripled over the course of four years to $600 million by 1984.

The L’Oréal Cosmetics Division was based on a group of existing products: nail polishes and lipsticks. These soon grew to include a wide range of color cosmetic products, each priced to sell at $6. Anais Anais was formulated in 1981 by another Frenchman, Jean Cacharel, who was attempting to duplicate the fragrance of the scarce Madonna Lily. Another brand, Drakkar Noir, by Guy Laroche, became a top seller in men’s fragrances by 1984 with a marketing campaign that targeted younger male consumers via the advertising slogan, “Feel the power.” Italian stylist Georgio Armani’s fragrances were enlisted in 1984, as well as those of chic designer Paloma Picasso, daughter of the famous painter Pablo Picasso.

In 1983 Cosmair staged a coup that dramatically boosted its standing within the industry. As it planned the introduction of a pioneering hair styling foam called “mousse,” the company bought up the entire supply of customized aerosol cans available in Europe. This move left Cosmair in a very advantageous position six months later when it debuted its Free Hold Styling Mousse, which was eventually named “Product of the Year” by Fortune magazine. Challengers were prevented from competing in the styling mousse market for several months until the inventories of aerosol cans could be fortified. As a result, by 1985 Cosmair dominated the profitable $150 million U.S. mousse market with 40 percent of the market share.

Cosmair also gained notoriety in 1984 with its purchase of Warner Cosmetics, a subsidiary of Warner Communications, for $146 million. Warner Cosmetics produced cosmetics and fragrances under the brand names of designers Ralph Lauren (Lauren, Chaps, and Polo), Gloria Vanderbilt (Vanderbilt) and Paloma Picasso (Paloma Picasso). The management of both Cosmair and Warner Cosmetics foresaw advantages in the merger. As reported by Catherine Ellis Hunter in Drug & Cosmetics Industry, the gains included “international distribution and expert research facilities for Warner, marketing creativity and domestic know-how in fragrance marketing for Cosmair.” By 1985 Vanderbilt was the top selling women’s fragrance in America.

In 1985 Cosmair brought France’s most successful skin care line, Biotherm, to the United States. International in flair, Biotherm’s forte was in reputable body, face, and sun commodities displayed in prestigious department and specialty stores. Biotherm products have included Symbiose Naturel, a daily treatment that features a “natural mineral enzyme” as an anti-aging protectant; Contour Total, a cream or gel to fight cellulite; Bioperfection, a liposome formulated treatment makeup with natural colors; Aqualogic, an emollient designed to aid skin in finding its correct moisture level; and Actif Nuit, an overnight facial skin cream.

Biotherm focused its advertising efforts on women between the ages of 30 and 45 through advertisements in traditional beauty magazines such as Elle, Harper’s Bazaar, Glamour, and Vogue. Later on in the decade Cosmair began distributing the brands Biologies 30, 40, and 50, targeted to women of those specific ages. Biotherm also created a club for purchasers, Centre Biotherm. With no purchase required, consumers could sign up at the department store counter to receive newsletters and obtain discounts. Another service, Biotherm’s “Skin Fitness Program,” gave consumers private skin consultations, pinpointing skin care problems. In 1992 Cosmair vigorously cut its Biotherm distribution in an attempt to make it more price competitive and, as stated by Biotherm’s general manager in Women’s Wear Daily, to make Biotherm pricing “more affordable” and appealing to a broader range of clientele.

In 1985 L’Oréal had a 24 percent market share (in dollars) compared to competitor Clairol’s 58 percent in the realm of hair coloring. The following year Cosmair debuted the Stu-Stu-Studio product line that allowed purchasers young and old to style their hair “anyway they liked it.” The product line of spritzes, sprays, styling gels, and mousses was chicly packaged into “a virtual styling tool box,” as reported in a company brochure. The company also expanded its upscale L’Oréal cosmetic line into mass-merchandising outlets such as drugstore chains, and set the price 20 to 30 percent higher than the prices of the products of competitors.

To create and promote its numerous new products Cosmair far outspent the industry average; this had a negative impact on profits. According to William Meyers in The New York Times, “Cosmair’s strong performance notwithstanding, its heavy spending on research, advertising and promotion has kept it from turning in blockbuster profits. … Cosmair’s advertising and promotion budgets, analysts say, total about $230 million, or 35 percent of sales, higher than the industry norm of about 25 percent.” In 1987 the L’Oréal Cosmetics Division made the decision to cut product distribution by almost 3,500 stores to dconcentrate on major stores and to acquire the significant shelf space needed to install their new modern display system. Sales from 1985 to 1987 fell significantly. The move reduced the importance of promotional activities and “refocused on basic business, holding off new-product launches,” noted Pat Sloan in Advertising Age.

Cosmair was also troubled by so called “knockoff fragrances,” as reported in Advertising Age, where “the practice of linking a product with an established product marketed by another company” became very commonplace in the industry. In 1986 Cosmair had won a temporary restraining order against S.C. Johnson Co. that prohibited the distribution of its new L’En vie shampoos and conditioners. L’En vie, produced by the Agree shampoo and conditioner line, printed Cosmair’s Vanderbilt fragrance title on the containers. Cosmair declared trademark infringement and unfair competition as reasons for the court order. Although Johnson claimed to be solely in the shampoo and conditioner selling business, Cosmair charged that its marketing strategies copied those of “knockoff-fragrance marketers” by printing misleading material on the wrapping. Cosmair also accused Johnson of being intentionally aware of and cashing in on “the reputation and goodwill of Cosmair’s Vanderbilt brand.” The lawsuit was later dropped when both companies agreed on new labeling and ad disclaimers. Rather than “inspired by,” Johnson was forced to use the phrase, “A fragrance similar to Vanderbilt perfume.”

Product innovation rebounded from the late 1980s into the early 1990s. The L’Oréal Cosmetics Division again became profitable in 1988, largely due to the introduction of Lash-Out Lash Extending Mascara. Lash-Out became the number one mascara seller in the United States that year. Other new cosmetic products included such brands as Mattique Illuminating Matte Foundation, Colour Supreme LongWearable Lipstick, Splash Out (a waterproof version of Lash-Out mascara) and Hydra Perfecte Protective Hydrating Makeup.

In fragrances, Glorious was introduced as an offshoot of Vanderbilt in 1987. Paloma Picasso’s sophisticated bath-fragrance line and designer cosmetics continued to expand with Mousse Hydratante Parfumée, introduced in 1989 as a non-greasy body moisturizing foam scented with the classic “Paloma Picasso” perfume.

Collaboration between Cosmair and Ralph Lauren also increased in the early 1990s. Ralph Lauren and Cosmair debuted a woman’s fragrance called Safari in 1990 and a separate division was established in the following year composed entirely of Lauren designer fragrances. In 1991 Polo Crest, a citrus-scented perfume, was introduced for men with a logo patterned after the traditional Lauren crest. Safari for men was debuted in 1992. In hair care, Colorvive Technicare was introduced as Cosmair’s premier line for the daily care of color-treated hair. Other innovative hair coloring brands, such as Crescendo, Majirel, and Majiblond, were created under the L’Oréal Keralogie group. Diacolor, another invention, combined “the soft and gentle properties of semi-permanent color with the long-lasting results of permanent hair color,” as reported in a company brochure.

The Lancôme Division continued to capitalize on its French mystique, but adapted its message to an American way of life. For instance, the moisturizer TransHydrix was not only to be marketed as an emollient, but also as a guard against skin dehydration. Lancôme’s leadership in the industry was further strengthened by the introduction of Niosôme Daytime Skin treatment. Poudre, Teint, and Blush Majeur makeup products were also part of the line-up, and in 1991 Lancôme debuted Tresor, a floral-oriental fragrance, which soon became popular in Europe and America.

One of the fastest growing segments in the cosmetic business by 1990 was the so-called “anti-aging” skin treatment market. In 1987 Cosmair and two other cosmetics firms—Shiseido Cosmetics Ltd. and Christian Dior Perfumes Inc.—were warned by the Food and Drug Administration (FDA) about their “anti-aging skin treatment” claims, as reported by a staff reporter for The Wall Street Journal. Cosmair’s Lancôme Niosome Systeme Anti-Age Daytime Skin Treatment was pointed out as a violator. The FDA stated that the companies “must seek new-drug status for the treatments if they want to keep making certain claims in labelling.”

Undaunted by this event, Cosmair introduced an upscale, anti-aging facial treatment and France’s most popular skin care line to America in 1989 under the brand name Plénitude. Plénitude was launched with a $35 million Euro-style ad campaign, designed by Publicis, Paris. As reported in Advertising Age, the brand was released under the slogan, “Reduces signs of aging.” Plénitude products were primarily distributed through drug stores, mass volume retailers, and combination stores. In 1990 another product was added, Plenitude Action Liposomes, touted as “skin care of the future,” according to Pat Sloan in Advertising Age. Sales of Plenitude skin care were estimated at $75 million by 1991. As George Klarsfeld, general manager of Cosmair’s L’Oréal cosmetics and fragrance division, said in Advertising Age, Plenitude’s success has been attributable to demographic growth of baby-booming women and a “very good quality-for-value concept.” Oil of Olay, produced by Procter & Gamble Company’s Richardson-Vicks subsidiary, is Cosmair’s main competitor in this market.

In 1990 Cosmair held 5.6 percent of the U.S. women’s fragrance market behind industry leaders Estée Lauder (12.5 percent) and Revlon (11.6 percent). In the men’s fragrance category, Cosmair has been listed as the second ranked company with 23.5 percent of market share, trailing only Unilever’s 25 percent share of the market. In 1991 Cosmair was the sixth largest marketer of cosmetics in the United States, with $1.1 billion in sales and more than 3,600 personnel employed throughout the United States and Puerto Rico. Sales ending 1992 were estimated at around $1.2 billion. 1992 divisions included 1) the Professional Salon Division, made up of L’Oréal Technique Professionale and L’Oréal Professional Salon Products, 2) the L’Oréal Hair Care Division, 3) the L’Oréal Cosmetic & Fragrance Division, 4) Lancôme, 5) Biotherm, 6) the European Designer Fragrance Division, 7) the Ralph Lauren Fragrance Division, and 8) Cosmair Caribe, which serves Puerto Rico. The company’s laboratories are located in Clark, New Jersey. As reported in 1991 by Steven Greenhouse in The New York Times, the three major stockholders of the privately held company are the Nestle company, with about 70 percent; L’Oréal, with four percent; and Liliane Bettencourt, daughter of L’Oréal’s founder, with 26 percent.

Cosmair, Inc. further solidified its position in the industry on June 21, 1993, with the purchase of Redken Laboratories, one of the world’s largest beauty products companies, with a presence in 36 countries.

As Cosmair faces the future, it has been focusing most of its marketing efforts on cosmetics and fragrances. For instance, as reported by Pat Sloan in Advertising Age, another Ralph Lauren men’s fragrance is slated for introduction in spring 1994. With its broad line of profitable perfumes, cosmetics, and hair care products, Cosmair is expected to remain one of America’s most powerful beauty companies well into the 1990s.