Creams & Lotions

INDUSTRIAL CODES

NAICS: 32-5620 Toilet Preparation Manufacturing

SIC: 2844 Perfumes, Cosmetics, and Other Toilet Preparations Manufacturing

NAICS-Based Product Codes: 32-5620D through 32-5620D271

PRODUCT OVERVIEW

Creams and lotions are, along with soap, among the oldest products used by humans on the skin. Early humans—with skin exposed to wind, sun, and extreme temperatures—likely used oils and fats to relieve the pain associated with dry, burned, and chapped skin. Human skin is the body's largest organ and a complex biological system known as the integumentary system. As the interface between a body and the environment, skin serves many functions. It provides a protective layer around the body, keeps moisture in and toxin out, regulates body temperature, and produces vitamin D, which is essential for the growth and strength of human bones. While humans have long experimented with products used on the skin's surface, the dermis, creams and lotions have changed.

Gone are the days when the use of bar soap followed by the application of face cream was considered appropriate skin care. Creams and lotions have an expanded role in a well-rounded skin care regimen. Creams, used as facial cleansers and moisturizers, and lotions, used as hand and body lotions, are large and robust product classes within the Toilet Preparations Manufacturing industry as defined by the U.S. Census Bureau. Most are marketed with claims that their use transforms the skin and prevents or delays signs of aging.

Facial cleansing creams are available in formulations including foam, fizz, cream, milk, and gel. Toners, disposable cleansing cloths, facial scrubs and masks, and even exfoliation are considered part of a well-rounded skin care regimen. Creams and lotions oils are available in multi-function formulations, so that one product can provide cleansing, moisturizing, self-tanning, and sun screening benefits to the user. This makes it difficult to separate creams and lotions into discrete classes. While the standard Dove and classic Pond's brand names still exist, they each now lead a cavalry of multi-functional products within their respective lines.

The U.S. Food and Drug Administration (FDA) refers to skin care products as cosmetics. The U.S. Census Bureau refers to skin care products like creams and lotions broadly as toiletries and reports on them every five years in the Economic Census and during off years in the Annual Survey of Manufactures. Because both governmental agencies use generic terms to refer to a broad class of products, the skin care market is referred to, generally, as the cosmetics and toiletries industry. The FDA does not regulate cosmetics and toiletries, and critics like the Campaign for Safe Cosmetics claim that consequently it is a marketplace where rule of law barely exists. Others insist it is a highly self-regulated and well-functioning market.

Manufacturers may use any ingredient or raw material (except for color additives and a few prohibited substances) to make cosmetic and toiletries products without government oversight, review, or approval. Companies are not required to substantiate performance claims or conduct safety testing. Labeling regulations, however, do apply. The Fair Packaging and Labeling Act requires an ingredient declaration on cosmetics and toiletries products. Ingredients must be listed in descending order of quantity.

Creams and lotions are classic nondurable consumer goods. Nondurable goods are purchased for immediate or almost immediate consumption and have a life span ranging from minutes to three years. Nondurable goods are destroyed by their use so consumers need to repeatedly replenish their supply throughout the year. Generally this equates to a large variety of affordable products for consumers to choose from in the market.

MARKET

Creams and lotions are part of the $28 billion per year U.S. cosmetics and toiletries market. The U.S. Census Bureau refers to such skin care products as toiletries and reported the value of all shipments of them in one of the 2002 Economic Census series of reports titled "Toilet Preparation Manufacturing: 2002." The major toilet preparation divisions are presented in Figure 77 and are, from largest to smallest: (1) Cosmetics; (2) Hair preparations; (3) Creams, lotions, and oils; (4) Perfumes; (5) Shaving preparations, and (6) Other toilet preparations. The creams, lotions, and oils accounted for 21 percent or $5.9 billion of the total $28 toiletries industry in 2002.

The creams and lotions discussed in this essay are a subset of the Census Bureau's third toiletries division, creams, lotions, and oils. Product classes discussed are listed in Figure 78 with total U.S. shipments for 1997 and 2002.

Cleansing Creams

Shipments of cleansing creams mushroomed between 1997 and 2002, rising from $379 million to $2.0 billion, a growth of 428 percent. This represents an 85 percent annual growth rate over the five-year period, striking growth by any industry yardstick and particularly within the mature cosmetics and toiletries industry. This growth demonstrates that consistently over the five-year period, more U.S. women and men concluded that the unique nature of the skin on the face requires a special product to properly cleanse it. Cleansing creams became the leader within the creams and lotions major division, leapfrogging over moisturizing creams to become most popular.

According to Market Share Reporter 2007, top facial cleansers are: Olay, Pond's, Cetaphil, and Neutrogena. Olay, the number one best seller, is manufactured by Procter & Gamble. An examination of Olay's facial cleansing products shows a substantial collection including Hydrate & Cleanse Micro-Bead Cleansing Serum, Hydrate & Cleanse Antioxidant Lathering Face Wash, Hydrate & Cleanse Night Nourishing Cream Cleaner, Dual Action Cleanser & Toner, Deep Cleansing Face Wash, Moisture Rich Cream Cleanser, and Clarify Foaming Cleanser. That covers only Olay cleansing creams. Cleansing with Olay can also be accomplished with various non-woven fiber cloths, often referred to as premoistened towelettes.

Premoistened Towelettes

Shipments of premoistened towelettes grew at a healthy pace between 1997 and 2002, rising from $647 million to $1.1 billion, a growth of 70 percent. Such double-digit growth is striking by most industry yardsticks. More Americans are turning to tow-elettes premoistened with creams, lotions, and oils as part of their skin care routine. For instance, facial cleansing can be accomplished with such Olay towelettes as Daily Facials Clarity Lathering Cloths, Daily Facials Moisture Balancing Self-Foaming Discs, Daily Facials Lathering Cleansing Cloths-Hydrating for Normal to Dry Skin, and Daily Facials Night Cleansing Cloths with soothing lavender and chamomile.

Hand Lotions

Between 1997 and 2002 hand lotions product shipments grew 34 percent, from $678 million to $911 million. According to Market Share Reporter 2007, the top hand and body creams in 2005 were Vaseline Intensive Care, Aveeno, Jergen's Natural Glow, Olay Body Quench, Eucerin, Cetaphil, and Nivea Body.

A visit to a major metropolitan mass merchandiser such as Target produced a substantial list of products that highlights why Vaseline Intensive Care is a leader in hand lotions. The Vaseline Intensive Care brand includes a broad variety of ancillary products such as: Vaseline Intensive Care Cocoa Butter Deep Conditioning Extra Rich Cream and Cocoa Butter Hydrating Lotion; Vaseline Intensive Care Aloe Cool & Fresh Light Moisturizing Lotion and Aloe Cool & Fresh Body Lotion; Vaseline Intensive Care Total Moisture; Vaseline Intensive Care Daily Skin Shield with SPF 15; Vaseline Intensive Care Healthy Body Glow with a Touch of Self-Tanner; Vaseline Intensive Care Intensive Rescue Moisture Locking Lotion; Vaseline Intensive Care Renewal Age Redefining Body Lotion with AHAs; and Vaseline Intensive Care Intensive Rescue Heal and Repair Balm and Intensive Rescue Healing Foot Cream.

Moisturizing Creams

The only creams and lotions product class that declined between 1997 and 2002 was moisturizing creams. Shipments of these products in the United States dropped 9.7 percent between 1997 and 2002, from $884 million to $806 million. As a result, moisturizing creams lost their historic first place spot due to the vigorous growth of cleansing creams and pre-moistened towelettes. Many creams and lotions have been reformulated to perform simultaneous functions such as cleansing, moisturizing, self-tanning, and sunscreening. Consequently, it may be assumed that this decline in the shipments of moisturizing creams is not a sign of reduced use of moisturizers but rather a sign that other products are now being used to fulfill the moisturizing function. For instance, Dove Energy Glow can be purchased as either a face moisturizer or a body lotion.

According to Market Share Reporter 2007, the top facial moisturizing creams in 2006 were Olay, Neutrogena, and Pond's. An examination of the classic Pond's Cold Cream that moisturizes as it cleans might explain the decline in shipment value of the moisturizing creams class. Pond's classic Cold Cream that removes make-up while it also moisturizes has a whole family of classic products to support. Additions to the classic brand include Dry Skin Cream, Deep Cleanser & Makeup Remover with cucumber in a lighter lotion format, Clean Sweep cleansing & make-up removing towelettes that clean down to the pores, and Exfoliating Clean Sweep cucumber cleansing towelettes that gently exfoliate while removing make-up. Pond's also sells Dramatic Results age-defying towelettes that fight visible signs of aging while cleansing.

Body Lotions

Shipments of body lotions grew 79 percent between 1997 and 2002, rising from $256 million to $458 million. According to Market Share Reporter 2007, the top hand and body creams in 2006 were: Vaseline Intensive Care, Aveeno, Jergen's Natural Glow, Olay Body Quench, Eucerin, Cetaphil, Nivea Body, and Jergen's.

Aveeno, the number two best seller after Vaseline Intensive Care, is made by Johnson & Johnson. Top selling Aveeno body lotions encompass six lines. Daily Moisturizing utilizes natural colloidal oatmeal, natural oils, and emollients; it is available in both a lotion and a creamy moisturizing oil. Stress Relief Lotion is natural colloidal oatmeal combined with lavender and essential chamomile and ylang-ylang oils. Continuous Radiance is a self-tanner line that utilizes soy and color enhancers gradually deepening skin color. Positively Radiant body lotions use soy to even out skin tone/texture and comes in formulations including a moisturizer with SPF 30, a moisturizer with SPF 15, a daily moisturizer, and an anti-wrinkle cream. Positively Smooth body lotions are formulated with skin-silkening soy extract and skin conditioners to minimize the appearance of unwanted hair.

Facial Scrubs and Masks

Shipments of these products more than doubled between 1997 and 2002, rising from $59 million to $119 million. This robust product class includes products such as Olay Daily Facials Intensives Clay Mask with lanolin clay and marine extract. Contributing to the growth in this category were products such as Pond's Clear Solutions strips designed to instantly unclog pores and remove unwanted blackheads.

Cosmetic Oils

Cosmetic oils grew at an annual rate of 28 percent between 1997 and 2002, rising from $31 million to $75 million in shipment value. One of the long time leaders in the product class is Johnson & Johnson's Baby Oil, a product recommended in the January 2007 edition of In Style Magazine as the best eye makeup remover on the market.

The market for creams and lotions is a mature and healthy market. The more robust product classes grew at rates as high as 85 percent annually. As creams and lotions become ever more multi-functional, it has become harder to classify them as simply cleansing creams or moisturizing creams, or even to determine whether a product was a hand lotion, a body lotion, a self-tanner, an anti-aging product, or possibly all four. Manufacturers of these multi-functional products are discussed in next section.

KEY PRODUCERS/MANUFACTURERS

Branding plays a key role in marketing toiletries and penetrating the more robust product classes. Manufacturers tend to invest heavily in well-established brands. The connection between a brand and the company that owns that brand is not always obvious to customers. Makers of top selling cream and lotions brands are profiled in alphabetical order.

Biersdorf

In 1911 Beiersdorf develop a skin cream based on one of the first-ever water-in-oil emulsifiers and named it Nivea, from the Latin word nivius, meaning snow-white. The Nivea brand grew to encompass not only facial care, but hair care, shaving, bathing/shower, body care, baby care, and sun care products all sold in 150 countries.

Biersdorf markets five lines under its famous name: Nivea Cream, Nivea Body, Nivea Soft, Nivea for Men, and Nivea Visage, which focuses on face care only. The Nivea Visage line includes Moisturizing Toner, Makeup Remover, Sun Kissed Facial Moisturizer, Anti-wrinkle and Firming Cream, All Around Protection Cream, and Q10 Advanced Wrinkle Reducer available in a day cream, a night cream, and an eye cream.

Nivea for Men features Revitalizing Eye Creme Q10 with coenzyme Q10, a natural component of the skin that allows the cream to be quickly absorbed to instantly revitalize eyes; it reduces dark circles, under-eye puffiness, and fine lines.

According to Market Share Reporter 2007, Beiersdorf captured 14 percent of the 2005 U.S. body lotion market and 8 percent of the hand lotion market. Recent innovations in its Nivea Body line include Smooth Sensation, a daily lotion for dry skin that delivers intense moisture in a light, fast absorbing formula enriched with gingko extract, shea butter and vitamin E.

S. C. Johnson & Johnson (J&J)

Headquartered in Racine, Wisconsin, Johnson & Johnson is one of the largest U.S. family-owned and family-managed companies. It manufactures and markets thousands of products in hundreds of categories, all related in some way to health and cleanliness. J&J was formed in the mid-1880s when it pioneered ready-to-use surgical dressings that applied the pharmaceutical theory of antiseptic wound treatment. It is still in the pharmaceutical industry, and is able to utilize its pharmaceutical R&D in making creams, lotions, and oils.

According to Market Share Reporter 2007, Johnson & Johnson consistently captures 28 percent of the U.S. creams, lotions, and oils mass market. It makes Aveeno, Lubriderm, and Neutrogena products, among others. In 2006 J&J introduced a natural products infant care line called Johnson's Soothing Naturals, its biggest product launch in a decade. The line includes a lotion, a cream, and a balm, all touted as using the healing power of pure vitamin E, special minerals to regulate "cell water balance," and olive leaf extract.

Neutrogena makes Body Lotion, Body Oil, Firming Body Moisturizer with Active Copper, Norwegian Formula Body Emulsion, Norwegian Formula Body Moisture, Norwegian Formula Fast Absorbing Hand Cream, Norwegian Formula Foot Cream, Norwegian Formula Hand Cream, Relaxing Overnight Body Cream, and Summer Glow Daily Moisturizers SPF 20.

Procter & Gamble

Cincinnati-based Procter & Gamble was established in 1837. P&G is a giant in a wide range of consumer goods and is the leading U.S. maker of consumer products. It markets its nearly 300 brands in more than 160 countries.

P&G makes products in five main segments that it labels as: Personal & Beauty, House & Home, Health & Wellness, Baby & Family, and Pet Nutrition & Care. According to Market Share Reporter 2007, P&G consistently captures 31 percent of the U.S. creams, lotions, and oils market. Two of its popular Personal & Beauty products are Olay and Noxema.

Banking on Noxzema's 102 year-old name, P&G spent an estimated $15 to $25 million on advertising push to update Noxzema's attitude and look. A French illustrator based in Germany created sexy yet cheeky characters to appeal to potential consumers. P&G told WWD in June 2006 that Noxema had a 7.7 percent dollar share in face cleansing and admitted that while they had been chasing the technology trends, their re-emphasis on Noxzema helped get lost consumers back. While the heart of Noxzema's business is still its tub of tingling cleansing cream, a bevy of products has been launched over the past five years, including the Triple Clean acne line and a face-cleansing line with a citrus fragrance, which is lighter than the traditional eucalyptus, camphor, and menthol blended scent that is the original Noxema cream.

Unilever

Unilever is an international manufacturer of leading brands in food, home care, and personal care. Unilever's personal care brands include Vaseline Intensive Care, Pond's, and Dove. Vaseline Intensive Care and Pond's were highlighted in the market section.

Unilever created two ancillary lines for its Pond's classic product. One is called Cleanse and Purify and consists of six additional products for exfoliating, toning, and dermabrasion. The other is a Pond's restore, protect and age-defy line.

Dove's newest line is New Dove Body Care. It uses a unique 24-hour Nutri-Serum to add moisture and essential nutrients to skin and includes six products. New Dove Energy Glow Daily Moisturizer with subtle self-tanners; New Dove Intensive Nourishing Lotion to nourish skin with essential nutrients; New Dove Sensitive Skin Lotion unscented and dye-free for sensitive skin; New Dove Cool Moisture Lotion with green tea and cucumber extracts; New Dove Regenerating Night Lotion to fuel skin's nightly renewal process with honey and nourishing shea butter micro-pearls; and New Dove Intensive Firming Lotion to make skin firmer and smoother after two weeks with a blend of collagen and seaweed extract.

In addition to the four firms profiled, other large manufacturers of creams and lotions worldwide include Kao Corporation, headquartered in Tokyo, Japan; Shiseido Company, Ltd., also headquartered in Tokyo, Japan; and L'Oréal USA headquartered in New York, New York.

MATERIALS & SUPPLY CHAIN LOGISTICS

The materials used by manufacturers in the production of creams and lotions consist of the ingredients necessary to produce the product themselves as well as the materials used to package those products. The packaging used with toiletries serves two roles, to contain the product through its distribution and to help create the products' look, important in helping a product stand out from the crowd on store shelves.

Packaging is so important that the industry as a whole spends more than half of its expenditures for materials on packaging materials. The toilet preparations manufacturing industry in 2002 spent a total of $8.0 billion on materials of all sorts. Of this total, $2.4 billion was spent on ingredients for making the toiletry products and $5.6 billion was spent on packaging materials—containers made of plastic, metal and glass, paper and paperboard, plastic, and the like.

In terms of the ingredients that actually end up in the products sold, the primary categories—according to data reported by the U.S. Census Bureau—are, from largest to smallest in terms of industry-wide spending, the following:

1. Perfume oil mixtures and blends, essential oils (natural), and perfume materials (synthetic organic)
2. Other synthetic organic chemicals
3. Bulk surface active agents (surfactants)

Perfumes are used to impart a pleasant aroma to both the product and the packaging. Together, perfume ingredients purchased for their pleasant aroma accounted for almost 40 percent or $935 million of the annual $2.4 billion industry-wide ingredient cost in 2002.

When purchasing aromas, more than 50 percent of the $935 million—$522 million—went toward perfume oil mixtures and blends. The cost to purchase essential oils (natural) decreased 7 percent between 1997 and 2002, dipping from $174 million to $161 million. Natural essential oils are expensive, so if possible they are replaced in formulations by perfume materials (synthetic organic).

The cost for purchasing perfume materials (synthetic organic) almost quadrupled in the five-year period that ended in 2002, ballooning from $67 million to $252 million. Synthetic organic perfume materials are created primarily from chemical compounds obtained during petroleum distillation, a process that separates petroleum into fractions according to its boiling temperature. Synthetics both mimic fragrances found in nature, and provide fragrances not found in nature. The quadrupling of spending in this class was driven by products such as the expanded Noxzema line scented with eucalyptus, camphor, and menthol and Olay Daily Facials Night Cleansing Cloths scented with lavender and chamomile. The advantages of synthetics are tremendous. Synthetic organic perfume materials have enlarged the fragrance library, resulting in more than 2,000 odor profiles to choose from (instead of only 200 plant-derived profiles).

Synthetic organic chemicals are generally derived from petroleum during its separation into fractions according to boiling ranges. In creams and lotions, organic chemicals are most important as preservatives integral for making high performance, non-toxic products with a long shelf life. Consumers expect creams, lotions, and oils to last a long time, perhaps up to three years. Examples are the parabens. Parabens include methyl, propyl, ethyl, and butyl—all provide broad spectrum antimicrobial protection to toiletries products. The U.S. toiletries industry almost tripled its use of synthetic organic chemicals between 1997 and 2002, from purchases valued at $243 million to $721 million, an increase of 197 percent.

Surfactants are used to adjust the surface tension of a cream, lotion, or oil. They are wetting agents that help cleansing and moisturizing creams, and hand and body lotions, spread smoothly and evenly onto the face and skin. They are integral to making toiletries. The U.S. toiletries industry decreased spending on surfactants by 26 percent in the five-year period between 1997 and 2002, from $330 million to $243 billion.

DISTRIBUTION CHANNEL

Creams, lotions, and oils are distributed through two distinct channels: the department store and the mass market. Within the industry, these channels are often referred to as prestige and masstige. Prestige products are classified based on the location where they are sold, primarily through the department store distribution channel. Lower-price products are called masstige to differentiate them from the higher-end prestige products and because they are sold using a mass market distribution channel.

The department store distribution channel is a classic distribution channel for prestige products. Prestige brand names were built on the department store distribution channel, which represents 40 percent of the North American market for prestige products. The department store distribution channel involves delivering prestige creams, lotions, and skin oils via a gift with purchase. This involves the teaser of a free gift with purchase to entice the customer to buy.

The gift with purchase model was invented by Estée Lauder and became an almost instant classic. It became a national sensation when Clinique promoted it heavily as part of its twice-yearly Bonus Time to encourage consumer spending. The gift with purchase has power over the consumer and can determine the outcome of a transaction.

The mass market distribution channel is growing as the number of stores and outlets expanded during the end of the twentieth and beginning of the twenty-first centuries. This growing distribution channel for lower-priced products includes drugs stores such as CVS, Rite Aid, and Walgreens; food stores; mass merchandisers such as Target, Kmart, and Wal-Mart; and nontraditional retailers such as e-commerce Web sites. This channel also includes warehouse club stores BJ's, Costco, and Sam's Club.

The mass market channel has begun to copy the classic department store gift with purchase concept. Lubriderm Daily Moisture recently offered a variation on the gift with purchase by shrink-wrapping a free 3.3 ounce Lubriderm Daily Moisture with Sea Kelp Extract to the product. A free gift with purchase helps capture attention in the mass market channel where a wide range of products are sold side by side on the shelf. Eye catching and innovative packaging is used to capture the attention of buyers looking at a wall of creams and lotions.

KEY USERS

Adult women are the primary users of creams, lotions, and oils. Some creams, lotions, and oils are specially formulated for men and for children. For instance, Nivea has a line dedicated to men called Nivea for Men. Johnson's introduced an all natural line dedicated to baby care. Women are the primary purchasers of these products as well, although the products are designed for men or children. Consequently, the marketing appeals used to sell creams and lotions are almost always geared to attract the attention of women.

ADJACENT MARKETS

Markets adjacent to creams and lotions are moisturizing and sun protection products, self-tanning creams and sprays, cosmetics, hair care products, and apparel. Apparel is used in part to protect the skin from the elements, as are creams and lotions. Multi-functional products that may be a hand lotion, a body lotion, a self-tanner, an anti-aging product, or possible all four are adjacent to more traditional creams and lotions. Moisturizers double as sun blocks, foundation creams also exfoliate, and hair sprays contain sun protection.

The large variety of multi-functional creams, lotions, and oils product choices causes some consumers to choose to buy less. In January 2007, The America's Intelligence Wire reported on a Manhattan dermatologist who advocates skin-care minimalism. Most people, according to the dermatologist, need just two products: a gentle cleanser and a good sunscreen. These are available at almost any drugstore or grocery store. In the same article, a clinical professor of dermatology at Tulane University Health Sciences Center in New Orleans said, "A $200 cream may have better perfume or packaging, but as far as it moisturizing your skin better than a $10 cream, it probably won't."

Books about how to care for the skin are also an adjacent market to creams, lotions, and oils. Books explain what individual chemical ingredients do, and give tips on how to buy just the ingredients needed, and not pay more for packaging and celebrity endorsements. One example is Six Weeks to Sensational Skin, published by Rodale in 2006. It recommends reading product labels and does not make product recommendations, letting the consumer decide which ingredients are needed based on a listing of ingredients and their functions. Similar books include the 2005 fifth edition of A Consumer's Dictionary of Cosmetic Ingredients and the 2003 sixth edition of Don't go to the Cosmetics Counter Without Me by Paula Begoun.

RESEARCH & DEVELOPMENT

Manufacturers of creams and lotions tend to be secretive about their R&D endeavors. Generally R&D focuses on reducing material costs and creating products for the robust product classes like cleansing creams that grew 428 percent and premoistened towlettes that grew 70 percent between 1997 and 2002. Much R&D focused on "chasing the technology trends," explained P&G in a WWD article in June 2006.

Technology trends tended to result in products that were multi-functional. For instance, innovations in silicone waxes allow melting points to be formulated and then modified. When incorporated into emulsions these silicone waxes lower the surface tension of skin care oils and greatly improve their spreading properties. As a result, new silicones waxes allow oils to be utilized in more pleasing formulations. For instance, Dove introduced a line of moisturizing products that utilizes this type of breakthrough technology to combine oil with cream to form a rich, creamy consistency that gives the benefit of oil but in an indulgent way that is not greasy.

Research and development often results in products containing natural ingredients. Natural implies that ingredients used in the creams, lotions, and oils are extracted directly from plants as opposed to being produced synthetically. Labeling implies that products containing natural ingredients are good for the skin. For instance, J.R. Watkins began in 1868 by incorporating natural ingredients into creams, lotions, and oils. Its more recent Watkins Apothecary line includes shea butters and lotions to build on its approach of combining nature with science. Many Watkins products contain an exclusive blend of six botanical essences designed to nourish all skin types: hypericure, cornflower, linden, matricaria, calendula, and chamomile. Its natural ingredient-based skin care products include body oils, dry oil mists, and hand salves. Dry oil mists are available in Aloe & Green Tea, Citrus & Chamomile, Lavender, Vanilla, and Herbal Extract. Shea butters are available in Aloe & Green Tea, Lavendar, Mango, and Vanilla.

Research and development efforts focused on the benefits of creams and lotions made from organic plants resulted in more than 127 products sold under the Dr. Hauschka brand name. Dr. Hauschka began 40 years ago as a holistic beauty company and is owned by WALA Heilmittel of Germany. Dr. Hauschka entered the U.S. market in 1972 and developed a cult following in Hollywood. Dr. Hauschka has a network of certified biodynamic, or sustainable, gardens to grow the organic plants it uses in its exclusive formulations. Its products are sold in 1,200 stores, mostly specialty boutiques, health food stores, and spas. One three-item kit includes its best-selling products—cleansing cream, facial toner, and rose day cream.

CURRENT TRENDS

Cleansing creams—the product class that grew 428 percent over 5 years—have expanded the definition of the cleansing regimen. More facial cleansing creams than ever are available in formulations including foam, fizz, cream, milk, and gel. Exfoliating and dermabrasion have become standard components of the skin care regimen. Creams, lotions, and oils are available in multi-function formulations. One product can cleanse, moisturize, apply a self-tanning chemical, and protect the skin from sun damage.

The trend toward multi-functional product formulations has produced a tendency on the part of the consumer to pay more attention to labeling. This scrutiny of ingredient listings makes it more obvious that the FDA does not require cosmetics and toiletries products and their ingredients to undergo approval before they are sold to the public. Manufacturers may use any ingredient or raw material (except for color additives and a few prohibited substances) to make cosmetic and toiletries products without government oversight, review, or approval. Companies are not required to substantiate performance claims or conduct safety testing. Labeling regulations, however, do apply.

Long lists of chemicals on facial cleansers and body lotions can arouse suspicions, and organizations like The Campaign for Safe Cosmetics emerge in an environment of suspicion about the ingredients used on some toiletry products. The Campaign for Safe Cosmetics claims that the chemicals used in cosmetics and toiletries, even in small amounts, may be cumulatively causing damage to humans and their environment. Their campaign calls for more transparency regarding the chemical found in products.

The cosmetics and toiletries industry is sensitive to the image that it operates in an uncontrolled market where rule of law barely exists. It counters this image with well-established, self-regulation programs. Manufacturers are interested in self-regulation by way of avoiding the imposition of government regulation. The most well-known of industry-sponsored self-regulation is the Cosmetic Ingredient Review (CIR), sponsored by the Cosmetic Toiletry and Fragrance Association. CIR is conducted by a panel of experts who evaluate cosmetic ingredients for safety and publish detailed reviews of the resulting safety data. A finding of safety by the CIR provides a degree of confidence that the ingredient can safely be used in cosmetics and toiletries.

Even if the entire cosmetics and toiletries industry is, as it insists, working under a well-established program of self-regulation, organizations such as The Campaign for Safe Cosmetics are still working for more transparency about chemical ingredients used in the manufacturing process. The goal of The Campaign for Safe Cosmetics is to have the toiletries industry phase out the use of certain chemicals linked to cancer and birth defects. In February 2007, the Environmental Working Group published a report titled SkinDeep that called attention to potential cancer causing ingredients in cosmetics and toiletries. A precedent for continent-wide and industry-wide transparency is the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) program in place in the European Union, which went into effect in 2007. The New York Times reported on February 15, 2007, in an article titled "Looking at the Bottle and What's in It," that momentum is building for greater oversight of chemicals used in everyday products, including cosmetics and toiletries.

TARGET MARKETS & SEGMENTATION

The market for creams and lotions tends to be segmented based on gender, age, and skin type. In addition, for all product classes, less expensive, mass market products are offered as well as more prestigious, higher priced creams and lotions.

Women are the largest target market for creams and lotions. They use more creams and lotions than do men and women are influential in the purchasing decisions for products designed for men and babies. Manufacturers of creams and lotions market products to inspire brand loyalty from women early in life. A woman who has used Oil of Olay from an early age will be more likely to transition to one of Oil of Olay's anti-aging products as she gets older than a woman who has never tried the Oil of Olay line of products.

Aging skin is targeted with products that are designed for it. The Baby Boom generation (those born between 1945 and the early 1960s) is a prime market for products designed to increase factors like moisture, elasticity, and luminescence. If products do not promise to increase those factors, they promise to decrease signs of sun damage and aging.

Manufacturers target men with products designed especially for them. These products frequently contain more masculine scents and are marketed with a more masculine tone.

Manufacturers target people with particular skin conditions with specially designed creams and lotions. One such manufacturer is Galderma Laboratories, maker of Cetaphil Gentle Skin Cleanser.

RELATED ASSOCIATIONS & ORGANIZATIONS

The Campaign for Safe Cosmetics, http://www.safecosmetics.org

Cosmetic, Toiletry and Fragrance Association, http://www.ctfa.org

The European Cosmetic Toiletry and Perfumery Association, http://www.colipa.com

Research Institute for Fragrance Materials, http://www.rifm.org

Synthetic Organic Chemicals Manufacturers Association, http://www.socma.com

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Lazich, Robert S. Market Share Reporter 2007. Thomson Gale, 2007, 317-319.

Nagle, Andrea. "Noxzema Develops a Personality." WWD. 23 June 2006, 6.

"The New EU Chemicals Legislation—REACH." European Commission—Enterprise & Industry. Available from 〈http://www.ec/enterprise/reach/index_en.htm〉.

"Our Gardens and Growers." Dr. Hauschka Skin Care. Available from 〈http://www.drhauschka.com/about/our-gardens-growers〉.

Singer, Natasha. "Looking at the Bottle and What's in It." New York Times. 15 February 2007.

"Skin Deep." Environmental Working Group. Available from 〈http://www.ewg.org/reports/skindeep〉.

"The Skinny on Skin: It Might Make you Smile but the Efficacy of That Cosmetic is Doubtful." The America's Intelligence Wire. 5 January 2007.

"Toilet Preparation Manufacturing: 2002." 2002 Economic Census. U.S. Department of Commerce, Bureau of the Census. December 2005.

"Watkins, Inc." MMR. 12 February 2007, 41.

see also Cosmeceuticals, Cosmetics, Sun Care Products