Focus on label markets: Cosmetics, health and beauty

MARKET SIZE AND MAIN CHARACTERISTICS

Here, we look at the whole cosmetics, health and beauty markets, excluding only OTC drugs and any product for which a doctor’s prescription is needed. The chief characteristic of this category of products is that unlike prescription pharmaceuticals or basic foodstuffs, they are all products of choice. Accounting for just 9 percent (by volume) of the total self-adhesive market, (and a slightly lower percentage of total label use), they are frequently high value-added decorations designed to sell a high-margin product. Moisture-resistance is a key requirement for many, if not most cosmetics labels. Each sub-group of products (hair coloring, skin cream, shampoo) has its individual labeling imperatives.

Less coercive than food labeling laws, cosmetics regulations and directives are nonetheless binding on the manufacturer, and the label converter needs to know what they are. The main regulations are given below.

DIRECTIVES AND REGULATIONS GOVERNING COSMETICS LABELING

Cosmetics marketed in the United States, whatever their country of origin, must comply with the labeling requirements of the Federal Food, Drug, and Cosmetic (FD&C) Act, the Fair Packaging and Labeling (FP&L) Act, and the regulations published by the Food and Drug Administration (FDA) under the Authority of these two laws.

The FD&C Act in particular was passed by Congress to protect consumers from unsafe or deceptively labeled or packaged products.

The main rules laid down by US authorities for cosmetic labels cover basics such as weight/volume (using only US measures) and supplier’s name but also determine that a label may not be ‘false or misleading’. The label must also warn of ‘consequences resulting from the intended use’.

Front and back labels must each contain certain information, and instructions for use and all other information must be clearly legible (and in English).

For ingredients, regulations lay down in detail the order in which they must be listed, also the type size and prominence. In a curious exception, US laws do not consider soap as a cosmetics product. In another exception, cosmetics do not have to carry an expiry date.

If experts have not substantiated a cosmetic product’s safety, the label must display ‘prominently and conspicuously’ the words ‘The safety of this product has not been determined’. Marketing a product with that on the label might be considered a challenge.

For aerosols, a whole range of other warnings must figure on the label. Separate and slightly different labeling regulations apply to cosmetics delivered by direct mail.

All these US regulations and many others are listed in detail on the FDA website.

In Europe many of the regulations are the same as in USA. Quantities (in metric measures), country of origin and name of manufacturer must all be shown on the label, along with a barcode and, where relevant, a warning (e.g.‘Do no throw aerosols into the fire’). Ingredients must be listed using their scientific (usually Latin) names, and the same terms must be used in all countries of the EU (despite the fact that not one consumer in a thousand can understand them).

A symbol plus a date shows the ‘period after opening’ during which a product can be safely used. Another symbol on the label is used to indicate that additional information is available elsewhere, for example on a leaflet.

Ecology-conscious Europeans will often see on cosmetics a symbol indicating that the label and packaging can be recycled. A recent EU directive (Regulation (EC) No 1223/2009 on cosmetic products) tightens safety requirements and simplifies the procedures for registering new cosmetic products.

To summarize, US, EU and most other countries’ laws require the label on cosmetics products to state what it is, what it is used for, its weight/volume, a batch number (for traceability), plus some warning about improper or dangerous use.

Optional information may include (for Europe) a symbol indicating that the product has not been tested on animals.

However, a label bearing the words ‘We do not test on animals’ often means only ‘We let other people do the testing for us’.

Similar misinformation on cosmetics labels may include words like ‘non-irritating’, ‘allergy-tested’, ‘natural’ or ‘green’. None of these terms has any legal force. The Cosmetics Organic Standard (COSMOS) tries to harmonize organic standards across the globe. To get a COSMOS certification, the product has to meet a strict set of criteria. It ensures that the product really does contain organic ingredients, and is not just label trickery.

PRODUCTION, DISTRIBUTION AND MARKET STRUCTURES

Statistics on sales by leading cosmetics groups differ widely, no doubt because of ambiguity on what constitutes a cosmetic product.

The listing shown (Figure 4.2 - World’s leading cosmetics groups) derives from averaging out statistics of normally reliable sources. Whatever the sale figures used it is clear that in a world market totaling somewhere in the region of 400B USD, the three market leaders together account for only some 15 percent market share.

This sector is therefore much less concentrated than, for example, the food business.

Procter & Gamble’s product range in the cosmetics/health/beauty sector includes leading brands of shampoo (Head+Shoulders, Herbal Essence), diapers (Pampers), shaving products (Gillette, Braun), female hygiene (Tampax, Always) and many popular brands in skin care and deodorants.

L’Oréal is mainly known for its perfumes: its brands include Lancôme, Yves Saint Laurent, and Giorgio Armani, Cacharel, Guy Laroche and Roger & Galet. Its retail division sells the Garnier range of skin and hair care products. It also has specialty brands sold exclusively to professionals in the hair and body care sector.

Unilever needs no introduction: its cosmetic products include leading skin care brands like Ponds, Hazeline and Caress, shower gels (Lux, Badedas), and eight brands of hair care. It also makes soaps, oral hygiene products and products for baby care.

Distribution of cosmetics and perfumes is via supermarkets for the everyday products like hand cream (Beiersdorf’s Nivea cream is said to be the biggest-selling cosmetic product ever), and for many of the brands listed above.

Labels for many of these products are ordered by the tens of millions after long negotiations and investigations into the label converter’s credentials (financial, technological end environmental).

More exclusive products are more generally retailed in specialty stores, but here again the quantities can be impressive. In many countries, pharmacies are the biggest outlet for slightly up-market brands of cosmetics and hair care.

Airport shops are reckoned to account for over 15 percent of certain well-known perfume and deodorant brands as hurried business travellers stock up for themselves or their loved ones with scant attention to the price. A few smaller companies (like L’Occitane) manufacture and sell through its own retail outlets.

Avon, which sells only beauty products for women, uses its own unique ‘direct selling’ network of part-time representatives who sell on a woman-to-woman basis.

For the label converter it is useful to note that each distribution channel has its own brands. This is to discourage price comparisons between channels.

LABEL TYPES USED FOR COSMETIC PRODUCTS

Cosmetic products are nearly always branded, and frequently have high value-added. This means that in many cases even very complex, expensive labels are only a very small percentage of the retail cost.

Hair care products must withstand long exposure to water and humidity. If the product is in a squeezable bottle, then the label must not wrinkle.

Clear-on-clear filmic self-adhesive labels are commonly used on this category, but aluminum spray cans are more often direct-printed.

Labels for hair coloring present the particular problem of exact color matching. This is where digital label printing comes into its own, since the same basic product is often sold in fifty or more SKUs each with a slightly different color. For many bathroom cosmetics the label will be as for shampoos. However, look into any bathroom cosmetics cupboard and you will see products in glass bottles, rigid plastic pots, tubes, and rigid or squeezable plastic bottles.

The top-selling Nivea (Figure 4.3) is sold in a plastic pot decorated with no less than four labels, of which three are self-adhesive clear-on-clear and the fourth is a circular multi-layer label opening up to give hints for use. Many bathroom products, like Nivea, are greasy, and labels must not discolor, detach or degenerate. Others like nail varnish remover contain chemicals, and these can react with certain filmic label types. The same is true of most skin care and suntan lotions, which can be particularly oily.

The peculiar labeling problem for lipsticks and other makeup products is that the labels often need to be very small, but still providing all legal requirements as well as instructions for use and brand logos. Where these products are small tubes (e.g. lipstick) label application can also be a challenge. Perfumes and deodorants cover a vast range from the cheap-and-cheerful up to the eye-wateringly expensive.

Direct printing is seen frequently on these products, but self-adhesive labeling is the dominant technology. Printing is often on metallized foils, with spot colors, and finishing generally involves varnish, hot or cold foiling, or embossing. It is estimated that around 70 percent of all perfume labels are on filmic labelstock. For shaving foam or gel the standard decoration is direct printing onto the can or tube.

One leading brand of oral hygiene mouthwash uses front label made to look like a traditional medicine, and a clear-on-clear back label giving ingredients.

Since cosmetics labels are most often displayed without any leaflet or box, the label is the main vehicle to sell the product and to inform on its use. This has encouraged the use of multi-layer or peel-off labels, often used to give complementary information or to include various languages to conform to local laws.

With all cosmetic labels the conditions of storage after purchase are an important consideration for the label converter. As well as water-resistance, many cosmetics labels need to be scuff-proof, and this is not always the case with some digitally printed labels. Since these products must look good on the retailer’s shelf, the barcode is generally relegated to a back or contra label, which will also contain all the legally required information (dosage, health warnings, for example).

For cosmetics products brand owners will insist that the label and logo must have exact color reproduction. Some brands even have their own special house/brand colors created especially for them by an ink manufacturer.

Controlling the supply of these inks will provide an additional means of brand protection.

Every type of label, and every type of print can be found decorating cosmetics products. For reasons of cost, flexo predominates, but there is much use of offset, screen, hot and cold foiling, embossing on luxury brands, metalized or ‘soft touch’ surfaces and customized finishing. For these reasons the higher-end cosmetics market makes use of combination multi-process presses which, by the nature of their complexity, may also help to deter counterfeiting.

ANTI-COUNTERFEIT AND BRAND PROTECTION

Product piracy in developing countries may affect even cosmetic products of low value, but serious counterfeiting is confined to luxury items like perfumes – which account for over ten percent of all seizures of counterfeit goods in the US. Perfumes are amongst the favorite luxury goods sold via Internet or Online exchange forums.

The ruling handed down by France’s Tribunal De Grande Instance in the case of Louis Vuitton v eBay in 2008 is a good example of harsher penalties towards fakes. The court ordered eBay to pay 5.7 million EUR (6.2m USD) in damages after the luxury goods maker, its sister company Christian Dior and four of its brands, accused eBay of illicit sales.

Fake cosmetics are still mostly coming from China, (including Hong Kong, which has some of the worst offenders). However there is hope for an improvement since the declaration two years ago by Jack Ma, boss of China’s biggest online retailer Alibaba, that counterfeit goods were 'a cancer' which he vowed to fight.

Fake cosmetics not only harm the brand owners’ profits, they can harm the user as well. Counterfeit products have been found to contain cyanide, arsenic, rat poison, urine, and lead, none of which should be finding its way onto, and through, the user’s skin.

Anti-counterfeit labels and closures must be tailored to the retail price of the product, but modern track-and-trace technology, using QR code/smartphone technology means that even mass-market cosmetics can be protected. Special print and non-standard colors can make the counterfeited product stand out.

Holograms can be faked of course, but they still act as a deterrent. The multi-layer label is also considered to be a useful deterrent since counterfeiters find this more difficult to reproduce. Most leading cosmetic brands have teams of detectives whose sole job is to sniff out fake products sold via Internet, or at street markets.

The closure is often the weakest point of any cosmetics packaging, and though tamper-evident closures are becoming the norm, they will not defeat every counterfeiter (see box).

PARTNERSHIPS TO BEAT THE COUNTERFEITER

The creation of the more luxury cosmetics, health and beauty products labels is often done on a partnership basis, between the brand owner, the designer, substrate supplier, ink manufacturer and converter, so as to make the labels as unique as possible and to deter attempts at counterfeiting.

There have even been instances where a press has been uniquely built and configured just to produce one brand owner's dedicated brand product labels.

DIGITAL DEMAND

One major shampoo manufacturer in France has installed, next to its plant, its own packaging and bottle forming plant, making 300 million bottles per year. It also controls its labels which it buys in bulk to reduce costs. But the text on shampoo bottles changes regularly, depending on the laws of the countries where they are sold and in the case of special promotions. This can lead to labels being thrown away.

One of the latest projects is therefore to print labels in two phases. This brand owner now asks its suppliers to print and stock the basic labels, and print the text at the last moment, just before delivery. The expected gains are around 600,000 EUR (650,000 USD) per year. Many other label end-users adopt this technique, which favors converters equipped with digital presses for fast delivery of short runs.

ENVIRONMENT, SUSTAINABILITY, ETHICS

Leading cosmetics or perfume brands are keen to use their labels to promote their eco-values. One such company is L’Oréal: after it launched its sustainability platform ‘Sharing Beauty with All’, a leading US-based labelstock producer offered to do a Greenprint assessment for L’Oréal Americas. Greenprint was introduced in 2010 and is an environmental lifecycle assessment tool.

It measures the environmental impact of labels across the six categories: fossil material, trees, water consumption, energy, greenhouse gases and solid waste.

As a result of the assessment, L’Oréal Americas is transitioning the labels for some of its leading products to one of Avery Dennison’s extra-thin products. By providing twice the number of labels per roll, this labelstock produces 40 percent less waste and also reduces the converter’s energy bill.

As an added bonus, the 33-micron PET film used by L’Oréal is fully recyclable. This initiative by L’Oréal (now followed by many other brands) also extends to the use of eco-friendly inks on the labels of its products.

POINTS TO REMEMBER FOR COSMETIC LABELS

• Huge, expanding market sector for luxury labels

• Subject to strict regulations in most countries

• No-label look is increasingly popular

• Color, appearance, water and oil resistance are key label considerations

• Multiplying SKUs and shorter print runs encourage digital label printing

• Multi-layer labels are much used giving added information or various languages

• Product piracy is a problem: the label can help to solve it

• Ecological concerns are important.

The flyer in Mexico reads: ‘Señora, don't throw them away, we'll buy your empty bottles of perfume. Just call and we will come and pick them up.’
It goes on to offer 30 pesos (about 3 USD) for an empty flask of Lancôme. Hugo Boss bottles for some reason can bring in 3.50 USD.

The offer may be tempting to those with empty perfume bottles lying around, but the sale of the bottles, which are of course destined to be refilled with imitation perfumes and sold as brand-name products for a fraction of the cost, is causing a headache for cosmetics brands.

Not really a label (though it could be used as one) is a UV sensor which changes color according to the strength of the sunlight. Linked to an app, it recommends what strength of suntan lotion should be used depending on local weather conditions.