Market Focus

Beauty & Personal Care Labeling

July 19, 2005

The trends, the challenges, and the qualities converters need to break in and stay ahead.

According to Kline & Company, a business research firm, there are 20,000 beauty and personal care products in the United States alone, marketed by more than 1,000 companies.

Each product promises its own little miracle — from taming frizzy hair to clearing skin to eliminating odor. At the same time, there are possibly hundreds of other products promising the same results. Often the ingredients are nearly identical, the directions similar, and the price comparable. So how is a consumer to choose?

When all else fails, judge a book by its cover. At least that’s what marketers are betting on. And so, labels on beauty and personal care products increasingly include a dash of something special, all in an effort to stand out.

Current designs demonstrate the level of complexity and creativity in beauty and personal care labels. Sun and Skin Care Research Inc., located in Cocoa, FL, produces Ocean Potion sun care products. Ocean Potion products can be found in a variety of stores, including Wal-Mart and KMart.

“All our packaging has been upgraded or is new in the last two years. Our category depends on change and new items for vitality. Also, we change the package to communicate more clearly with our customer,” says Leslie G. Anstey, vice president of marketing for the company.

Sun and Skin Care Research Inc. employs a variety of methods to catch the eye. In the sunless product line, the company uses “a clear label and gold foil on a bronze package to denote a cosmetic finish, which would appeal to female buyers in our primary and secondary demographic,” says Anstey. The primary demographic is women aged 18 to 34. The second target group is women aged 25 to 54.

Color is also important to the company. In the sport product segment, “the label is a contrasting royal blue and red/orange against a gold package. It is very eye catching and vibrant at shelf,” says Anstey.

Glyn Eppy is vice president of The Design Spot in New York City, a firm that specializes in creating brand identity for skin and personal care products. For one of her recent designs, for a company called Scarguard, the label “was a seven-color job, including two four-color photographs, a soft gradation and a gloss varnish,” she says. Another design Eppy completed recently, for Stallex Skin Care, included a custom color metallic label, a four-color icon and silver foil stamping.

These designs provide examples of some of the most common trends in beauty and personal care labels: the film no-label look, metallic effects, and sharp, eye-catching graphics. Also commonly seen are unusually shaped containers and labels, combination printing and graphics printed on the backside of the back label.

Driving these trends: “Everybody wants to be unique,” says Rami Molcho, president of Logotech in Fairfield, NJ.

There are other trends emerging. An increased use of holograms is one of them. “There are two parts here. You can have a hologram for brand protection and security and you can also have a holographic wallpaper pattern foil for a decorative application too,” says Sam McElree, sales product manager/graphics for Kurz Transfer Products in Charlotte, NC. McElree sees a growth in both types.

As end users strive to be different, labels are starting to appeal to more than the sense of sight. “The beauty care industries, as well as other industries, are trying to get their package to deliver more than just the graphics, whether it’s feel or smell or touch or depth,” says Phil Courtier, director of product leadership for Multi-Color Corporation, a label converting company based in Cincinnati, “There just seems to be a higher level of interest in products like that, even if you don’t see a whole lot of them on the shelf yet.”

Soft touch labels are slowly entering the field, although its acceptance is not as quick as holograms. “It’s penetrated slower than you would think because of a cost related issue,” says Kari Virtanen, business development manager, films, for Raflatac in Fletcher, NC.

Still, the interest is there and it’s a trend to watch. “The interest in soft touch labels has been growing. This concept builds on the clear no label look and incorporates a no label feel as well. The need for this type of label is the result of the introduction of these types of containers — containers that have a soft, pearlized feel and look,” says Michelle Ostiguy, market development representative, Packaging Business Team for FLEXcon located in Spencer, MA.

As the beauty and personal care label markets are always evolving, there is already speculation on future trends. Leslie Gurland, vice president of Logotech, offered the following predictions:
• Peel-able coupons with clear backing
• The use of digital presses for market samples, salesman’s samples and new product launches

Innovation will continue to drive the beauty and personal care market. There are limits, however, to just how creative and complex labels can become. One limit is the capability of the machinery. The design may look nice in Adobe Illustrator, but can it be color-separated, printed on press and applied to a bottle?

“There is a big gap between what the designer sees on the monitor from the ability of what the press can achieve,” says Molcho. “We are trying to invite the designers in and let them understand our abilities and constraints.”

This is not the only limiting factor. “Cost sensitivity, regardless if it’s for a private label or a branded product, is always taken into account when designing labels,” says Tim Northrup, general manager, label division, of Innovative Folding Carton Company in South Plainfield, NJ.

Cost can prohibit further innovation. For instance, “When we talked to Estée Lauder about power paper, for example, that label was over a dollar. They can’t afford it,” says Gurland. Power paper contains a battery, which can be used as a timer.

Cost limitations affect more than end users. For converters, competition is fierce. “More and more converters are looking to increase their share in this marketplace as they view it as a profitable, growing market due to the importance the consumer products companies attach to the label and the perceived higher margins for the more challenging graphic work. Meanwhile wider web, combination presses are becoming much more efficient at running these types of sophisticated label jobs,” says Diane Ewanko, market manager — household and personal care, for Avery Dennison Fasson Roll North America, in Painesville, OH.

This competition leaves narrow web converters scrambling to keep their prices lower and the quality better than everyone else. Attaining and maintaining an efficient operation is one way to cut costs. Offering less expensive substitutions to customers is another.

Baby Blanket sun care products, from Children’s Healthcare Research Group, use the color pink and a logo featuring building blocks to create brand identity.

For example, if an end user is presented with a cost of five cents per label, but is willing to spend only three cents, “What that could possibly lead us to do is look at alternative materials, look at alternative ways to create images on those materials, and be able to give the customer the same look they wanted but at less cost,” says Andy Farquharson, president of Dow Industries in Wilmington, MA.

End users rely on converters for substitution ideas. “As soon as we start discussing a product, a lot of times we bring in the label manufacturer to help us come up with a better way of doing it — a more cost efficient way of producing the label,” says Kristi Portington, package engineer for Avon Products in New York City.

Beauty and personal care packaging can include metallic effects, often created with foil stamping (as pictured), metallic inks or metalized films.

At other times, end users will not settle for a substitute. “They want discounts. A lot of the guys ask you to go back to your raw material suppliers,” says Gurland of Logotech.

This price squeeze has taken its toll on the industry, both on converters and, ultimately, on the raw material suppliers to the beauty and personal care market.

For suppliers, “The constant demand placed on cost requires us to continually focus on raw material costs, manufacturing efficiencies, workmanship and a rationalized product offering,” says Ostiguy of FLEXcon.

One way this has manifested itself is in a demand for thinner films. “What we’ve done is gone thinner and thinner on the face materials. The trend is really the same on the liners as well, so the whole construction is getting thinner,” says Virtanen of Raflatac.

While cost cutting is an important consideration for both converters and suppliers, sometimes it is not enough.

Chip Bailey, sales product manager/plastic foils, for Kurz Transfer Products has observed migration in the area he works with: “[The price squeeze] is forcing the industry to leave the United States. Increasingly, I’ve seen business that we’ve counted on for years and years disappear to Mexico, and from Mexico it is now disappearing to Asia. It’s a painful process right now for us.”

Products from the Ocean Potion sunless and sport sun care lines, from Sun & Skin Care Research Inc.

Staying ahead
Despite the challenges, many are looking to this market as a lucrative business endeavor. And many are succeeding, but not without the latest equipment, a wide array of capabilities, and skilled staff.

Ken Kidd, CEO of WS Packaging/Superior Label Systems in Mason, OH, says that in order to succeed in this market, there are three capabilities a printer must have: UV flexo, rotary screen and foil stamping.

Northrup of Innovative stresses the importance of color matching. “The art department and the label production staff must work together up front to show subtle shade differences and color continuity,” he says.

Other converters agree. “The point is, you have to have a broad range of capabilities and the ability to deliver that at a high level of excellence,” says Courtier of Multi-Color.

Many converters possess these capabilities, but they don’t guarantee success in the field. Good management is a necessity, along with a focused direction. “The successful converters are the ones who have a good sense of what they want to be,” says Ewanko of Fasson Roll North America, Avery Dennison, “They are well-managed businesses that make conscious decisions as to what business they want to pursue.”

Creativity is another necessary component. “We love working with printers that are creative, ‘out-of-the-box’ type thinkers,” says Eppy of The Design Spot.

“In my opinion, the successful converters are those who are next generation focused. They are looking beyond the label concepts and technology of today, looking into the future and working to develop new concepts and technology,” says Ostiguy of FLEXcon.

Equally important, converters should be knowledgeable and consultative. “They should know what type of label will withstand certain elements,” says Kathy Cohen-Anderson, Graphics/Marketing, for Children’s Healthcare Research Group, makers of Baby Blanket sun care products. “The label must not fade from the sun, they cannot come off easily or ripple when they’re wet.”

Sometimes taking on a consulting role means telling an end user when a design won’t meet the desired objective. For instance, Children’s Healthcare Research Group wanted to change the hue of its products. A converter advised against it. “Certain colors fade more than others. We’ve asked for a brighter pink, but because that particular color is especially prone to fading we stayed with our regular color pink,” says Cohen-Anderson.

Knowing end users’ needs is also critical. “Understand your customer’s expectations and who their competitors are. Know what the customer’s needs are before trying to sell them something. Not all customers have the same quality needs,” says Gary Alsgaard, senior buyer, strategic procurement for Access Business Group in Ada, MI. Access, along with Amway Corporation, is part of the Alticor family of companies, makers of Artistry cosmetics and skin care products.

Artistry products aren’t sold in stores, an important consideration for converters. “Labels play a different role than in traditional retail channels,” says Lisa Hunter, global strategic business line manager for beauty and body at Amway Corporation, Ada, MI. “The labeling is a repetitive communication tool about the product.”

Avon Products is another company not sold through traditional retail channels. “Our audience looks at [the product] through a brochure,” says Portington. “Most of the products are pictured a lot smaller so the graphics really need to pop.” Considering details such as this is what can set a converter apart from the rest.

Film labels printed by Logotech demonstrate the importance of accurate color matching.

The bottom line: In order to be successful, converters need to be offering their end users more than just a quality label. “If you took 10 of the major converters, you’ll get pricing that’s comparable, service that’s comparable… What sets them apart?” asks Steve Glick, a consultant for the graphic arts industry and retired associate director, package design department, for Procter & Gamble in Cincinnati.

Can converters break in?
Let’s say a converter invests in up-to-date machinery, practices good business methods, hires a skilled staff, and is receptive to the needs of end users. Will an order from Estée Lauder come rolling in the next week? The converter would probably have a better chance of winning the lottery.

It is not an easy industry to break into. End users often approach converters who are established with a good reputation. “[End users] want to be doing business with the folks that they perceive are state-of-the-art and leaders in the industry,” says Mark Lutz, vice president, general manager of WS Packaging/ Superior Label Systems.

“There is a core group of people that are well known in the industry by the end user. I think that tends to be the group that is first looked at or approached,” says Courtier. “If you’re not part of that group it’s difficult to walk in and say, ‘I really know how to do what they’re doing.’”

“My opinion is that it is very hard to break in,” says Farquharson of Dow Industries. “It took us years to break in. It’s not an easy thing to do. It’s a very small community.”

For converters striving to enter that core group, the barriers can be significant. Well known end users prove difficult to break into. Navigating the tangle of employees and finding the right person to speak to is the first challenge. Setting up an initial meeting is another challenging task. But this is just the beginning. Next comes the qualifying process.

The qualifying process varies depending on the company. Seungah Jeong, procurement and quality control manager for Nars Cosmetics Inc. in New York City, modeled her company’s current qualifying process after Procter & Gamble of Geneva, Switzerland, her former employer.

When qualifying vendors, “I look at general service, like responsiveness, pricing, minimum quantities, general capabilities,” says Jeong. Also examined are lead times and machinery. Currently, Nars cosmetic labels do not feature complex graphics, but “in case we ever change in terms of our artwork needs, we need to make sure the printer has the capabilities.”

There are also a number of steps in the qualifying process. Molcho of Logotech outlines several steps his company has encountered. The first is a questionnaire, with inquiries about financial stability, customers, equipment and capabilities. After this stage, there is a qualifying visit. End-user representatives often come with specific standards of operation, and if the converter isn’t already following these standards, they must agree to comply.

Finally, “they send a small order. A very complicated and very short order. And sometimes they want it for free,” says Molcho. If the rolls of labels pass inspection, the converter will be approved to receive orders. It still may be awhile, however, before they are given their first job.

What would it take for a large company to switch converters? “That might happen if we were to make a significant change, like — now I’m going back in history — when we switched from cartons for diapers, to bags,” says Glick, who retired from Procter & Gamble in 1998.

Fortunately, there are many players in the beauty and personal care industry, both big and small. While it is not an easy market to break into, converter’s agree there is still room for others. There are plenty of niche markets out there, providing ample opportunity for converters.

“There are still tremendous opportunities out there for all of us. We are excited about it,” says Andre Michaud, graphics director at Dow Industries, Wilmington, MA. “We are not down on it at all. People say the economy is awful and oh, my 401k plan, but we see nothing but opportunities in the marketplace and it’s just about having the discipline to get up in the morning and go do it.”

For converters considering moving into the market, add one more necessary item to the shopping basket: patience. “The size and potential is so big that I think if you do things right, you’ll find your niche,” says Molcho. “You have to be aware, though, that you’ll struggle for a few years.”

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