Sunday, March 14, 1999
Oil of Olay in living color important to P&G
BY RANDY TUCKER
The Cincinnati Enquirer
The face of the cosmetics industry has a new wrinkle, but Procter & Gamble Co. says it has it covered with just the right makeup.
P&G's new Oil of Olay Color Collection is designed to appeal to women who want both skin care and color with each brush of their eye shadow or stroke of mascara.
That's a growing trend among makeup buyers and the impetus behind P&G's national rollout of the new cosmetics line in May, four years after its first market test in Europe.
The Cincinnati consumer-products giant, which boasts the leading skin-care line in the United States with Oil of Olay, is counting on the brand's cachet to help it regain much of the market share it has lost in cosmetics.
While P&G's Cover Girl brand claims the top spot among mass-market cosmetics lines, its second-biggest brand — Max Factor — has fallen out of the top five in recent years.
“The Olay consumer believes the key to true beauty is beautiful skin, so skin care is the basis for the cosmetics line,” Marc Pritchard, vice president and general manager of P&G cosmetics, said. “Our objective is to be the best in care and the best in color.”
P&G already has begun shipping the Oil of Olay line with its 13 product categories to mass-market retailers nationwide.
But P&G won't be alone this spring in stocking store shelves with health-oriented cosmetics.
Johnson & Johnson will soon introduce a major line of good-for-the-skin cosmetics under its Neutrogena brand name.
And several other makeup sellers, including market leader Revlon, are vying for a bigger slice of the estimated $3 billion mass-market cosmetics pie with new products that emphasize skin care.
Still, some observers think that P&G has an edge on the competition for at least two reasons: First, P&G is already and established player in the beauty biz. Second, the company can rely on consumer loyalty to Oil of Olay products, which already cater to the cosmetics line's target market of women 25 and older.
P&G acquired Oil of Olay from Richardson-Vicks in 1985.
Since then, Oil of Olay beauty fluid, which is sold in 44 countries, has become the No. 1 moisturizer in America with a 26.9 percent market share. The brand's body wash is also No. 1 with a 19.4 percent share, according to Information Resources Inc. of Chicago.
“The two categories are similar enough so that P&G can launch its new cosmetics line by leveraging the strength of the Oil of Olay brand,” Douglas Christopher, an analyst who follows P&G for Los Angeles-based Crowell, Weedon & Co., said. “None of P&G's competitors has the combined clout of the top skin-care and top cosmetics line.”
If P&G's new cosmetics line is nearly as popular as its Oil of Olay skin-care products, it should have no problem reaching its sales goals, Mr. Christopher said.
P&G won't discuss those goals.
But industry publications are projecting sales in the $300 million range for the year, which Mr. Christopher said “sounds reasonable.”
With such sales, Oil of Olay would join Cover Girl to give P&G two of the top five mass-market cosmetics lines in the United States, according to Information Resources.
For the 52-week period that ended Dec. 27, 1998, the market-tracker ranked Cover Girl No. 1 with more than $309 million in retail sales, followed by Revlon with $193.2 million and Maybelline with $112.2 million.
L'Oreal ranked No. 4 at $97.3 million, followed by Almay with sales of $71.2 million.
Max Factor ranked No. 6 with $67.5 million in sales, up about 2.4 percent from the previous year. That growth paled next to overall industry growth of 14 percent, according to Information Resources.
Revlon, which also sells cosmetics under the Almay and Ultima II brands, is still the biggest cosmetics producer, taking over that position from P&G a few years ago.
But P&G, which is now the third-largest U.S. cosmetics producer, is counting on Oil of Olay to help it move back into the top spot, Jack Neff, who covers P&G for Chicago-based Advertising Age magazine, said.
Mr. Neff said industry sources estimate that P&G will spend between $60 million and $90 million to promote Oil of Olay cosmetics, driving home the importance of the Oil of Olay launch.
By comparison, he said, only Gillette Co. has spent more on advertising in recent years for a single consumer product — the Mach III razor that was introduced last year at a cost of more than $100 million.
“This one is very important to them,” Mr. Neff said, referring to the Oil of Olay launch. P&G “has been losing ground every year over the past five years. This is something that's aimed at reversing that trend.“
P&G will kick off its Oil of Olay campaign Saturday with a joint promotion with FTD florists in selected cities, including Cincinnati, to give away Oil of Olay product samples with free bouquets.
The full-fledged advertising blitz for Oil of Olay cosmetics will begin later this spring.
Lead agency Saatchi & Saatchi of New York will introduce the line with national print and television ads likely to carry the tag line “Lasting Color That Cares,”
The new line has a different target audience than the teen-age-oriented Cover Girl or Max Factor brands and begins selling at a slightly higher price point.
That should prevent Oil of Olay from significantly cannibalizing the market share of its existing cosmetics brands, P&G said.
Prices for the Oil of Olay line will range from $3.85 for nail polish and eye shadow to $11.25 for foundation and blush. A lipstick is $8.70, and mascara is $7.
While those prices are slightly higher than prices for Cover Girl or Max Factor, they're still lower than most department-store brands.
Obviously, P&G thinks that drug, discount and food store shoppers are willing to pay a little more for the right product, Crowell, Weedon & Co.'s Mr. Christopher said.
“Many studies have shown that people are living longer and taking better care of themselves and are willing to spend money to improve their looks,” he said. “I think Procter & Gamble is positioned well to capitalize on that with Oil of Olay.”
Oil of Olay's U.S. launch follows its international rollout under the name Oil of Ulay.
P&G initially tested the brand in 1994 in Germany and introduced it in 1997 in the United Kingdom.
Mass distribution of the line started last year in Germany, Austria and Switzerland, and the line now holds double-digit shares in some European markets, P&G said.
The company will pitch the line to U.S. retailers on the premise that it can effectively compete for department-store shoppers and bring new customers to the mass market.
To win retailers over, P&G is offering to provide them with lighted Oil of Olay cosmetics display fixtures and pay the initial cost of electrical installation.
The black-and-white wall displays hold all 13 product categories along with testers, a mirror and tissues for sampling.
The units resemble the ones P&G used in Oil of Olay cosmetics' first U.S. market test in 1995 in Evansville, Ind.
Top six color cosmetics brands
No. 1: Cover Girl
Company: Procter & Gamble, Cincinnati
1998 sales: $309 million, up 13 percent
Market share: 33.3 percent
No. 2: Revlon
Company: Revlon, New York
1998 sales: $193.2 million, up 11.2 percent
Market share: 20.8 percent
No. 3: Maybelline
Company: Cosmair, New York
1998 sales: $112.2 million, up 22.5 percent
Market share: 12.1 percent
No. 4: L'Oreal
Company: Cosmair, New York
1998 sales: $97.3 million, up 15.7 percent
Market share: 10.5 percent
No. 5: Almay
Company: Revlon, New York
1998 sales: $71.2 million, up 16.9 percent
Market share: 7.7 percent
No. 6: Max Factor
Company: Procter & Gamble, Cincinnati
1998 sales: $67.5 million, up 2.4
Market share: 7.3 percent
Source: Information Resources Inc., Chicago.
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