INDUSTRY
& B U S I N ESS
Toilet Goods Business Lures Chemical Industry Long its principal supplier, chemical industry now seeks direct participation Good profits and a rapidly growing market are continuing to lure chemical and allied firms into the toilet preparations business. The chemical industry has long supplied the field with a major portion of its raw materials (synthetic detergents and ethanol, for example), but in recent years chemical firms have been moving directly into the field—generally through acquisition. Earlier this month, food and chemical producer Borden Co., for instance, completed acquisition of Ozon Products, Inc., a Brooklyn, N.Y., producer of men's and women's hair preparations, lotions, and perfumes. It was the third such acquisition for Borden, which had earlier acquired two cosmetics producers—Marcelle and John Robert Powers. In a different approach, Rexall Drug and Chemical, which has long sold cosmetics through its franchised drugstores, formed a cosmetics division—to be called Vanda—and will sell them door to door (C&EN, Feb. 7, page 2 7 ) . The U.S. toilet preparations industry has undergone tremendous growth in this century. Total industry volume in 1900 was about $5 million. This year, according to the Business and Defense Services Administration of the Department of Commerce, the value of the industry's wholesale shipments will total $2.534 billion, compared with $2.3 billion in 1965 and $2.1 billion in 1964. The Toilet Goods Association, the industry's trade association, believes the BDSA figures are too high, however. According to TGA, 1964 sales at the retail level totaled about $2.55 billion, which would put wholesale sales near $1.35 billion, considerably below the BDSA estimate for 1964. Last year retail sales, now being tabulated, probably reached $3 billion.
BDSA cites a number of reasons for the growth of the toilet preparations market—increased population, higher earnings, urbanization, and industrialization. Combined, these factors have brought people together more closely in work, social activities, and recreation, thus placing greater emphasis on personal appearance. Other factors include a larger female work force, a growing population at both ends of the age scale—teenagers and the over-60 group—and a growing men's market. Aggressive marketing and advertising and the availability of new synthetic chemical products have also helped. Problems. Any firm that tries to break into the field must find the marketing and management skills needed for success in this competitive industry (C&EN, Sept. 14, 1964, page 2 8 ) . Establishing the required marketing setup from scratch would require a formidable effort. This explains why chemical firms generally buy an already established marketing unit. The industry's advertising costs are high-$403 million in 1964, says BDSA. In addition, new products and lines are continually being introduced because of limited profit life. American Cyanamid, which ac-
Sales, Toilet Goods Soar Retail sales of perfumes and cosmetic and toilet preparations (not including toilet soaps) Year
1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1964 1965 1966
Sales (Millions of Dollars)
$
45.0 129.5 256.4 336.2 322.1 449.9 711.3 840.1 1192.2 1784.0 2551.9 3000.0* 3500.0*
Source: Toilet Goods Association estimates * C&EN estimates
quired shampoo maker John H. Breck, Inc., in 1963, cited the problem of high marketing costs for new consumer products in its 1964 annual report: "The products which eventually reach national markets will require large introductory as well as continuing advertising and promotion expenditures, which we recognize as essential to this phase of our business. ,, On product obsolescence, Chas. Pfizer, which has its Coty, Pacquins, Desitin, and Barbisol lines of toilet preparations, noted in its 1963 annual report that it had reformulated and repackaged its Barbasol line of shave cream for the new high-performance razor blades. Growth. The largest single group of products in this field, in terms of sales, is hair preparations. BDSA places the value of 1966 shipments of hair preparations at $864 million, about 34% of total shipments. Last year, shipments of these preparations totaled $762 million. TGA believes these figures also are too high, but it does agree with BDSA's estimate of 13% as the growth figure. The market for personal deodorants is also growing; manufacturers' sales have risen 17% annually since 1958. Retail sales of these products rose nearly 50% in 1964 alone, according to BDSA. Another growing area is toilet preparations for men (about $350 to $400 million a year now). TGA cites it as the one with the greatest growth potential. Raw Materials. The value of the raw materials used by the industry, generally chemical products of one sort or another, came to $569.4 million in 1963, the most recent year for which BDSA presents figures. In 1963, when shipments of hair preparations, including shampoos, totaled $592.8 million, shipments of synthetic organic detergents for use in shampoos amounted to $120.6 million. (Soap in shampoos accounted for $6.9 million.) Ethanol is another chemical used in considerable amount in toilet preparations. Many perfumes, hair tonics, and mouthwashes, for instance, contain more than 65% ethanol. FEB.
14,
1966
C&EN
29
