inside cosmeceuticals asked Jeffrey R. Ten, president Americas of ck Calvin Klein beauty, to provide insight on how the increased interest in “natural” is influencing Calvin Klein’s product development strategy, and whether the burgeoning growth in organic is also on the company’s radar.
IC: How has the growing consumer interest in “natural” products affected your business?
Ten: It’s affected it in major way. The natural category is one of the few benefits or features that, despite the recession, is still attracting consumers.
IC: Is Calvin Klein looking at creating natural products?
Ten: We certainly are taking a look at it. When I speak in respect to our company, we are much bigger than Calvin Klein. We market a number of mass brands such as wet n wild® and Black Radiance®, so we have a wide portfolio. I think customers are becoming more aware and reading labels. They are aware of some of the ingredients used in cosmetics that have potential carcinogenic issues, so, yes, you have to look at it. But you have to balance some ingredients. I mean, we all expect if there is an ingredient that is carcinogenic it has been mandated by FDA to be eliminated. There have been, over the years, ingredients that have been eliminated, but, as I said, there is a balance you have to look at because sometimes certain ingredients that are quite pervasive in cosmetics are not so easy to replace. I think over the long haul you need to look at [natural] because it is a growing movement and people are health conscious, more educated and on the Internet where information is much more readily available about what ingredients do. Over time companies are becoming much more selective on what they’re putting in their products.
IC: What about interest in “organic” products?
Ten: I think they [natural and organic] are somewhat related. There are two challenges with organics. One, I think [the term] been overused a lot; so, from our view, if you’re going to call yourself organic you really have to walk the walk. The standards are very, very high if you go to the official credentials of organics, such as the U.S. Department of Agriculture standards—which I think are 90 or 95 percent. It’s a tall order today if you are really looking for high performance and other important features and benefits for cosmetics. California has its own gradation for organics; I think it’s 75 percent, which makes it slightly easier. My approach is if you’re going to call yourself organic then you really need to make sure you’re certified by someone. There are too many questions out there about “How much organic are you?” or “Are you organic at all?” I think you have to meet official standards to really have credibility out there because there are so many companies and brands that have organic in their names. You have to decide what’s most important in your product. Are you trying to get the, what I would call, “diehard organic” customer, which I think is still a small segment of the market. There are three tiers: the upper tier segment is diehards that will only buy organic and are probably still shopping in the health food channels of distribution, which is still a small channel. The second and third tiers are more the mainstream customer who would shop at the drugstores, supermarkets and prestige stores, such as specialty stores. Here you have a larger group; these customers would like to have organic, but it’s not their primary motive in buying a product. It all needs to be watched to see how many serious diehards spill into the mainstream market, but it’s certainly growing. The last chart I looked at, in respect to cosmetics, it was growing in the high double digits and in some cases 20 to 30 percent in certain cosmetic categories. And that’s quite remarkable because the industry is declining in most categories.
IC: Some traditional cosmetic and personal care brands are developing or already marketing “beauty from within” products, either as dietary supplements or beverages. What is your opinion of this product trend?
Ten: It is interesting. Look at the Vitamin Waters, whether they have benefits to beauty or not, or Borba, which came out in the market for skin care. My take is it’s similar to vitamins in general; they have ups and downs. I think there are more groups questioning whether these products really do provide benefits. As this recession unfolds, customers are going to be more discerning on their spending. If this is really their market it’s going to be more challenging over the next few years because spending on cosmetics in general is certainly being challenged. The peripheral kind of companies are going to have bigger challenges unless they can get certified approval by doing clinical trials and showing skin before and after, which I’m unsure whether any of them have done yet. People are always looking for innovation and that’s why they come out very strong. Innovation is what drives our business, but since they are on the peripheral of the business and they tend to be premium prices, I think it’s going to be more challenging unless they show clinical before and after results. Borba, for example, was kind of limping along and got on television and all of sudden they took off like a rocket and sold millions of dollars on television. It’s what publicity and marketing bring out of an obscure, niche category. All of a sudden it explodes because information gets out there in the face of the consumers in a television format and that tends to explode categories fast. When we talk about naturals with minerals, minerals in cosmetics has been around for ages, but all of a sudden a company called Bare Essentials gets on television with nothing really extraordinary but gets in front of the customer for an hour and business triples. Again, that’s marketing, and a lot of our business is about communication and marketing. The answer is sometimes even without testing if it’s presented in a certain way it can create a lot of engagement with the customer in purchasing.
IC: Do you see opportunities for collaborations between cosmetic, food and/or supplement companies?
Ten: I think it’s already happening. Companies have been selling vitamins for the skin for years. And you see today hair care brands that have topical products for the hair in addition to ingestible vitamins. So it’s already here, and I suspect it will continue to a certain extent. But again, just like vitamins in general, especially as the economy becomes more difficult, the question mark is whether people will be able to afford all these things. Consumers use creams and serums and a lot of them today will show immediate results; but, I’m not so sure about vitamins. I’m not a pharmacist, but from what I read, vitamins tend not to absorb in the body very easily and a small percentage of them actually are made available in your body. Again, I question whether these things are attractive unless they are proven with before and afters or scientific empirical evidence in order for people to spend that kind of money in this environment.
That said, this movement is here to stay; it’s not a blip in the screen or even a trend. This is something that is continually growing and it’s evident in the whole industry. Today, 35 percent of the cosmetic brands have a natural component or natural marketing in their business, and it’s just something that will continue to grow. The question is how natural are they? There are some that say all-natural and others are just touting it for marketing purposes to kind of ride the coattails. I’m cautious of the ones who ride the coattails versus the ones that are really serious. We are working on an unrelated brand to Calvin Klein that will be out very soon that will be organic to the California standards, roughly 75 percent, and natural. There will be some other nuances as far as textiles that we will be including with this brand. It’s here to stay and I think it’s the future.
