BEAUTY CARE

Innovation likely to continue brushing up oral care category

BY Antoinette Alexander

Oral hygiene experienced a brushing up in 2007 and emerged as one of the fastest-growing sectors in the U.S. cosmetics and toiletries industries thanks in large part to a strong surge of hot new products. However, 2008 looks to be more challenging for manufacturers as consumers tighten their wallets amid tough economic conditions. Given this, products with added benefits likely will remain key growth drivers.

“The sector, which relies on consumers’ willingness to pay extra for added convenience products, will find a thriftier consumer in 2008 as the U.S. economy continues to struggle,” stated research firm Euromonitor International in its most recent U.S. Oral Hygiene report.

Euromonitor International predicted that consumer expenditure growth in 2008 (in current prices) on personal care will slow to 2 percent—the lowest rate since 2001. This sluggish growth will spell challenges for the oral hygiene segment and manufacturers that hope to grow the segment with premium-priced value-added innovations.

If this proves to be the case, it will be a shift from the growth experienced in 2007. For example, toothpaste, which accounts for more than 35 percent of total sector growth, had its best performance since 2001, according to Euromonitor International. Fueling the growth was, in part, the continued success of Crest Pro-Health, launched in 2006, and Colgate Total’s successful marketing campaign.

Manual brushes with added benefits, such as Colgate’s 360 or Oral B’s Pulsar, which are priced four to six times higher than a generic manual toothbrush, helped drive growth of manual brushes by 2 percent—a category that tends to be flat, the research firm noted.

Furthermore, tooth whiteners experienced a rebound—growing by 10 percent in 2007, after declining by 27 percent between 2003 and 2006—as manufacturers looked to brighten the category with such innovative launches as Listerine Whitening Strips and Aquafresh White Trays.

Manufacturers, however, are hoping to continue the momentum as consumers continue to place value on the cosmetic aspects of proper oral health, such as whiter teeth and controlling bad breath.

For example, Procter & Gamble launched for 2008 its new Crest Whitestrips Daily Whitening Plus Tartar Protection, marking the first time that Crest Whitestrips has gone beyond whitening. The strips promise to protect against daily tartar buildup, whiten and protect from everyday stain buildup.

Earlier this year, Colgate announced that products planned for launch in first quarter 2008 included Colgate Total Advanced Whitening and Colgate Total Advanced Fresh toothpastes, Colgate 360 Degree Deep Clean manual toothbrush and Colgate 360 Degree Sonic Power battery toothbrush.

Dr. Fresh is looking to invigorate the mouthwash category with the launch of Dentyne Ice mouth rinse, which features the same flavors as Dentyne arctic chill and shiver mint chewing gum. The mouthwash is alcohol-free.

Meanwhile, SunTrust Robinson Humphrey analyst William Chappell is optimistic about Chattem’s ACT mouthwash brand, which it snapped up from Johnson & Johnson.

Sales forecast: Oral care 2012
Consumers will look for added-value products

*In U.S. millionsSource: Euromonitor International estimates
  2007 2012
Toothpaste 2,078.80 2,025.2
Toothbrushes 1,699.1 1,868.8
Mouthwash 914.4 924.4
Denture care 407.2 380.4
Tooth whiteners 378.8 397.8
Dental floss 297.8 296.1
Mouth fresheners 141.7 111.0
Total oral care 5,899.70 6,003.5

“In our opinion, ACT is emerging as the real jewel of the five brands acquired from J&J. Recall, ACT had seen limited advertising and only one product extension in the five years before Chattem acquired it in early 2007,” stated Chappell in a recent research note. “Since the acquisition, Chattem has improved the packaging, added a 33-ounce bottle (expanding the addressable market by 40 percent) and stepped up advertising. As a result, the brand not only has grown in excess of 20 percent over the past year, it also has gained market share, the only brand in the category to do so during that time frame.”

He noted that ACT already has grown from a $40 million brand to a $60 million brand under Chattem’s ownership. He said it is likely ACT could grow to $100 million in the next two to three years.

“Moving to 2009, we expect the company to leverage its strengthened position with retailers to gain additional facings for new product extensions and more favorable shelf space at retail,” Chappell stated.

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Skin moisturizers increase cancer risk in mice, according to study

BY Alaric DeArment

NEW YORK A study by researchers at Rutgers University has found that skin moisturizers given to mice exposed to ultraviolet radiation increases the risk of cancer, according to HealthDay News.

The researchers, who published the study in the Aug. 14 issue of the Journal of Investigative Dermatology, emphasized that the study was done only on mice, and they didn’t know if studies on humans would yield similar results.

The study involved exposing hairless mice to UV radiation for extended periods, which caused skin cancer. After that, they applied four common brands of skin moisturizer on the mice over 17 weeks for five days a week. The mice that received the moisturizers had an increased rate of tumor formation.

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Inter Parfums posts record 2Q results

BY Antoinette Alexander

NEW YORK Inter Parfums, which develops, manufactures and distributes perfumes and cosmetics, has reported record results for the second quarter.

All share and per share amounts were adjusted to reflect the retroactive effect of the 3 for 2 stock split effected on May 30, 2008. Net sales for the quarter rose 20 percent to $99.1 million from $82.8 million; at comparable foreign currency exchange rates, net sales were up 12 percent for the period.

European-based operations achieved sales of $83.9 million, a 19 percent increase compared with $70.5 million, in the same period last year. Sales by U.S.-based operations rose 23 percent to $15.2 million from $12.3 million in the same period last year; Net income was $3.8 million, compared with $3.7 million in the year-ago period; and diluted earnings per share were 12 cents in both periods.

Jean Madar, chairman of the board and chief executive officer, stated “As we previously reported, sales by European operations rose 19 percent to $83.9 million from last year’s $70.5 million. Burberry brand sales were especially strong due to the continued rollout of the latest fragrance, Burberry The Beat and the exceptional growth and staying power of Burberry Brit, which launched in 2003. Van Cleef & Arpels brand sales also contributed to the top line gains. Our U.S. operations achieved growth of 23 percent, as sales rose to $15.2 million from $12.3 million driven by the international distribution of Gap and Banana Republic fragrance and personal care products.”

Reviewing the new product pipeline by European-based operations, Mr. Madar noted, “With three major fragrance brands launching globally this year, as well as several smaller brand introductions and fragrance flankers, 2008 is proving to be one of our most ambitious years ever. Although Burberry, The Beat initially launched during the first quarter of 2008, additional geographic expansion is still underway. Jeanne Lanvin, which is previewing in Paris this summer, is scheduled to go global beginning in September. In addition, Feerie will be our first major new fragrance family under the Van Cleef & Arpels brand. We also brought the Quiksilver suncare collection to market this year and have ST Dupont Passenger, a new scent for men and women, ready for launch during the third quarter.”

He continued, “Specialty retail has become an increasingly important part of our overall business. As we announced last month, bebe stores, inc. teamed up with Inter Parfums to create and produce brand appropriate fragrance and beauty products, the first of which will be lip glosses which are expected to be in stores for the holiday season. A new bebe fragrance is on our launch schedule for next year. We are readying our first new Brooks Brothers fragrance collection for debut later this year at U.S. Brooks Brothers stores followed by international distribution in 2009. For Gap and Banana Republic, we continue to introduce new products and create variations of existing ones. Based upon results to date and plans underway, we are finding international markets to be very receptive to Gap and Banana Republic products and we have achieved excellent placement in department and specialty stores in certain international markets, including travel related retail.”

The company stated that it is on track to meet its 2008 guidance with net sales of approximately $460 million and net income of approximately $26.8 million or 87 cents per diluted share.

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