During the course of the past ten years these leading players have managed to make significant gains in the market through a combination of mergers and acquisitions as well as a strong marketing program and attention to both innovation and newness that has defined their positions in the market place - claims a new report entitled Cosmetics & Toiletries USA 2004 from Kline and Company.
Consolidation by these companies has helped to shape a leaner but more reactive market, which has in turn learnt to respond quicker to the demands of consumers. In turn this has helped contribute to an overall market growth of 2 per cent in 2004, a result that bucked a multi-year decline in sales.
For well over ten years the US market has been dominated by P&G, which has only gone from strength to strength in its cosmetic and toiletry operations. In the 1980s it bucked direct sales player Avon off the number one spot after a series of mergers and acquisitions saw it grow significantly.
Since that time of consolidation, merger and acquisition activity has slowed significantly as opportunities have become limited. However, the report does point out that P&G's acquisition of Clairol and Wella in 1999, together with the proposed merger with Gillette this year, have only served to strengthen its lead further.
Indeed, once the Gillette €53 billion deal is completed in the fall, P&G is set to become the largest consumer goods company in the world and by far the largest cosmetics and toiletries players.
The battle for the number two and three cosmetic and toiletry positions have been hotly contested in the US between Anglo-Dutch consumer giant Unilever and French player. Despite Unilever still holding a strong market share, its position has been weakened by the rise of P&G, which in turn saw L'Oreal take the number two position last year, as a strengthened product portfolio helped to boost sales significantly.
"Organic growth is coming through strong, well-executed marketing campaigns accompanied by newness, which helps to maintain a competitive edge," said Lenka Contreras, head of the Consumer Products practice for Kline's research division.
Conteras also highlighted that smaller player Limited Brands has become a master of maintaining newness within in the Bath & Body Works and Victoria's Secret store concepts. Beating industry growth, the company has achieved a consistent growth of 5 per cent over the last five years, earning $1.4 billion.
This sales figure, Conteras claims, was achieved through very limited media advertising campaigns, relying instead on the visibility of its stores and direct sales.
"The launch of Bath & Body Works in 1990 took Limited Brands from being a virtual non-player in the beauty business ten years ago up to the fifth ranking among all marketers today, which is phenomenal," says Contreras.
Johnson & Johnson is another company that has made inroads into the top ten cosmetic and toiletry players in the US. Since purchasing Neutrogena and Aveeno in the nineties, it achieved the number ten slot with sales of $1.2 billion in 2004, the report says.
"Continued innovation and strong marketing efforts have helped these companies to advance, even though overall market growth hasn't been spectacular," said David Vladyka, head of Kline's Consumer Products consulting practice.