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The Evolution of the Global
Beauty Industry
Geoffrey Jones,
Universidade Nova de Lisboa,
April 8 2011
It’s big > $330 billion of sales worldwide
The “beauty premium” affects all of us
>attractive people earn higher salaries, and
much more
It’s full of puzzles> beginning with, what
exactly are people buying?
Why is the Beauty BusinessImportant?
In 1800 beauty was very local, with products made
at home or in small batches by craftsmen;
It is now a global industry in which the ten largest
firms account for one-half of world sales;
As a result, it provides a unique insight on the
impact of globalization on societies, and each of us as
individuals.
Beauty and Globalization
Who were the entrepreneurs and firms who
built the industry? What explains success and
failure?
How was the market for beauty constructed?
Is this a legitimate industry? What is the
judgment on the industry’s constructions of
gender, age and ethnicity?
Three Questions
Pre-Industrial Inheritance
Human beings are probably genetically programmed to respond to
“attractiveness”
Or, at least, every known human society had its beauty products.
However, there has been huge variation between societies, and over time,
about what was “beautiful”
And in pre-industrial societies, few were beautiful for long, or had the
time or money to work on it
“It is certainly not true that there is in the mind of man any universal
standard of beauty with respect to the human body” (Charles Darwin,
1871)
The Transformation of Perfume
Perfume in 1800 was a craft associated with
medicine>often drunk, never put on the skin,
and used by both genders
Perfume in 1900 was an industry based on
brands, focused on women, and dominated by
France
Searching for New Scents
The industry was constrained, historically, by the limited range
of scents
From 1830s firms in Grasse, France, employ new technology to
extract “essential oils” from flowers
The firm of Chiris begins a global search for new natural
ingredients, beginning with the new French colony of Algeria in
1836
Later, Paris firms led by Guerlain exploit advances in organic
chemistry to make synthetic scents
> Perfumes become more complex, cheaper and gendered
A Marketing Revolution
As the industry grows, Paris firms begin differentiating by
marketing channels
More importantly, they associate perfume with the other
Paris luxury industries growing after “haute couture” starts
in 1850s
François Coty envisioned perfume as an accessible luxury >
he invented new classes of perfume, vertically integrated to
build scale, and pioneered the use of elegant and expensive,
bottles designed to make perfume aspirational
Building the Beauty Market
Entrepreneurs pursue similar strategies in skins creams,
color cosmetics, hair dyes, and other products.
They employ scientific advances and new technologies to
expand production
And they create aspirations in order to persuade more
affluent, urban consumers to spend on beauty
This begins the transformation of many products such as
lipstick regarded as “immoral” into aspirational brands
Making soap a brand
Europeans knew how to make soap for at least two thousand
years
But the Romans barely used it; and for hundreds of years
before the 1800s Europeans refuse to use it
Then health campaigners begin to encourage washing; towns
begin to pipe water
But its beauty companies that turn a product sold in bulk into
a brand – by associating it with God, celebrities - and
romance
Beauty becomes Imagined
Associated with women
And with cities > especially Paris,
and later New York
And with ethnicity -White people
Beauty Homogenized
By 1914, globalization had encouraged a worldwide
homogenization of beauty ideals;
The industry does not invent societal assumptions
about ethnicity (or gender) – but it does turn them
into powerful brands which reinforce societal and
cultural values, and prejudice.
The Role of Entrepreneurs
Often “outsiders”, with fake names
Quite often female, except in perfume
and soap
Frequently cosmopolitan
And sensitive to trends > before they
became trends.
Global Beauty Market
(today’s $ billion)
Global Brands/Local Expressions
By 1920s/30s, the globalization of aspirations
(and some brands)was well-advanced
The boundaries were also evident. Mass brands
needed customization to achieve local relevance
(although firms differed in their emphasis)
Premium brands also needed local relevance-but
how to achieve this was not easy.
The Beauty Boom After
World War 2
A new generation of entrepreneurs, like
Charles Revson and Revlon, use television
as a new marketing tool
Hollywood diffuses beauty ideals
International beauty pageants also diffuse
the “Miss Universe standard of beauty”
Big Business buys into (and
then sells) beauty
1940s-1980s toiletries companies such as P & G,
Colgate and Unilever try to build wider beauty
businesses>with little success
US and European pharmaceutical companies buy
numerous leading brands from 1950s – and sell them by
the 1980s. Some beauty companies, like L’Oréal, buy
into pharmaceuticals
The key issue is the lack of a clear industry identity
>which makes finding the right business model difficult
Globalization after 1945
The postwar economic miracles provide
booming markets in the West >even if much of
the world is off-limits to capitalism
Avon takes the direct selling model to Latin
America, and then elsewhere
But globalization proves
challenging
Distribution channels are local-and hard to access
Local firms still flourish
While global brands spread, managing them proves a
huge challenge
Especially as consumers remain stubbornly different
in product preferences > the French like perfume,
the Americans make-up, and Asians prefer skin care
Consumption of shampoo relative
to GDP per capita, c.1982
Geography of Beauty
While there are many local brands, Paris and New York
remain the homes of the brands with global appeal;
This reflects the agglomeration of creative talent,
supplier firms and related industries;
But, especially, their aspirational appeal;
London, Stockholm and Tokyo are among the cities with
beauty clusters, but its hard to get beyond niche.
Beauty Re-imagined from
1970s
Health scares in hair dyes
Feminist critique
Civil Rights – “I’m Black and I’m Proud”
Decolonization > are Whites really the only
attractive ones?
Back to the Future
Since the 1990s, “natural” products have
moved from radical and “odd” to mainstream
So has ancient craft knowledge
Gender and age stereotypes have also begun
(slowly) to shift too
Global Giants
1990-2011 sees huge industry concentration. P & G and
L’Oréal now control 23% of the world market
The background of both firms makes this surprising
But both recognized the new potential from the opening of
China, Russia etc. And make the investments and acquisitions
to seize the new opportunities
L’Oréal was primarily a European hair company in 1980s.
But in 1990s it buys US brands, transforms them, and takes
them global
Today, evidence that the world of
beauty is flat ….
Corporations roll out global brands at
unprecedented speeds – to Russia, China and now
India
The web, and social networking, have spread
celebrity culture worldwide (except France)
Fashions spread across countries almost
simultaneously
Co-exists with evidence that it is
“spiky”
Consumers rediscover local beauty ideals and rituals
> the most global of brands need their local
expressions
Swedish, Greek, Indian and Brazilian beauty ideals
go global – but just how far?
Markets fragment as consumers crave an
individuality lost with the industrial age
Summing Up
The founding entrepreneurs did not invent the rituals or concepts of
beauty products>but they transform them into a capitalist industry and
“create” a market;
The beauty market and norms created by the modern industry were
contingent. Firms shape a global standard for beauty by turning
prevailing values into brands which create markets and eco-systems;
There was a strong homogenization of beauty ideals between 1850 and
c1970s – but local expressions remained. Now firms are active in
diffusing a greater diversity of ideals and intensifying the local
relevance of global brands
The industry combines both legitimate and illegitimate elements >in
complex ways
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