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