Friday, June 12, 2009

It's all about the calculus - why Max Factor is leaving the United States

The Too-Much-Makeup Mannequin by Shawn Zehnder Lea (szlea) (Twitter) used under a Creative Commons License

I listen to a few podcasts here and there, but (with one exception - I mean two exceptions) the podcasts that I listen to are usually less than five minutes long. One of my favorite short podcasts is the early morning one from the Wall Street Journal, and they had an interesting story last Friday - Max Factor makeup will no longer be sold in the United States, but will continue to be sold in the rest of the world. Obviously a short podcast can't delve into the why's of something, but at least it alerts you to what's going on, which then allowed me to consult other sources, such as this Times of London post, which included a brief history of the company.

Max Factor himself was a Russian emigrant who created the makeup brand in 1909. The business remained in the Factor family until 1973, and Revlon sold Max Factor to Proctor & Gamble in 1991. However, are working against Max Factor in the United States these days:

Max Factor...unlike similarly priced rivals, is not stocked by big drug store chains, such as Walgreens and Rite Aid.

While you can buy cosmetics online, the product often tends to be sold in retail outlets. You have your department stores that sell the high-end cosmetics, with the people in white lab coats pushing whatever, and then you have the low end of the market, a segment where Max Factor apparently isn't participating.

Proctor & Gamble does offer another cosmetic line, Cover Girl. And Max Factor outsells Cover Girl in the United States. So why is P&G discontinuing the better-selling brand? Because, if you look at the trends (or, for techies, the calculus) of the two brands, Cover Girl appears to be the better long-term buy:

At present in the US, Max Factor outsells CoverGirl, with $1.2 billion in sales each year, against $1 billion for its newer rival. However, CoverGirl has increased its US market share every year for the past seven years while Max Factor has stagnated.

So what happens now? Do desperate American Max Factor fans write to their European fans and ask them to ship some cosmetics out our way? This is what the U.S. Food and Drug Administration says:

Cosmetic products imported into the United States are subject to the same laws and regulations as those produced in the United States. They must be safe for their intended uses and contain no prohibited ingredients, and all labeling and packaging must be informative and truthful, with the labeling information in English (or Spanish in Puerto Rico). All color additives must be approved by FDA; many cannot be used unless certified in FDA's own laboratories. If the product has an intended use that causes it to be considered a drug, it must comply with the requirements for drugs, it must comply with the requirements for drugs, including establishment registration and drug listing.

As long as P&G doesn't change the formula, and the FDA doesn't change the regulations, this in itself doesn't appear to be a problem. Something legally sold in the United States in 2009 should theoretically be legal to be sold in the United States in 2010. But the products have to get here, which means that an entity such as the U.S. Postal Service comes into play:

Hazardous materials come in a wide variety of forms and can be chemical, biological, radioactive, or a combination thereof. If a material or substance can cause harm to someone or something, it can be considered a hazardous material.

The Postal Service’s definition of a hazardous material includes many common household and consumer products. These items may not be hazardous during normal use or storage in your home but can present a significant hazard when placed in the mail due to vibration, temperature changes, and variations in atmospheric pressure.

The first two items on the Postal Services' list? Perfumes and nail polish.

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