Looking good is big business and one that preoccupies the C&T industry the whole year round. The belief that external beauty can be bought is no longer an unrealistic concept, but now consumers are asking more of their cosmetics with the purchase of more ethical products. The question is, can a pot of cream make us beautiful on the inside?
With the advent of modern marketing techniques, buying C&T has become an emotive experience. Consumers are buying aspirational products which in many cases reflect the lifestyle they wish to have rather than the one they actually have or can afford. Although this is not a new concept, this style of buying has been accelerated in recent years with the hype surrounding natural and organic products and the wider distribution of ethical products.
The belief that you can change the world by what you put in your shopping basket is not new and was spearheaded by Anita Roddick, in the context of the cosmetics industry, when The Body Shop first opened its doors in 1976. However, until recently the ethical products sector has remained relatively niche.
According to the Co-operative Bank’s annual Ethical Consumerism Report 2006, ethical spending in 2005 in the UK amounted to £29.3bn, with £173m being spent on humane cosmetics, up 1.8% from 2004. The ethical products sector is therefore making real waves in the C&T industry.
Green Day
It is difficult to define the term ethical as it now encompasses so many different ideas. The issues are numerous and include not only our relationship with the natural environment and the consequences of our consumer behaviour – such as pollution, animal testing, traceability and sustainability of ingredients and resources – but also the effect that our ambition for continued economic growth has on suppliers, who often live in developing countries and may suffer poor working conditions, living standards and wages. Last is the relationship that we have with ourselves: that is, the toll that our consumer behaviour is taking on our own health.
In marketing speak these ethical principles translate into: not tested on animals, sustainably farmed, locally sourced, recyclable, fair trade and natural or organic.
Ethical values are paticularly relevant when it comes to the cosmetics industry because the very nature of cosmetics as a non-essential, consumer product makes the industry immune to several of the arguments that are regularly used to defend unethical practices used during the production of food or medicine. The basic need for cheap food or safe, effective medicine may trump any concerns over fair trade or animal testing.
These issues have been at the forefront of awareness campaigns for some time now, but consumers are finally sitting up and taking notice This means that they are demanding more from their products and manufacturers, and retailers are having to adjust their behaviour to woo ethical consumers back to the fold.
Whether it is the consumer or the industry that is in the driving seat of the sudden upturn in ethical products is uncertain. However, what is certain is that trust is a big factor when buying into a brand and consumers favour brands that reflect their own ideals and values. Charles Laroche, vp external affairs - Europe at Unilever and co-chairman of the European Partnership for Alternative Approaches to Animal Testing (EPAA) steering group, points out that the upside of this is that the industry has the ability to gain the confidence of the consumer if it is seen to be doing the right thing. The downside when it gets it wrong of course is a huge fall from grace.
Alex Bourke, vice chair of The Vegan Society and author of Vegetarian Britain, explains: “When companies are targeted by animal rights protesters or slated in the media for unethical practices they will inevitably lose consumers who value these principles. The loss of market share and consequently turnover can be significant.”
And no one knows how great a loss of consumer confidence can affect a brand’s consumer appeal and sales more than those who have experienced a consumer backlash first hand. Bourke points to Gillette as an example of a company that has come under pressure to end animal testing from the pressure group BUAV (British Union for the Abolition of Vivisection).
The Body Shop has also come under fire following its sale to L’Oréal in 2006. Several accusations were levelled against Roddick. It has been argued that she sold out on the brand and her own ethical values and, although The Body Shop operates on an independent basis within the L’Oréal Group, in a rather predictable twist of fate campaigners called on customers to begin boycotting The Body Shop to show their disdain.
Roddick has, however, argued vociferously that L’Oréal is not the enemy. If anything, says Roddick, L’Oréal will come under closer scrutiny of its practices and The Body Shop will give the cosmetics vehemoth the framework to implement ethical practices throughout its business.
Bourke supports Roddick’s case: “I think it is probably true that The Body Shop will influence L’Oréal’s practices. It is worth remembering that L’Oréal isn’t going anywhere – it’s like trying to close down McDonald’s. But we can help it make a step in the right direction.”
There has been some residual resentment towards the original protagonist of ethical cosmetics however. The end of recycling in-store and the discontinuation of in-store product information – which helped The Body Shop’s vegetarian and vegan consumers make informed purchasing decisions – has left a sour taste in the mouths of some of The Body Shop’s biggest fans.
In October, L’Oréal announced a further acquisition of French organic brand Sanoflore, stating: “This is truly an alliance of expertise, combining the experience and knowledge of an organic brand, the integrity of whose formulas and values we will preserve, with the know-how and research capabilities of the L’Oréal group.” Only time will tell whether these two brands can effect a wholesale change in the biggest cosmetics company in the world, but it is certainly a sign that the tide is turning in favour of the ethical camp.
Fighting for our rights
With the growing market for ethical products, regulation of the claims that products make has become a key concern for the industry.
Currently a number of private standards available to manufacturers exist which signal to the consumer that the producer has met certain criteria. The organic movement has a number of private standards across Europe, including Ecocert, The Soil Association, the German Bundesverband Deustcher Industrie und Handelsunternhmen (BDIH) and Associazione Italia per l’Agricoltura Biologica (AIAB).
In the UK, the BUAV Humane Cosmetics Standard is the benchmark for products that are not tested on animals and the stamp is supported by several similar European organisations, such as Belgium’s Global Action in the Interests of Animals (GAIA), Italy’s Lega Anti Vivisezione (LAV), Asociacion de Defensa de los Derechos de los Animales (ADDA) in Spain and One Voice in France, as well as organisations in the Netherlands, Finland, Austria, Sweden, Ireland and Switzerland which together form the European Coalition to End Animal Experiments.
The Vegan Society takes a stricter view on the use of animals in the production of cosmetics and will not accredit any cosmetic product that contains animal bi-products, including beeswax and lanolin.
With a common position on the much anticipated REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) legislation now agreed by the European Union, in the form of the Cosmetics Directive (Dir. 76/768/EEC), the regulation of ethical standards will pass from the private to the public. The legislation will not only ban animal testing in all European Union Member States, but also require an in-depth assessment of the potential environmental impact of all cosmetic ingredients.
This legislation should also impact positively on consumer confidence. Kees van der Graaf, executive director at Unilever, highlighted the factors influencing the need for change. He stressed that public awareness of animal testing has made consumers more wary of what they are purchasing. Politicians too are taking into account this social need for change, adapting and pushing legislation forward. In turn, companies have had to listen to customer demand alongside strictly adhering to the law.
Animal testing for cosmetic products is already banned in the UK, Belgium and the Netherlands and, as of 2009, when REACH is projected to come into force, this ban will extend to all members of the EU. This should mean an end to illegitimate product claims and a higher level of transparency for customers.
The difficulty in regulation before the new law comes into force arises from the fact that, while it may be illegal to conduct animal testing in the UK, Belgium and the Netherlands, manufacturers can always outsource production to those countries with less restrictive legislation. Furthermore, it has sometimes proved difficult to confirm whether companies have truly ceased testing.
Getting in on the act
There are several ethical brands currently on the market and their market share is growing rapidly. Ethical retailers are also on the up and the likes of the American Wholefoods chain, who also own Fresh & Wild in the UK and Planet Organic, are gradually expanding their storebases. “The health food sector is expanding and these retailers make a significant proportion of their profits from stocking ethical cosmetics,” says Bourke.
The internet has also played a big role in the increase in popularity for the ethical products market. Now that smaller brands can sell through websites, they no longer need to compete for shelfspace with the multinationals. Plus the internet offers these brands an opportunity to communicate their values and beliefs to consumers.
The more internationally well known ethical brands include the German Weleda, Jason Natural Cosmetics, Green People, Brazilian Natura, Aveda (Estée Lauder), Neal’s Yard Remedies and of course The Body Shop.
Arguably The Body Shop is the most internationally renowned and commercially successful of the ethical brands to date. With Roddick at the helm, The Body Shop aimed to become a shining beacon for the public for fair and responsible retailing, injecting fresh thinking into the way the C&T industry operated.
In 1985 – its first year as a public company – The Body Shop showed its support for Greenpeace by sponsoring its poster campaign, thus kickstarting its reputation for a brand ready to uphold its ethical values. An extensive number of human rights campaigns and environmental initiatives were to follow and to this day the company supports ethical projects such as the Roundtable on Sustainable Palm Oil (RSPO), a venture which aims to bring about greater support and stricter guidelines for the sustainable palm oil sector, and has recently launched a fragrance to raise awareness and money for AIDS.
The tagline Against Animal Testing has become synonymous with the brand. The Body Shop’s five key company values are: that it is against animal testing and for activating self-esteem, defending human rights, protecting the planet and continuing its reputation for campaigning.
One of the green giants in the industry never to have relied on animal testing is Aveda. The company was founded in 1978 by Horst M Rechelbacher, a stylist looking to offer salon and spa visitors both natural and environmentally responsible products while maintaining high performance, and its mission statement focuses on setting an example: “For environmental leadership and responsibility, not just in the world of beauty, but around the world.”
Green People was conceived by a mother fed up of searching for products that wouldn’t irritate her daughter’s eczema. The brand is organically certified and uses all natural ingredients. The company’s ethical credentials include: no animal testing, full disclosure of ingredients on all products and 10% of annual profits are donated to charities dedicated to environmental causes.
Neal’s Yard Remedies is another bastion of ethical practice. It uses organic ingredients, supports fair trade, refunds customers ten pence for every primary item of packaging returned for recycling and says it is committed to the fight against animal testing, instead choosing to use human volunteers to trial its products.
And further afield, Natura Cosméticos, Brazil’s leading cosmetic company, is a success due to the fact that it trades on the values of sustainable development and working in harmony with the environment. Using natural ingredients that come from sustainable Amazonian sources and supporting remote communities has won the company many supporters and more importantly, customers. The company opened a standalone boutique in Paris in 2005 and Natura’s underlying ethical values seem to have translated well into the European market.
High street retailer Lush describes itself as a cosmetics grocer with an ecological message, stocking natural, fresh produce in its beauty delis. It prides itself on stocking a range that is 100% vegetarian and 74% vegan.
This particular marketing strategy appears to work well. Since the first shop appeared in 1995, a further 84 shops have opened across the UK and development of 20 more sites is planned for this year. Internationally, Lush can boast a presence within Europe, Eastern Europe, Asia and Australasia. A spokesperson for the company highlighted Lush’s recent involvement in pushing for change: “From Lush’s perspective, innovation and ethics have driven the brand since it was set up 11 years ago. In the past, Lush has deliberately avoided statements and marketing the brand heavily on its ethics, preferring to let the high quality ingredients, creativity and value for money help drive the brand. Lush has now amended its strategy and in the past 18 months or so has embarked on a variety of campaigns.”
These campaigns focus heavily on the outright banning of animal testing and lobbying to stop MEPs allowing such testing to carry on after the new REACH legislation comes into force. Lush employs independent animal rights consultant Andrew Butler to act as a company spokesperson and has its own Supplier Specific Boycott Policy that means it refuses to do business with any supplier still carrying out chemical testing on animals. It also claims to use the minimum amount of preservatives wherever possible, to steer clear of excess packaging and reduce pollution by using sea freight in the transportation of its goods.
Taking its role a step further, Lush recently launched a sister brand, formulated specifically for vegans. The make-up range, entitled B Never Too Busy To Be Beautiful, is claimed to be the only UK company to offer an entire cosmetics line-up suitable for vegans.
Cause for concern
While natural, organic and ethical spending is on the increase, to a great extent it is still seen as the concern of the upper and middle classes – or those with enough money to worry about such issues. And it is no exaggeration that such products, with certain exceptions, carry a higher price tag. But as many of the major supermarkets make pledges to cut down on food packaging and source produce from sustainable sources, an increase in ethical C&T on shelf in the mass market is likely to follow.
Tesco, for example, has developed the organic-inspired line bnatural to capitalise on the growing demand for organic products and in January pledged to invest £500m on green initiatives, aiming to reduce its carbon footprint and awarding customers who buy organic, fair trade or biodegradeable items.
British high street staple Marks & Spencer pipped Tesco to the post by announcing its plans to spend £200m over the next five years on a new green strategy, to reduce C02 emissions, to cut down on waste sent to landfill sites and to reduce packaging.
This is surely proof that companies have a choice: to either fight against the increasing ethical tide or make a bold step towards change. In the retail world, Marks & Spencer, because it exclusively sells own label products, has an easier task ahead of it than many others, but this sends a message out to other businesses to voluntarily take a look at the size of their ecological footprint before they are forced to by consumers or by legislation.
Taking responsibility
However, there are still several firms who view ethical values as standing in direct opposition to economic growth. But it is worth remembering that the economic growth of some ethical brands has been phenomenal. All companies have to turn a profit to survive.
And if Stuart Rose, chief executive at M&S, did not make his decision based solely on a personal quest to save the environment, then it is an indication that he is willing to put his money where he thinks more profits can be made.
Several of the multinational cosmetics companies have already made this calculation to their advantage. Estée Lauder is always out in force in support of Breast Cancer Month, with its stable of brands launching limited editions to raise money for the charity.
Fellow Lauder brand, MAC Cosmetics’ charitable campaign, the MAC Aids Fund, further highlights the impact a brand can have when it is seen to take a moral stance on a controversial subject. Since its inception in 1994, MAC has managed to raise $70m through its Viva Glam Lipstick/Lipglass campaign. The campaign has continued to gather momentum and MAC has used a number of high profile representatives to drive the movement forward.
L’Oréal’s Kiehl’s has also stepped out in support of the Aids campaign. In New York the brand hosted a two hour shopping event, Shop to Stop Aids on World Aids Day in aid of the Terrence Higgins Trust, a European HIV and Aids charity. With 100% of net profits of sales of its Grapefruit Hand & Body Cleanser going to the cause, Kiehl’s has continued its support of HIV and Aids organisations.
There is plenty of scope for manufacturers to get on board and ride the ethical wave. But companies should exercise caution when advertising ethical credentials to consumers; ethical claims made cynically and without a backdrop of real passion will fall on deaf ears and closed purses.
To take a lesson from the food industry, fast food giant McDonald’s had little success when it tried to peddle salads. Consumers want to see companies acting responsibly, but that shouldn’t extend as far as alienating your core audience. Burger King took a different tack, promoting the quality of its ingredients while unashamedly pushing highly calorific burgers. The road ahead may be bumpy but companies have a lot to lose if they bury their heads in the sand.
Trace and traceability: Sharon Hess, Aveda
Aveda’s Soil to Bottle project is described as a traceability system which is designed to keep track of each step taken in the manufacture of an Aveda product.
Sharon Hess, project manager for Aveda’s aroma group, explains that Aveda has built up a good relationship with its suppliers. “People we work with know the essential oil business inside out and know what we’re looking for.”
In the past four years, the company has managed a fourfold increase in its use of organic essential oils. It continues to look at its current use of non-organic oils and is implementing change to re-source these ingredients through its organic conversion project, which allows farmers to choose whether they wish to convert to organic farming methods. If the supplier decides to convert, the company will continue to buy ingredients from them while they apply for full organic certification.
Hess is clear that while price is a consideration, Aveda is after all a business venture, organic is the priority. “Organic is a chance for us to reduce our environmental footprint,” she says. In the first year of this project, Aveda was able to convert 75% of its essential oils to organic and in fiscal year 2006, more than 80% were converted to organic, the equivalent to 34 tonnes of organic essential oils.
Due to Aveda’s efforts to explain its requirement criteria, suppliers understand the whole process down to logistics and purchase orders. “There is a mutual respect and understanding. We’re very lucky. Trust isn’t a business term, especially when talking about big corporations, but it’s absolutely critical to our success.”
Hess explains that more people are now beginning to understand the concept of biodynamics and Aveda is striving to include more of these essential oils into its products, moving a step beyond organic. However, this presents an even bigger challenge due to the limited availability of such ingredients. “Biodynamics raises the bar on attempts to improve sustainability standards. It takes into account the key issues of waste management, energy consumption, wages, water and so on. Organic is a great model but it’s not the end all.”