R+A+T+M

Reliability and ccuracy) introduction The cosmetics industry plays a significant part in the economy. In this sense, case studies prove to be useful since it provide findings as to the past and current situation of the industry. Moreover, it will present recommendations based upon the perceived findings. This case study can be classified according to the famous (SWOT) Strength, Weaknesses, Opportunities, and Threats format. Strength During the three decades, from 1970 to 1990, the cosmetics industry gained momentum in its extensive development through per capita consumption. Even some segments may vary; the cosmetic industry is near maturity. The current annual retail sales of the industry totaled up to $14.5 billion. The first quarter of this current year has seen a demand beginning to revive and trend is expected to continue well into the following year. Weaknesses Accounting to the past developments, the cosmetics industry has never been always in such a case. The industry is no longer recession-proof and is now bound for depressions and declinations. Actually, the sales in the past year are slow moving because of downed consumer spending. Consumers that time then tend to settle for the less expensive lines. Another setback of the industry is the demand-price ratio. Within the past five years, the prices were invariable and steady but promotion budgets were growing and getting greater than ever. Opportunities In keeping away from a potential head-on competition, a strategy of focusing on special niches proved to be effective especially in the struggle with the industry leaders. This has been a great line of attack adopted by smaller companies in their contest with the market leaders. They survive and exist through specializing in niches, differentiating the product lines, and focusing on market segment. A potential huge market has been spotted on men as they account for 50% of adult population that consume one-fifth of cosmetic sales. The failure of the market leaders in such opportunity provides hint to smaller companies as to what would be the proper and better approach to the market. Furthermore, the senior citizen population is a large growing market segment which should be given focus as the population’s needs were not being met. Threats Notwithstanding the apparent growth of the cosmetic industry during the past four decades, there are currently more than 700 growing cosmetic companies competing in the market. Additionally, there are also market leaders that dominate the cosmetic industry. Consequently, it creates stiff and intensifying competition especially to those smaller companies as market leaders are putting pressure on these smaller cosmetic companies. Conclusion and Recommendations As stated above, the configuration makes it clear enough for the company on where to focus its strategy. That is, the focal point of such strategy should be on the opportunities keeping in mind the threats. The strengths of the industry should also be maintained through the awareness of its weaknesses.

This SWOT structure provided clear and definite way in formulating strategies and approach to the cosmetic market. It gave attentiveness by laying past and current findings that is of great significance to the market approach.

Read more: http://ivythesis.typepad.com/term_paper_topics/2008/02/cosmetics-case.html#ixzz1rbeOTRX8

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Cosmetic Industry Overview for Cosmetic Chemists
by P ERR Y on 01/05/2010

In college, science majors spend their time learning complicated subjects like Calculus, Physics and Chemistry. Figuring out stuff like differential equations

and bond angles of electron orbitals there

isn’t much time or brain power left to learn the more mundane things taught in business classes. But when you get out of school, business subjects are important and you’ve got to take time to learn them. To be the most well-rounded and effective cosmetic chemist, you need to know about the markets for which you’ll be creating products. In this post, we’ll review the overall cosmetic industry to give you a basic understanding of where the money is and what products make the most.

Worldwide Cosmetic Market
If you look at the entire worldwide cosmetic industry, sales reach about $170 Billion dollars a year. It’s distributed pretty uniformly around the world with ~$40 billion in the Americas, ~$60 billion in Europe, ~$60 billion in Australia & Asia, and another $10 billion in Africa. The Western world spends a bit more per person but India and Asia are quickly catching up.

5 Primary Cosmetic Segments
So now that you know where all the money is spent, it’s helpful to know what people are spending their money on. The cosmetic industry (aka beauty industry or personal care industry) can be broken down into 5 segments. Sales are distributed roughly by the %’s given. 1. Hair Care – 20% 2. Skin Care – 27% 3. Fragrance – 10%

4. Make-up – 20% 5. Other – 23% Market researchers like to break these up into even more segments but these 5 cover everything.

Hair Care Market
About 20% of all cosmetic products sold are for the hair. Shampoos make up the vast majority of this market since almost everyone uses shampoo. Other significant market segments include conditioners, styling products, hair color, and relaxers. Currently, the biggest players in this category are Procter & Gamble (Pantene) and L’Oreal.

Skin Care Market
The range of products that are offered for the skin care market are much more diverse than the hair care market. Skin care makes up about 27% of the total cosmetic industry and includes skin moisturizers, cleansers, facial products, antiacne, and anti-aging products. Of all the cosmetics, skin care products can be some of the most expensive with 2 ounces of product routinely selling for >$200. Women do not mind spending big bucks to keep their skin looking young. The biggest companies in this market include Procter & Gamble (Olay) and Unilever (Vaseline).

Make-up Market
The color cosmetic market represents about 15% of the cosmetic industry and includes anything from lipstick to nail polish. Included are things like blush, eyeshadow, foundation, etc. The array of products is vast and the number of color

variations are practically infinite. You can spend a lot of time as a cosmetic chemist working on new shades of familiar products. The market is highly segmented so there isn’t really one dominant player. Maybelline an Clinique are just a couple of significant brands.

Fine Fragrance
This market segment has really taken a hit in the last few years but it still makes up about 10% of the cosmetic industry so some companies are still making money. This is the highest profit segment of the cosmetic industry but consumers are fickle. Only a few brands (like Chanel #5) can last for a long time. Fine fragrances come and go like fashion and companies have to continue to reformulate just to compete.

Other
The “other” category represents 23% of the cosmetic industry and is made up of things like toothpaste, deodorants, sunscreens, depilatories, and other personal care products not yet mentioned. Actually, many of these products could fall under one of the categories already mentioned but the industry likes to keep them separated whenever they do stories on the various markets. The dominant companies are many of the same already mentioned, P&G, L’Oreal, and Unilever. While the cosmetic industry is considered a “mature” industry (that means business people don’t expect much significant growth) it is a pretty reliable industry. No matter what, people want to smell and look good so even when the economy hits a recession people will still buy soap. The recent economic

conditions demonstrate, they do buy less, but they do keep buying.

GROWING HERBAL COSMETICS INDIAN MARKET By:Prof. Ashok Sinha & Prof. Nisha Singh We focused on the positioning of various herbal cosmetic brands in urban India. Many of the world's popular cosmetics brands entered the Indian market in the 1990s as the Indian market opened up to foreign companies. The cosmetics and personal care industry has been growing at an average rate of 15-20 percent for the last few years. Growth has come mainly from the low and medium-priced categories, which account for 90 percent of the cosmetics market in terms of volume. Even though mass-market products still constitute the major portion of the India cosmetics and toiletries market, increased disposable income has led to growth in demand for premium products. Initially these products comprised of brands like:Loreal,Revlon etc to name a few who boasted of superior technology and use of science for beautiful skin and hair. But now there is a reverse trend seen and consumers are fast diverging from these products to premium Herbal/ natural products. We focussed at gauging the consumers' perception of these brands with a special emphasis on finding the most preferred brands and reasons as to why consumers are buying herbal products at all. The respondents were students/working women and men/homemakers between the age of 18 years to 45 years Our focus mainly covers the cosmetic industry of India and emergence of International brands, and consumer awareness towards quality. Cosmetics in India have always been dominated by global brands partly by adoption, partly by franchising and partly by imports. However, the Indian Market was also served by a number of traditional cosmetics, which segment was dominated by the informal or the small industry the value of the output of cosmetic industry is estimated at Rs 12.5 bn in the organized sector the informal sector produces about one-third by value and much higher by volume the total market is of the order of Rs 19 to 20 bn. It has witnessed a growth rate of 12 to 18% annually. Despite the downward trend in the demand of a large number of consumer products, the cosmetic industry continues to grow at a high rate basically because of the entry of the new players and new products and globally known brands. This could also be due to the essentiality function of some of the product such as talcum powder and those having relatively high per unit value. The excise duty on cosmetic to as high as 120%, which was lowered to 30% this has helped to boost demand. Ads by Google

It was found that teenagers are the target to boost demand, teen ager is the target to all brand builder although the major use segment is the adult women. The up-end market is expected to grow at the rate of 15% and might pick up a rate of 20% from the present market value level to Rs 16bn. The introduction of the herbal segment is a relatively new element. It is estimated to have logged a turnover of over Rs 4.0 bn.

It was witnessed that Amway India is emerging as a strong force. With its past history, the talcum powder is the leading segment by volume although in value term it is the third largest product. The total demand of talcum powder is estimated at around 20000 ton per annum. The other two important items where facial creams including fairness creams and lipstick. Revlon has been the dominant producer with the market share of over 20% of the total demand of talcum powder produced by the organized sector. Oriflame follows at second spot with a market share of 10% followed by Maybelline with a relatively small share of 5%. The new entrant is Revlon and Christian Dior which has the potential to emerge as an important player in long run. The talcum powder section has grown steadily at an annual rate of 8 to 10%. Indications are that this rate should be sustained over the next five years. The rural market in particular offers a big potential. The urban market at a penetration co-efficient of 0.6 is fairly high although not at the peak. Only since 1990's and especially after the 2000's other cosmetics entered the market in a big way. Beauty creams have turnover of about 1.50 bn of this Revlon has a share of 20% in the fairness cream market the total market covers cold creams, fairness cream skin toners and moisturizers with an annual turnover of Rs 6.0 bn. We also also found that the major International players are Shahnaz Biotique, Lotus Herbals, Oriflame Herbals. Coming to the color cosmetic which is spreading like a fire from metros and mega cities to smaller cities and towns, from working women to non working women, from the very affluent to the core and even to the lower middle class. It is gaining increasing penetrations into rural areas as well. The value of color cosmetics is relatively low. It is basically due to low income and educational level among the women in India. It is limited both in users spread and product spread. The two leads players in colour cosmetics have been Revlon and Maybelline. The former has enjoyed 12% of the market of the organized brands. At the lower end Oriflame and Amway. Oriflame popular brand might also full in this category it is Amway which is taking on the national competition in the domestic market Revlon cosmetics made losses in 2000-2001 and it is reported that colour cosmetic might not survive. The average annual growth rate of the colour cosmetic market during the last five years is of the order of 16%.

Prof.Ashok Sinha - About the Author:

Prof. Sinha is a sea

ACCURACY The Pharmaceutical Affairs Act defines cosmetics as follows. "Articles with mild action on the human body, which are intended to be applied to the human body through rubbing, sprinkling or other methods, aiming to clean, beautify and increase the attractiveness, alter the appearance or to keep the skin or hair in good condition." Cosmetics are classified into "perfume and eau de cologne" including fragrance, "makeup cosmetics" including foundation creams, lipsticks and eye makeup, "skin care cosmetics" including facial cream, skin lotion, skin milk and cleansing cream, "hair care products" including hair dye, shampoo and hair treatment, and "specialpurpose cosmetics" including sunscreen. Under the Act, soaps are classified as cosmetics.

Scope of coverage 1. Points to Note in Exports to and Sales in Japan (1) Import Regulations and Procedures The following paragraph describes the regulations and procedural requirements at the time of importation. Importers of cosmetics assume all quality assurance and product liability for cosmetics. Consequently, cosmetic articles should not be imported based on marketability only. It is necessary for them to be ready to take full responsibility for imported cosmetics through regulation analysis and safety testing. The importation of cosmetics is subject to the provisions of the Pharmaceutical Affairs Act, and aerosol products are subject to the provisions of the High Pressure Gas Safety Act. The Customs Tariff Act prohibits the importation of fake name brand products and knock-off copies, and such items are subject to confiscation or destruction at customs, based on the provisions of the Customs Act. Importers can even be subject to criminal penalties, including fines and imprisonment. However, the Pharmaceutical Affairs Act imposes no restrictions on substances that are imported into Japan as raw materials for cosmetics and then subjected to domestic processing. ・Pharmaceutical Affairs Act When importing and distributing cosmetics, under the provisions of the revised Pharmaceutical Affairs Act, which went into effect as of June 1, 2009, the importer must obtain a primary distributor's license for cosmetics. The primary distribution business refers to the sale, rental, or lending of manufactured (including delegated to another, but not including manufacturing conducted for another) or imported cosmetics. Consequently, companies that do not possess

their own manufacturing facilities may still obtain a license. The revised Act abolished the importer license classification. Any primary distributor that engages in the final packaging, labeling in the Japanese language, or storage of the imported product, is required to o btain a cosmetic manufacturer's license. Even if the product was labeled overseas in the Japanese language, in addition to obtaining a primary distributor's license, the importer of that product must obtain a cosmetics manufacturer's license (under a classification of "packaging, labeling, and storage only") (excluding the case of manufacturing that is delegated to another licensed manufacturer), because the product must be temporarily stored in a facility that has a manufacturer's license in Japan, and availability of shipment must be judged after the necessary tests. Item Definition HS Code Perfume and eau de cologne Makeup cosmetics Skin care cosmetics Hair care products Special-purpose cosmetics Cosmetic soaps Perfume and eau de cologne Foundation creams, lipsticks, eye makeup, and others Skin lotion, essence, skin milk, cleansing cream, and others Hair dye, shampoo, hair treatment and others Sunscreen, shaving cream and others Soaps for cosmetics

3303 3304.10, 2, 30, 91 3304.99 3305 3307.10, 20, 30, 90 3401.11, 20-010 Cosmetics -Cosmetics-2Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. [Primary distributor's license] Primary distributor's license applications are filed with the competent prefectural pharmaceutical affairs division with jurisdiction over the business office where the marketing supervisor-general serves. Licenses are to be renewed every five years. Applicants must conform to the Good Quality Practice (GQP) standards and Good Vigilance Practice (GVP) standards, and they must appoint a marketing supervisor-general. The Act clearly assigns responsibility to primary distributors to assure post-marketing product quality, and to undertake appropriate actions for safety management. Applicants are required to obtain a business code number in advance. Documents require d for application include a copy of the corporate registration (in the case of a corporation), a list of the segregation of duties, a medical certificate attesting an applicant, documents certifying the qualifications of the marketing supervisor-general and an employment contract, documents verifying the quality management system and the

post-marketing safety management system, a floor plan of the business office and storage facility, and others. Application for a cosmetic manufacturer's license (under the classification of "packaging, labeling, and storage only") requires an outline of the physical facility, a floor plan of the manufacturing facility, documents certifying the qualifications of the responsible engineering manager and an employment contract, a copy of any contract with a testing laboratory (when used). After obtaining the primary distributor's license but before initiating product importation, the primary distributor must file a Notification form of cosmetic manufacture or importation brand name (with the Pharmaceutical and Medical Devices Agency (PMDA)), the Notification form of primary distribution of cosmetics (with the same prefecture as that which has granted the primary distributor's license), and the Import notification form of cosmetics for primary distribution (with the Kanto-Shinetsu Regional Bureau of Health and Welfare, or the Kinki Regional Bureau of Health and Welfare). Either they must attach to those forms an ingredients list from the import supplier manufacturer or, if this list cannot be obtained, a record of the testing and inspection results verifying that the product does not contain any prohibited combination. [Approval for primary distribution by product category] The Cosmetics Standards (Ministerial Notification in September 2000) defines the ingredients that are subject to prohibition or restriction in cosmetics combinations, and those that are allowed in cosmetics combinations in specific ingredient groups. Antiseptics, ultraviolet ray absorbents and tar coloring are subject to a positive list that indicates the maximum mixture quantities. All other ingredients may be used in cosmetics combinations after the

safety verification and selection at their own liability, except those covered by a negative list of combinations that either prohibits or limits them. In this regard, however, all ingredient names must be listed in the labeling. Provided the ingredients do not violate the Cosmetics Standards and all the ingredients are indicated on the labeling, approval for primary distribution by product item is not required. However, products containing amounts of ingredients in excess of the notifiable limit, or new ingredients without a history of prior usage, or which contain non-disclosed ingredients, must obtain primary distribution approval for each product item. [Preparation and maintenance of quality standard statement] Primary distributors are required to properly evaluate the results of production management and the quality control of cosmetics to be actually distributed, decide whether to ship to the market by lot, and prepare the records (quality standards) regarding whether to and where to ship the cosmetics. They must retain these records for five years. In addition, primary distributors of cosmetics must establish a system capable of providing accurate information in response to consumer inquiries, along with a system for handling complaints about product quality and the like as well as product recalls. They shall prepare and retain records required for the foregoing. Furthermore, if the primary distributor becomes aware of a research report indicating that one of the cosmetic product imports may have a harmful effect, the primary distributor must report that fact to the Minister of Health, Labour and Welfare within 30 -Cosmetics-3-

Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. days. ・High Pressure Gas Safety Act Aerosol products (e.g., hair spray) must be separately inspected at the time of importation. If the relevant products meet certain requirements specified under the High Pressure Gas Safety Act, however, they will be excluded from the application of the Act, on condition that the products describe precautions for consumers, but written results of the tests certifying that the products do not fall under the Act must be submitted to customs. (2) Regulations and Procedural Requirements at the Time of Sale The sale of cosmetics is subject to the provisions of the Pharmaceutical Affairs Act, the High Pressure Gas Safety Act, and the Fire Service Act. In addition, cosmetics and cosmetic soaps are subject to the Act against Unjustifiable Premiums and Misleading Representations. Products that infringe on intellectual property rights are regulated by the various intellectual property laws (Trademark Act, Patent Act, Unfair Competition Prevention Act, etc.). Prospective importers must be aware of these considerations, as rights holders may initiate legal action. Besides this, door-to-door sales, mail-order sales, chain sales, and other specified commercial transactions are subject to the provisions of the Act on Specified Commercial Transactions. In addition, as to containers and packaging, labeling may be subject to the provisions of the Law for Promotion of Effective Utilization of Resources, and recycling may be subject to the provisions of the Law for Promotion of Sorted Collection and Recycling of Containers and Packaging (certain small-scale providers are exempted from this regulation).

・Pharmaceutical Affairs Act Under the Act, cosmetics do not require a retailer's license, so anyone may resell them without restriction. But, the sale of defective cosmetics is prohibited, such being defined as follows: products that do not conform to the Cosmetics Standards, products that are unclean, degraded in quality, which contain foreign substances, which are contaminated with disease-causing microorganisms, or which make use of unapproved tar coloring. In addition, the Act specifies labeling items on the containers or packaging of cosmetics, and certain items may not appear in labeling. Products that violate labeling regulations are deemed to be improperly labeled cosmetics, and their sale is prohibited. Advertising and labeling for cosmetics are also regulated under the Act.

・High Pressure Gas Safety Act When selling products in aerosol containers, they must be labeled in accordance with the provisions of the High Pressure Gas Safety Act.

・Fire Service Act Products deemed as being hazardous under the Act are subject to the provisions of the Fire Service Act when stored in amounts in excess of certain levels or when transported over land. They are subject to notification or permission from the mayor of the local municipality. Aerosol products using high concentrations of alcohol may fall under this category.

・Act against Unjustifiable Premiums and Misleading Representations The Act prohibits any form of improper labeling with exaggerated or false labeling that misleads consumers about the nature or quality of a product. The Consumer Affairs Agency can demand documentation of a rational basis for labeling that makes claims of superior quality etc. If the importer or reseller is unable to do so, those claims are considered to be a form of improper labeling. Vague or confusing labeling that makes it difficult to d iscern the actual country of origin is also prohibited as a form of improper labeling. Based on the Act, the industry of cosmetics and cosmetic soaps has adopted the Fair Competition Code Concerning Representations of Cosmetics, the Fair Competition Code Concerning Representations of Cosmetics Soaps, and the -Cosmetics-4Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. Fair Competition Code Concerning Restrictions on Premium Offers in the Cosmetic Soap Industry, under certification by the Consumer Affairs Agency (The jurisdiction of the Act was transferred from the Fa ir Trade Commission to the Consumer Affairs Agency in September 2009). While these are voluntary industry rules, when they are adopted based on the Act, any breach of the Fair Competition Code is deemed to be as a breach of the Act. ・Act on Specific Commercial Transactions The Act on Specified Commercial Transaction was enacted to ensure that specified commercial transactions such as mail-order sales and door-to-door sales of designated products, rights and services, are carried out fairly and in such a

way as to protect ordinary consumers. Commercial transactions specified under the Act include: [1] door-to-door sales, [2] mail-order sales, [3] telemarketing sales, [4] chain sales (Internet marketing and multilevel marketing based on word of mouth), [5] specific continuous service provision transactions, and [6] sales transactions offering business opportunities. Mail-order sales include Internet sales and commercial advertisements through e-mail. In order to provide consumers with accurate information, in mail-order sales, operators are required to list the following information in their advertisements: [1] sale prices, [2] payment period and method, [3] delivery date, [4] clauses related to the return system, [5] name, address and telephone number of operator. The Act also prohibits advertising containing false or exaggerated statements. (3) Contacts of Competent Authorities

Fig. 1 Contacts of competent authorities Related regulations and control Competent agencies Contact/Website Pharmaceutical Affairs Act General Affairs Division, Pharmaceutical and Food Safety Bureau, Ministry of Health, Labour and Welfare (Pharmaceutical Affairs Act in general) TEL: +81-3-5253-1111(Main) http://www.mhlw.go.jp Evaluation and Licensing Division,

Pharmaceutical and Food Safety Bureau, Ministry of Health, Labour and Welfare (Marketing approval procedures) TEL: +81-3-5253-1111(Main) http://www.mhlw.go.jp High Pressure Gas Safety Act Industrial Safety Division, Nuclear and Industrial Safety Agency, Ministry of Economy, Trade and Industry TEL: +81-3501-1511(Main) http://www.nisa.meti.go.jp Fire Service Act Fire and Disaster Management Agency Fire Station having jurisdiction over the address TEL: +81-3-5253-5111(Main) http://www.fdma.go.jp Act against Unjustifiable Premiums and Misleading Representations Representation Division, Consumer Affairs Agency TEL: +81-3-3507-8800(Main) http://www.caa.go.jp Act on Specific Commercial Transactions

Consumer Economic Policy Division, Commerce and Information Policy Bureau, Ministry of Economy, Trade and Industry TEL: +81-3-3501-1511(Main) http://www.meti.go.jp Law for Promotion of Effective Utilization of Resources/Law for Promotion of Sorted Collection and Recycling of Containers and Packaging Recycling Promotion Division, Industrial Science and Technology Policy and Environment Bureau, Ministry of Economy, Trade and Industry TEL: +81-3-3501-1511(Main) http://www.meti.go.jp Office of Recycling Promotion, Policy Planning Division, Waste Management and Recycling Department, Ministry of Environment TEL: +81-3-3581-3351(Main) http://www.env.go.jp 2. Labeling (1) Labeling under Legal Regulations ・Pharmaceutical Affairs Act

When selling cosmetics, the Pharmaceutical Affairs Act requires that the container, packaging, or package inserts of cosmetics be labeled with the specified items so as to ensure appropriate usage and handling, ensure quality, and -Cosmetics-5Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. clarify liability. All must be expressed in the Japanese language and must be clearly and explicitly listed. Labeling with false or potentially misleading expressions, and unapproved claims of effect-efficacy in labeling are prohibited. The items that should be indicated for cosmetics are as follows. [Required labeling items] ・ Name and address of primary distributor (Office location where the marketing supervisor-general serves; in the case of those obtained primary distribution approval for the products manufactured in foreign countries, name and country of foreign preferen tial approval holder, and name and address of nominated primary distributor) ・ Brand name (Name for which notification has been posted for primary distribution) ・ Manufacturing number or code ・ List of ingredients (In principle, all ingredient names shall be listed in the labeling. Names must appear in the Japanese language that is readily understandable, and must normally be listed in descending order by quantity.) ・ Expiration date, for a cosmetic designated by the Minister of Health, Labour and Welfare. ・ Other items specified by the MHLW Ministerial Ordinance ・High Pressure Gas Safety Act and Fire Service Act

The information to appear on the label, such as warnings, cautions, types and quantities of hazardous materials, and the size of the letters and other labeling practices are set for aerosol products and other products deemed hazardous under the High Pressure Gas Safety Act and the Fire Service Act. [Representation example] * Label with white letters on red field

・Law for Promotion of Effective Utilization of Resources Under the Law for Promotion of Sorted Collection and Recycling of Containers and Packaging, as to specific containers and packaging, labeling must be provided, in order to promote sorted collection. When paper or plastic is used as a packaging material for the wrapping of individual product items, a material identifier mark must be displayed in at least one location on the side of the container. ・Voluntary labeling based on provisions of law There is no voluntary labeling based on the provisions of the law for cosmetics. The Japan Cosmetic Industry Association has compiled a Japanese version of the "List of Cosmetic Ingredient Label Names" to be u sed in conjunction with the Pharmaceutical Affairs Act's requirement to list all ingredient names on the labeling. If a new label name needs to be devised, then a request can be filed with the Association. Label names shall be, in principle, translated into Japanese from the International Nomenclature of Cosmetic Ingredients (INCI) names published by the Cosmetic, Toiletry, and Fragrance Association (CTFA) of the United [Representation example]

External packaging Label

* This is combustible product using high-pressure gas. Be sure to observe the following: 1. Do not use near flames or fire. 2. Do not use large amounts in rooms with open flames. 3. The container may burst if exposed to high temperatures. Do not place under direct sunlight or near fires or other locations of temperatures more than 40 4. Do not dispose of in incinerator. 5. Be sure to use completely before disposal. High Pressure Gas: Type of gas used (label name of gas) Keep away from fire and high temperatures -Cosmetics-6Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. States. Contact: Japan Cosmetic Industry Association TEL: +81-3-5472-2530 (2) Labeling under Industry-level Voluntary Restraint ・Fair Competition Codes based on Act against Unjustifiable Premiums and Misleading Representations The Fair Competition Codes establish required labeling items for cosmetics and cosmetic soaps as follows. [Representations of Cosmetics] [1] Product name by type [2] Brand name [3] Name and address of primary distributor [4] Content (weight or capacity) URL: http://www.jcia.org/

[5] Country of origin [6] Manufacturing number or code [7] List of ingredients as required by the Minister of Health, Labour and Welfare [8] Expiration date, for a cosmetic designated by the Minister of Health, Labour and Welfare [9] Precautions on usage or storage, for a cosmetic stipulated under the Enforcement Regulation [10] Information contact [Representations of Cosmetic Soaps] [1] Name and address of primary distributor [2] Brand name [3] The phrase "Soap" [4] List of ingredients as required by the Minister of Health, Labour and Welfare [5] Manufacturing number or code [6] Expiration date, for a designated cosmetic soap [7] For those products manufactured by a frame mixing method, a term to that effect [8] Standard weight per unit [9] Country of origin Contacts: "Fair Competition Code Concerning Representations of Cosmetics" Cosmetic Fair Trade Conference TEL: +81-3-5472-2533 (Main) "Fair Competition Code Concerning Representations of Cosmetics Soaps " Cosmetic Soap Fair Trade Council TEL: +81-3-3271-4301 (Main) ・Voluntary labeling by the Aerosol Industry Association of Japan The Aerosol Industry Association of Japan has established labeling guidelines for aerosol products. These guidelines mandate the following labeling for precautions on usage. [Representation example]

Precautions on usage - Do not place heat-sensitive objects near heating devices (fan heaters), as there is a risk of high temperatures leading to rupturing - To dispose of the product, take it outdoors to a location away from all flames, and press the button until the hissing sound stops, in order to exhaust all the gas. Contact: Aerosol Industry Association of Japan TEL: +81-3-3201-4047 URL: http://www.aiaj.or.jp/ -Cosmetics-7Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. 3. Taxation System (1) Tariff Duties Fig. 2 lists the tariffs imposed on cosmetics. To apply for preferential tariff rates on articles impo rted from countries granted preferential treatment, the importer should submit a certificate of preferential country of origin (Form A) issued by the customs or other issuing agency in the exporting country (not required if the total taxable value of the a rticle does not exceed ¥200,000). For details, contact the Customs and Tariff Bureau, Ministry of Finance. When confirming the tariff classification or applicable tariff rate in advance, it is convenient to use the "advance -counseling program." By making a verbal inquiry to customs, or by means of letter or e-mail, customs will duly respond with the required information. Contact: Customs website http://www.customs.go.jp/english/index.htm Fig. 2 Tariff duties on cosmetics Note 1:Special preferential rate is applicable only for the Least Developed Countries.

Note 2:Normally the order of precedence for application of tariff rates is Preferential, WTO, Temporary, and General, in that order. However, Preferential rates are only eligible when conditions stipulated by law or regulations are met. WTO rates apply when those rates are lower than Temporary or General rates. Refer to "Customs Tariff Schedules of Japan" (by Customs and Tariff Bureau, Ministry of Finance) for a more complete interpretation of the tariff table and for more details on economic partners hip agreements (EPAs) with each country. (2) Consumption Tax (CIF + Tariff duties) × 5% 4. Trade Trends (1) Changes in Imports <Trends in importation by product category> Imports of cosmetics had been steadily growing until 2007, but decreased to ¥178.9 billion in 2008 on a value basis, HS Code. Description Rate of duty General Temporary WTO Preferential Special preferential 3303.00 3304 10 20 30 91

99 3305 10 20 30 90 3307 10 20 30 90 000 010 090 011 012 019 090 010 090 010 090 Perfumes and toilet waters Beauty or make-up preparations and preparations for the care of the skin (other than medicaments), including sunscreen or

suntan preparations; manicure or pedicure preparations Lip make-up preparations Eye make-up preparations Manicure or pedicure preparations Other Powders, whether or not compressed Toilet powders Other Other Creams and other preparations with a basis of oil, fat or wax Foundation creams In liquid form Other Other Preparation for use on the hair Shampoos Preparations for permanent waving or straightening Hair lacquers Other Perfumed hair oil, cream, pomade and other preparations with a basis of oil, fat or wax Other Pre-shave, shaving or after-shaving preparations, personal deodorants , bath preparat i ons , depi l ator i es and other perfumery (excluding articles relevant to other items)

Pre-shave, shaving or after-shave preparations Personal deodorants and antiperspirants Perfumed bath salts and other bath preparations Other 1 Preparations with a basis of oils, fats or waxes 2 Other 5.3% 5.8% 5.8% 6.6% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 6.7% 5.8% 5.8% 5.8% 6.0% Free Free Free Free

Free Free Free Free Free Free 4.8% 3.9% 3.9% 4.8% 4.0% Free Free Free Free Free Free Free Free Free Free Free Free Free Free

Free 3401 11 20 010 Soap; organic surface-active products and preparations for use as soap or washing the skin, in the form of liquid or cream and put up for retail sale For toilet use (including medicated soap) Soap in other forms For toilet use (including medicated soap) 5.5% 5.8% Free Free Free Free -Cosmetics-8Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. 3.6% down from the year before due to the economic stagnation that could be traced to the Lehman Shock in autumn 2008, and to ¥159.1 billion in 2009, 11% down from the year before due to consumers' reticence to buy, such that there were year-on-year declines for two consecutive years. In 2010, imports recovered to the pre-recession 2007 level, at

¥185 billion, 16.3% up from the year before, due to substantial growth in imported hair care products. As in the case of a value basis, imports in 2010 on a volume basis increased to 161,673 tons, 20.3% up from the year before. This significant growth in hair care products is due to the fact that major foreign -affiliated manufacturers transferred their production bases to Thailand and other Asian countries. In 2010, imports of hair care products registered stronger growth than those of skin care cosmetics that had driven the imported cosmetic market in the past. By product category, skin care cosmetics registered ¥60.62 billion, making up 32.8% of all imports, the highest share. The next most prominent product categories are hair care products (¥52.8 billion, 28.5% share), makeup cosmetics (¥26.94 billion, 14.3% share), perfume and eau de cologne (¥21.26 billion, 11.5% share), and special-purpose cosmetics (¥17.97 billion, 12.2% share). Most of the product categories showed an increase of a few percentage points from the year before, whereas hair care products registered a 75% increase from the year before. Fig. 3 Changes in cosmetics imports [Changes in volume imports] Value Volume 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Perfume and eau de cologne 28,175 29,170 26,720 20,788 21,255 4,830 4,825 4,392 3,956 4,162 Makeup cosmetics 33,156 33,206 32,039 27,685 26,487 6,519 6,210 5,956 5,642 5,774 Skin care cosmetics 60,023 68,015 70,979 58,063 60,617 15,982 16,312 18,177 16,738 18,154 [Changes in import values of main product categories]

Hair care products 24,269 28,691 25,037 30,167 52,798 59,001 63,989 57,424 61,096 81,314 Special-purpose cosmetics 19,837 19,837 16,799 16,939 17,965 23,945 23,945 27,467 27,668 31,915 Cosmetic soaps 5,597 6,681 7,358 5,441 5,904 20,566 21,036 20,987 19,331 20,354 Total 171,057 185,600 178,932 159,083 185,025 130,843 136,318 134,403 134,431 161,673 Units: value = ¥ million, volume = tons Source: Trade Statistics (MOF)

Note: Total is not always the simple sum for each column due to rounding. <Import trends by country/region> On a value basis, the leading exporters were France and the U.S.A., which together accounted for 49.8%, almost half of the total, in 2009. In 2010, however, Thailand exceeded the U.S.A. and moved into second place (on a value basis), due to the fact that major foreign-affiliated manufacturers of hair care products transferred their production bases to Thailand and other Asian nations. This is considered to be due to the fact that the world's leading cosmetic companies shifted their production bases to Asian countries where production costs are lower, in response to worldwide economic stagnation. As a result, the EU commanded a 40.2% (on a value basis, 6.1 points down from the year before) of the imported cosmetic market in 2010, whereas Asia registered 38.1% (on a value basis, 8.8 points up from the year before). France has maintained its top position in the three main cosmetic sectors (perfume and eau de cologne, makeup 0 10,000 20,000

30,000 40,000 50,000 60,000 70,000 80,000 2006 2007 2008 2009 2010 （year） （￥million） Skin care cosmetics Makeup cosmetics Hair care products Perfume and eau de cologne 0 50,000 100,000 150,000 200,000 2006 2007 2008 2009 2010 （year） （￥million） 0 60,000 120,000 180,000 （tons）

（value） （volume） -Cosmetics-9Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. cosmetics, and skin care cosmetics), and also the highest total share by nation. In 2010, France's exports of perfume and eau de cologne to Japan increased to ¥12.56 billion (59.1% share), 5.7% up from the year before, while makeup cosmetics decreased 9.4% to ¥9.77 billion (51.3% share), and skin care cosmetics increased 10.8% to ¥24.52 billion (share 40.5%). France accounted for 26.9% of total imports, with an increase of 3.6% to ¥50.25 billion. The U.S.A. exhibited recovery in its leading product categories in 2010. Imports of perfume and eau de cologne registered an increase of 5.1% from the year before to ¥2 billion, while makeup cosmetics increased 7.1% to ¥5.24 billion, skin care cosmetics increased 2.0% to ¥16.43 billion, and hair care products increased 21.5% to ¥3.38 billion. Imports of hair care products from Thailand have grown rapidly, accounting for 73.7% of the tota l and increasing to ¥38.9 billion (2.2 times more than the year before). China stayed in fourth place in terms of total share (7.6%), achieving a two-digit increase of 11.6% from the year before to ¥14.13 billion in 2010. China took first place in imports of special-purpose cosmetics, with an increase of 8.4% from the year before to ¥5.98 billion, while the U.S.A. experienced a decrease of 22.6% from the year before. This reflects an expanding split between the two nations. In addition, China experienced strong growth in makeup cosmetics (6.2% up from the year before, third place), hair care products (28.6% up from the year before, third place), and cosmetic soaps (74.6% up from the year before, fourth place).

Fig. 4 Principal countries/places of origin of cosmetics (total) [Trends in imports of leading exporters] [Shares of imports in 2010] 2006 2007 2008 2009 2010 Value Value Value Value Volume Value Volume Average unit price France 55,594 57,022 57,574 48,485 9,408 50,252 26.9% 9,915 6.1% 5,068 Thailand 12,136 17,762 13,377 20,189 49,689 41,508 22.2% 66,305 40.5% 626 U.S.A. 36,983 38,749 37,101 31,781 18,995 31,967 17.1% 19,708 12.0% 1,622 China 15,317 14,602 13,645 12,665 16,894 14,132 7.6% 21,767 13.3% 649 Korea 3,867 3,660 6,688 7,080 3,699 7,149 3.8% 5,209 3.2% 1,372 Italy 9,092 10,982 9,154 7,109 1,487 6,495 3.5% 1,532 0.9% 4,240 U.K. 6,084 7,418 6,755 4,778 1,410 5,377 2.9% 1,877 1.1% 2,864 Germany 6,572 7,349 7,963 5,866 2,469 5,306 2.8% 2,576 1.6% 2,060 Canada 2,541 2,563 3,682 3,046 2,309 3,377 1.8% 3,190 1.9% 1,059 Spain 2,582 4,017 3,958 2,922 4,721 2,975 1.6% 4,591 2.8% 648 Others 22,295 23,483 21,042 17,172 25,357 18,497 9.9% 27,014 16.5% 685 Total 173,063 187,607 180,940 161,092 136,440 187,035 100.0% 163,683 100.0% 1,143 (EU) 89,345 96,420 93,190 74,586 20,383 75,116 - 21,384 - 3,513 51.6% 51.4% 51.5% 46.3% 14.9% 40.2% - 13.1% - (Asia) 39,274 44,397 42,310 47,133 91,592 71,240 - 115,319 - 618 22.7% 23.7% 23.4% 29.3% 67.1% 38.1% - 70.5% - Units: value = ¥ million, volume = tons Source: Trade Statistics (MOF)

Note: Total is not always the simple sum for each column due to rounding. 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2006 2007 2008 2009 2010 （year） （￥ million） France U.S.A. Thailand China France 26.9% Thailand 22.2% U.S.A. 17.1% China 7.6% Korea 3.8%

others 22.5% -Cosmetics- 10 Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. Perfume and eau de cologne Makeup cosmetics Rank Country Value Share Yearly change Average unit price Country Value Share Yearly change Average unit price 1 France 12,556 59.1% 105.7 5,107 France 9,773 51.3% 90.6 12,315 2 Italy 4,418 20.8% 94.6 5,600 U.S.A. 5,239 27.5% 107.1 5,961 3 U.S.A. 2,005 9.4% 105.1 5,190 China 3,996 21.0% 106.2 2,738 4 Germany 923 4.3% 91.7 3,728 Korea 1,911 10.0% 101.1 3,061 5 U.K. 608 2.9% 91.4 7,879 Taiwan 1,253 6.6% 104.6 964 Skin care cosmetics Hair care products Rank Country Value Share Yearly change

Average unit price Country Value Share Yearly change Average unit price 1 France 24,524 40.5% 110.8 4,876 Thailand 38,901 73.7% 217.5 635 2 U.S.A. 16,428 27.1% 102.0 4,181 U.S.A. 3,384 6.4% 121.5 980 3 U.K. 3,960 6.5% 91.3 3,643 China 2,223 4.2% 128.6 333 4 Korea 3,649 6.0% 101.5 1,752 Spain 2,138 4.0% 118.6 718 5 Germany 2,160 3.6% 110.8 4,345 France 2,003 3.8% 94.2 2,249 Special-purpose cosmetics Cosmetic soaps Rank Country Value Share Yearly change Average unit price Country Value Share Yearly change Average unit price 1 China 5,976 33.3% 108.4 521 Malaysia 2,434 41.2% 105.1 187 2 U.S.A. 3,995 22.2% 77.4 408 U.S.A. 916 15.5% 98.6 828

3 Canada 2,345 13.1% 133.4 784 France 671 11.4% 116.1 1,548 4 Thailand 1,537 8.6% 84.0 651 China 286 4.8% 174.6 296 5 Korea 909 5.1% 375.9 644 Spain 275 4.7% 70.6 184 Units: value = ¥ million, average unit price = ¥ per kg (MOF) Source: Trade Statistics

Fig. 5 shows a detailed breakdown of exporters to Japan. The top spots in face powder, founda tion creams, base creams, skin milk, and other skin care cosmetics are France and the U.S.A., who are becoming more competitive with each other. From 2009 onward, Thailand, China and other Asian nations have been taking the top spots.

Fig. 5 Leading exporters of cosmetics to Japan by subcategory (2010) Total value Share Yearly change 1st 2nd Country Share Yearly change Country Share Yearly change Perfume and eau de cologne 21,255 11.4% 102.2 France 59.1% 105.7 Italy 20.8% 94.6 Makeup cosmetics

Lipsticks 7,440 4.0% 110.6 France 50.6% 116.1 China 16.6% 102.7 Eye makeup 9,145 4.9% 88.5 France 36.2% 76.0 China 22.4% 113.4 Manicure or pedicure 3,310 1.8% 88.7 U.S.A. 32.0% 98.8 Taiwan 19.0% 110.2 Face powder 1,672 0.9% 121.6 U.S.A. 41.2% 181.0 France 30.5% 121.9 Foundation creams 4,920 2.6% 89.2 France 33.4% 79.4 U.S.A. 26.8% 108.5 Skin care cosmetics Base cream 5,580 3.0% 107.2 France 49.9% 127.4 U.S.A. 21.8% 101.7 Skin milk 6,700 3.6% 103.9 U.S.A. 35.9% 100.3 France 35.1% 122.6 Other face cream 23,786 12.7% 106.7 France 41.4% 119.0 U.S.A. 23.5% 107.5 Other skin care cosmetics 24,551 13.1% 101.8 France 38.8% 97.7 U.S.A. 29.4% 98.7 Hair care products Shampoo 20,240 10.8% 175.8 Thailand 80.7% 193.2 U.S.A. 6.7% 126.7 Permanent wave preparation 360 0.2% 420.6 Thailand 43.3% - China 42.3% 414.0 Hair lacquers 71 0.0% 70.2 Korea 53.5% 113.7 U.S.A. 31.3% 42.7 Hair cream, perfume oil 1,630 0.9% 81.4 China 35.8% 144.8 U.S.A. 18.4% 122.8

Other hair care products 30,497 16.3% 185.3 Thailand 72.6% 255.5 U.S.A. 5.6% 120.3 Specialpurpose cosmetics For shaving 1,025 0.5% 229.0 Australia 31.9% 553.1 U.K. 24.1% 511.0 Personal deodorants, etc. 1,723 0.9% 83.8 Thailand 87.1% 83.9 U.S.A. 4.6% 81.7 Bath preparation 3,166 1.7% 102.8 China 69.6% 96.6 Germany 13.6% 121.1 Other 11,717 6.3% 107.6 China 31.8% 117.4 U.S.A. 31.7% 75.9 Cosmetic soaps Solid face soap 4,959 2.7% 108.1 Malaysia 49.0% 104.9 U.S.A. 11.4% 133.4 Other face soap 945 0.5% 110.7 U.S.A. 37.0% 69.3 Thailand 17.2% 187.3 Units: total value = ¥ million Source: Trade Statistics (MOF)

Note: Total is not always the simple sum for each column due to rounding. -Cosmetics- 11 Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. (2) Import Market Share in Japan The domestic cosmetic market posted a significant decrease of 7.8% from the year before to ¥1,390.2 billion in 2009, but showed a slight recovery to ¥1,412 billion, 2.1% up from the year before in 2010. On the other hand, imported cosmetics, which have traditionally been characterized by brand names and high grades, were avoided as luxury goods as

the frugality trend continued during the depression as a result of economic stagnation and the resulting reduction in incomes. For this reason, imported cosmetics registered a decrease of 11.1% from the year before to ¥159.1 billion in 2009, exceeding the percentage fall in domestic cosmetics. In 2010, imported cosmetics generally registered an increase of 16.3% from the year before to ¥185 billion, due to the increase of hair care products being imported from Thailand. Fig. 6 Changes in import market share in Japan 2006 2007 2008 2009 2010 Yearly change Domestic shipments 1,499,725 1,510,696 1,507,105 1,390,243 1,419,957 102.1 Imports 171,057 185,600 178,932 159,083 185,025 116.3 Total market 1,670,782 1,696,296 1,686,037 1,549,326 1,604,982 103.6 Imports' share 10.2% 10.9% 10.6% 10.3% 11.5% [By category] 2007 2008 2009 2010 Yearly change Perfume and eau de cologne Domestic shipments 4,635 4,826 4,060 4,819 118.7 Imports 29,170 26,720 20,788 21,255 102.2 Total market 33,805 31,546 24,848 26,074 104.9 Imports' share 86.3% 84.7% 83.7% 81.5% Makeup cosmetics Domestic shipments 367,094 355,901 301,740 301,372 99.9 Imports 33,206 32,039 27,685 26,487 95.7

Total market 400,300 387,940 329,425 327,859 99.5 Imports' share 8.3% 8.3% 8.4% 8.1% Skin care cosmetics Domestic shipments 650,461 662,338 608,490 636,082 104.5 Imports 68,015 70,979 58,063 60,617 104.4 Total market 718,476 733,317 666,553 696,699 104.5 Imports' share 9.5% 9.7% 8.7% 8.7% Hair care products Domestic shipments 420,161 414,614 412,321 411,773 99.9 Imports 28,691 25,037 30,167 52,798 175.0 Total market 448,852 439,651 442,488 464,571 105.0 Imports' share 6.4% 5.7% 6.8% 11.4% Special-purpose cosmetics Domestic shipments 68,344 69,426 63,633 65,911 103.6 Imports 26,519 24,157 22,381 23,868 106.6 Total market 94,863 93,583 86,014 89,779 104.4 Imports' share 28.0% 25.8% 26.0% 26.6% Units: ¥ million (MOF) Source: Yearbook of Cosmetics Shipment Statistics (METI), Trade Statistics

(3) Changes in Volume of Imports and Backgrounds Around 2007, under relatively good economic conditions, imported cosmetics were strong in terms of brand names and high grade, but these conventional strong points have actually inhibited the consumption of imported products in the face of economic stagnation, and the reduction of consumers' incomes caused by deflation, since the autumn of 2008

onwards. While the domestic cosmetics market is being polarized between high-cost and low-cost zones, imported cosmetics will be dominated by traditional high-grade articles such as perfume and eau de cologne, makeup cosmetics, and skin care cosmetics. On the other hand, imports of low-cost hair care products, special-purpose cosmetics and cosmetic soaps from Asia are increasing. The domestic cosmetics market has various purchase groups and needs that depend on different types of distribution channels; a channel for department stores and cosmetics specialty stores, a self-selection sales channel for mass merchandisers, drugstores and convenience stores, a non-shop channel for door-to-door sales and mailorder, and commercial cosmetic channel for hair care salons. Consequently, it becomes impo rtant to apply sales measures that suit the characteristics and strong points of imported products. -Cosmetics- 12 Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. 5. Domestic Distribution (1) Trade Practice As noted above, cosmetics characterize the different types of distribution channels. The following shows the characteristics of major distribution channels. <Price-maintained merchandise channel> In the price-maintained merchandise channel, a chain store contract with cosmetic specialty stores is concluded to send sales staff and sell cosmetics. Commodities pass to the specialty stores at wholesale through sales subsidiaries of

cosmetics manufacturers. This channel characterizes a slightly high level of normal wholesale rate of about 70%, an incentive (4%-15%) in proportion to sales, an award for excellent stores, and a basic system for sales at nationwide uniform suggested prices. * Price-maintained merchandise is cosmetics that are sold by cosmetics specialty stores. <Self-selection merchandise distribution system> Essentially, self-selection commodities pass to mass merchandisers, drugstores and convenience stores through cosmetics wholesalers (partially direct sales by cosmetic manufacturers). The wholesale rate depends on the sales volume, while the merchandise is sold at a discount at the discretion of the store. Cosmetics sold by mass merchandisers are mainly those manufactured by large companies such as Shiseido, Kanebo, Kose, and Kao. Sales per mass merchandiser are lower than those per department store, but total sales by the merchandisers are higher than those by department stores due to the large number of stores. Cosmetics companies conduct a purchase negotiation with the mass merchandisers' headquarters, support sales for each store, send sales staff, educate the employees of the merchandisers, and provide POP (point of purchase advertising). Drugstores conduct store management and assortment by themselves, have a wide assortment of merchandise for different consumer targets (mainly young women), and discount the cosmetics in the case of bulk purchases from the headquarters and by selfselection sales. In convenience stores, cosmetics sales have traditionally been limited due to the high proportion of male consumers and the low purchase unit price per customer. At present, however, large companies are focusing their efforts on selling

cosmetics through convenience stores, for instance, Shiseido's exclusive merchandise for the convenience stores "Kesho Wakusei" and Kose's exclusive merchandise for Seven Eleven "Sekkisui."

Cosmetics manufacturers Subsidiaries (Branch offices) Cosmetics specialty stores Cosmetics specialty stores Sales staff Consumers Cosmetics manufacturer A Cosmetics manufacturer B Consumers Drugstores Convenience stores Variety shops etc. Cosmetics Mass merchandisers wholesalers -Cosmetics- 13 -

Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. <Department stores> In department stores, the sales staff from the cosmetics manufacturers sell their commodities directly to consumers in most cases. The sales of cosmetics in department stores are very sensitive to effective displays, but a sales quota per square meter is imposed by the department stores. If the quota cannot be accomplished, it will lead to a change in the sales agreement conditions or a pull-out from the stores. <Door-to-door and mail-order sales> Door-to-door sales posted a remarkable growth during the 1960s and 1970s. Door-to-door sales staff visit consumers' homes to present and sell cosmetics. In the past, this type of sales grew on the back of an incentive system for the sales staff, but in recent years has faced an ongoing hostile environment due to the facts that the increase in double-income families also led to a drop in the number of females at home, that the Act on the Protection of Personal Information has been enforced, and that more consumers do not want home visits. Demand for mailorder sales is expanding due to the enhanced convenience of the Internet and cell phones, due to the appearance of mail-order program channels by CS broadcasting, and due to the rapid improvement in the services offered by couriers. In addition to the conventional long-established manufacturers that utilize mail-order sales, newly emerging cosmetics manufacturers that have been in business for around five years are increasing their sales momentum in this market. Their keywords for appealing to consumers characterize new ingredients or functions such as "ozone" and "ocean collagen" rather than "whitening" and "anti-aging."

(2) Domestic Market Situations <Domestic market trends> The Japanese cosmetics market was the world's second largest at ¥1.605 trillion on a market total value basis (including imports) in 2010, behind only the U.S.A. Domestic factory shipments excluding imports stayed in the order of ¥1.4 trillion for the late 1990s to 2004. The market is mature in terms of its sophistication. The shipments topped the ¥1.5 trillion mark in 2005, and were expected to increase steadily. Since the Lehman Shock in the autumn of 2008, the cosmetics market has shrunk in line with the significant slowdown in the domestic e conomy. Domestic shipments fell to ¥1.39 trillion in 2009, 7.8% down from the year before, recovering slightly to ¥1.42 trillion in 2010, or the level existing in 2000. Cosmetics manufacturers Sales staff Cosmetics sales area in department store Consumers Cosmetics manufacturers Door-t o-door sales companies Consumers Catalog

Flier Internet Mail order TV program Magazine and newspaper advertisement Sales staff -Cosmetics- 14 Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. Fig. 7 Changes in cosmetics market scale and share

Japanese women tend to think of cosmetics not as something to cover up skin deficiencies, but rather as skin care cosmetics that make their skin more attractive. Compared with Western women, Japanese women tend to use smaller amounts of makeup and fragrances such as perfume and eau de cologne. The cosmetics market in Japan has been driven by consumer demand for skin care cosmetics. A breakdown of domestic factory shipments by product category

in 2010 shows that skin lotion, facial cream and foam, cleansing cream, essences and other skin care cosmetics made up 43.4% of the total (¥636.1 billion, 4.5% up from the year before). Domestic factory shipments of most skin care cosmetics increased by only a few percentage points in 2010, while sales of male skin care co smetics hit ¥19.4 billion, 20.2% up from the year before, due mainly to younger people having a heightened awareness of the importance of skin care. Domestic factory shipments of hair care products follow those of skin care cosmetics. In 2010, hair care pr oducts made up 28.9% of the total (¥411.8 billion, same as the year before). In particular, shampoo, hair dye, and treatments, the three leading commodities in terms of demand, accounted for about 70% of all hair care products. Makeup cosmetics include foundation creams, lipsticks, and eye makeup. Among these, foundation creams accounted for about 45% of makeup cosmetics. Eye makeup has been in steady demand by younger consumer groups over the last few years. Blusher was often highlighted in fashion magazines in 2010, while cosmetics manufacturers significantly increased the number of commodities. As a result, domestic factory shipments of makeup cosmetics in 2010 reached ¥12.1 billion, up 21.1% from the year before. Perf ume and eau de cologne 1.6% Makeup cosmetics

20.4% Skin care cosmetics 43.4% Hair care products 28.9% Specialpurpose cosmetics 5.6% [Changes in cosmetics market scale]

[Value share by product category] Sources: Yearbook of Cosmetics Shipment Statistics (METI), Trade Statistics (MOF) 1,500 1,511 1,507 1,390 1,420 171 186 179 159 185 0 500 1,000 1,500 2,000 2006 2007 2008 2009 2010 （year） （￥bllion）

Domestic Import -Cosmetics- 15 Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. Fig. 8 Changes in domestic shipments of cosmetics by product category 2008 2009 2010 Items Value Value Value Yearly change Share Volume Yearly change Share Average unit price (1) Perfume and eau de cologne (subtotal) 4,826 4,060 4,819 118.7 0.3% 6,291 135.3 0.2% 766 (2) Hair care products (subtotal) 414,614 412,321 411,773 99.9 29.0% 1,162,272 94.5 44.9% 354 Shampoo 108,813 106,542 105,097 98.6 7.4% 346,130 91.9 13.4% 304 Hair rinse 32,561 32,146 29,158 90.7 2.1% 128,855 73.2 5.0% 226 Hair tonic 19,134 17,317 17,135 98.9 1.2% 22,770 103.4 0.9% 753

Hear treatment 75,605 76,784 81,559 106.2 5.7% 195,996 108.4 7.6% 416 Pomade, hair cream, and hair oil 19,656 16,443 15,233 92.6 1.1% 51,280 93.8 2.0% 297 Liquid and foaming permanent wave compound 16,994 15,991 16,406 102.6 1.2% 48,996 101.1 1.9% 335 Set lotion 6,675 10,065 10,152 100.9 0.7% 29,044 103.1 1.1% 350 Hair spray 23,953 23,685 22,451 94.8 1.6% 59,235 96.5 2.3% 379 Hair dye 95,021 97,888 99,343 101.5 7.0% 249,237 99.5 9.6% 399 Other hair care products 16,202 15,459 15,239 98.6 1.1% 30,729 98.0 1.2% 496 (3) Skin care cosmetics (subtotal) 662,338 608,490 636,082 104.5 44.8% 826,227 107.1 31.9% 770 Facial cream and foam 54,999 51,592 52,002 100.8 3.7% 141,052 93.5 5.5% 369 Cleansing cream 59,672 53,524 54,420 101.7 3.8% 112,150 110.4 4.3% 485 Massage and cold cream 12,233 10,181 10,371 101.9 0.7% 21,132 141.1 0.8% 491 Moisture cream 76,522 71,197 78,119 109.7 5.5% 53,142 118.5 2.1% 1,470 Skin milk 76,693 68,979 70,139 101.7 4.9% 53,710 100.7 2.1% 1,306 Skin lotion 164,241 149,748 153,305 102.4 10.8% 166,755 108.8 6.4% 919 Essence 131,134 116,536 125,065 107.3 8.8% 66,613 113.4 2.6% 1,877 Packs 25,913 23,092 24,196 104.8 1.7% 31,624 104.0 1.2% 765 Male skin care cosmetics 17,600 16,134 19,386 120.2 1.4% 69,909 117.6 2.7% 277 Other skin care cosmetics 43,332 47,508 49,079 103.3 3.5% 110,138 105.7 4.3% 446 (4) Makeup cosmetics

(subtotal) 355,901 301,740 301,372 99.9 21.2% 405,675 102.3 15.7% 743 Foundation creams 160,240 134,793 135,169 100.3 9.5% 120,855 105.7 4.7% 1,118 Face powder 23,671 20,617 21,377 103.7 1.5% 15,015 108.8 0.6% 1,424 Lipsticks 41,459 35,470 33,863 95.5 2.4% 44,622 94.8 1.7% 759 Lip balm 14,892 9,198 8,699 94.6 0.6% 45,629 97.9 1.8% 191 Blusher 12,392 10,016 12,126 121.1 0.9% 15,072 122.9 0.6% 805 Eye makeup 45,888 41,404 41,002 99.0 2.9% 64,366 102.3 2.5% 637 Eyebrow pencil, eyelashes 44,143 39,320 38,432 97.7 2.7% 65,486 103.2 2.5% 587 Nail makeup (incl. nail-polish remover) 8,757 7,611 6,652 87.4 0.5% 29,319 93.5 1.1% 227 Other makeup cosmetics 4,459 3,310 4,051 122.4 0.3% 5,311 113.3 0.2% 763 (5) Special-purpose cosmetics (subtotal) 69,426 63,633 65,911 103.6 4.6% 185,824 108.8 7.2% 355 Sunscreen/suntan cosmetics 32,850 28,894 31,961 110.6 2.3% 46,510 112.8 1.8% 687 Shaving and bath cosmetics 9,515 11,955 10,046 84.0 0.7% 41,394 94.1 1.6% 243 Other special-purpose cosmetics 27,061 22,784 23,903 104.9 1.7% 97,921 114.4 3.8% 244

Cosmetics: Total 1,507,105 1,390,243 1,419,957 102.1 100.0% 2,586,288 100.5 100.0% 549 Units: value = ¥ million, volume = 1,000 units, average unit price = ¥ per unit Cosmetics Shipment Statistics (METI) Note: Total is not always the simple sum for each column due to rounding. Source: Yearbook of

[Progression of price reduction] In 2010, the cosmetics market was characterized by ever-lower prices as a result of economic stagnation and the resulting deflation and reduction in incomes in the self-selection sales channels such as mass merchandisers and drugstores. Consequently, Shiseido, Kanebo, Kose, and other major cosmetics manufacturers entered the low-cost skin care cosmetics market. "Chifure" and "Hada Labo (Rohto Pharmaceutical)," which focus on low-cost cosmetics in the same channel, started to sell new commodities. The cosmetics market is experiencing fiercer competition among these players. In particular, the biggest cosmetics company in Japan, Shiseido, has rolled out its "Senka" mainly in drugstores where it has lagged behind in selling low-cost products costing less than 1,000 yen, focusing its efforts on sales promotion in the low-cost market with huge promotion budgets. -Cosmetics- 16 Guidebook for Export to Japan 2011 Copyright (C) 2011 JETRO. All rights reserved. [New entry and another industries' involvement] Cosmetic commodities basically have a low cost percentage (the raw material constituent of the price is said to be about 20%) and a large margin of profit. Consequently, other industries have often entered the cosmetics market. Fuji

Film launched "Asterisk" cosmetics in 2008, and Nichirei started to sell "SYLVAN" skin care products in 2009, followed by the "NANAROBE" cosmetics made by Combi, a baby item maker. Furthermore, Asahi Beer and Choya, major names in the brewing industry, have both started their own cosmetics businesses. [Functionality cosmetics] With higher demand for effect, efficacy and functionality of cosmetics in recent years, the words "skinwhitening," "anti-aging," and "solution for sensitive skin" have become keywords. Anti-aging cosmetics, in general, were developed to improve certain symptoms such as age spots and wrinkles. In addition to normal skin care ingredients, natural ingredients or various ingredients such as hyaluronan and royal jelly are being used as cosmetics ingredients. The main commodities include Shiseido's "ACTEAHEART," which is focused on women aged 50 to 59, Kao's "GRACE SOFINA," Kanebo's "EVITA," Shiseido's "BENEFIQUE" enhancing moisture effectiveness, and Kanebo's "TWANY." The market for these cosmetics is growing. [Natural cosmetics] Natural cosmetics for sensitive skins, called Natural Cosme or Organic Cosme, have seen a steady increase in demand in recent years. These natural cosmetics are demanded mainly by consumers suffering from sensitive skin as well as by those desiring skin- and environment-friendly cosmetics. The development of natural cosmetics was promoted based on the concepts that chemical constituents should be reduced or eliminated, that only natural or plant ingredients should be used, and that the cosmetics should contain ingredients that protect the skin from external

irritants. More recently, cosmetics manufacturers have been focusing on cosmetics that contain herbal or natural ingredients with low immediate effectiveness but without any side effects. Yuuka Co., Ltd., which started its business in 2003, posted sales of ¥10 billion despite offering only one commodity, namely its "CHA NO SHIZUKU" facial soap. [Organic certification] Currently, organic certifications in Japan include France's "ECOCERT" (started in Japan in 2009) and Germany's "BDIH" (started in Japan in 2011). Organic-certified cosmetics are imported into Japan mainly from France, followed by Germany. At present, Japan has no legal standards to certify "organic cosmetics," but certain NPOs and private NGOs started working toward a certification system in 2007. These organizations have their own rigorous certification standards from a standpoint of consumers for organic certification (At this time, however, no commodities have been formally certified). In Japan, the "Japan Organic Cosmetics Organization" and the "Japan Organic Cosmetics Association" promote themselves as certification bodies. [Original equipment manufacturing (OEM) of cosmetics] In the cosmetics market, there is a wide variety of needs, which depend on the price band, distributi on channel, and item. Various commodities are offered on the market in response to these needs. Other industries that support new trends such as functionality and organic cosmetics have been entering the cosmetics market. For this reason, it has become difficult for a single cosmetics manufacturer to develop and manufacture every commodity. Under these

circumstances, the need for the original equipment manufacturing (OEM) of cosmetics has been increasing in recent years. The need to manufacture cosmetics on a consignment basis are oriented to the capabilities of manufacturing, technology and research & development that offer optimum equipment, stable supply, and the lowest costs. The most important requirement of an OEM manufacturer is to deliver a commodity on time despite short lead times, while maintaining its high quality and to offer lower production costs than in consignors. More recently, some cosmetics OEM manufacturers have been developing exclusive raw materials that can only be used by consignors, in order to

THEORITICAL CONTRIBUTION
SELF-REGULATION IN THE COSMETIC INDUSTRY: A NECESSARY REALITY OR A COSMETIC ILLUSION?
Casey Mee Lee Daum Class of 2006 May 2006 Food & Drug Law: This paper is submitted in satisfaction of the course requirement and the third year written work requirement.

ABSTRACT
The 1938 Food, Drug, and Cosmetic Act brought the cosmetic industry under the regulatory jurisdiction of the FDA. However, the confluence of federal administrative budgetary constraints, historical conditions of the cosmetic industry‟s development, and pragmatic policy considerations has fostered a unique regulatory regime. The FDA has come to rely heavily on the cosmetic industry to regulate itself in order to ensure consumer safety. Recent criticisms allege that this system of self-regulation is ineffective, inefficient, and/or inappropriate. This paper will situate these criticisms within their various contexts – the historical, social, and administrative realities which define and constrain potential regulatory approaches – in order to assess the propriety of the current schema of cosmetic industry self-regulation. I. INTRODUCTION “But our desire for beauty is likely to outlast its object because, as Kant once observed, unlike all other pleasures, the pleasure we take in beauty is inexhaustible.”[1]

The pursuit of beauty as achieved through cosmetics is a virtually timeless and universally enduring endeavor. For centuries women have utilized cosmetics to enhance or alter physical appearance, negotiate conceptions of femininity, combat external manifestations of aging, challenge societal gender norms, assert social status, and so on. For, “the urge to decorate ourselves is one of the most fundamental instincts in human nature,” and the act of acceding to such an urge can entail profound symbolic messages and societal consequences according to social context.[2] The long history of cosmetics usage can be demonstrated by the fact that earliest archaelogical indications of cosmetics date back to 10,000 B.C.[3] Now, centuries later, we inhabit a societal context which has fostered and maintained the ascendency of the cosmetic industry – a context of increasing globalization, rampant consumerism, technological sophistication, lengthened life expectancy, and societal preoccupation with aesthetics and youthful image. The president of the Cosmetic, Toiletry, and Fragrance Association (CTFA) notes the wide reach of the industry and its potential for seemingly limitless expansion: “In an era of globalization, we are truly one of the world‟s most global industries. Our products and our innovation know no boundaries. Whether it‟s Bangkok or Beijing, Baton Rouge or Bagdad, the products that we make are the products that women and families use every single day.”[4] The cosmetic industry today is a $29 billion business whose aggressive marketing and advertising efforts have forged a powerful trajectory of continued growth.[5] While the 1938 Food, Drug, and Cosmetic Act provisions granted the FDA de jure regulatory authority in the cosmetic arena, industry developments and FDA budgetary limitations since the 1960s or so have resulted in a de facto regulatory regime of fairly minimal FDA regulation of the cosmetic industry and extensive industry efforts at voluntary self-regulation. This regime of voluntary self-regulation has recently been criticized by groups such as the Environmental Working Group as ineffective and inadequate for the protection of consumer safety. This paper will examine the current framework of limited FDA regulation and extensive efforts at industry self-regulation in order to determine whether such framework is a necessary and effective reality or only an illusory form of regulation in need of replacement or change. This debate must be contextualized in order to be properly addressed, taking into account: the societal context of cosmetic usage, industry realities, pragmatic limitations on regulatory possibilities, and theoretical bases for administrative regimes.

II. STATUTORY FRAMEWORK: FDA REGULATION OF COSMETICS
“In regulating cosmetics, the agency functions like a highway patrolman.... FDA regulation of cosmetics is entirely ex post.”[6] Most citizens likely believe, probably vaguely but with conviction, that the FDA engages in expansive direct regulation of the detailed workings of the cosmetic industry. In fact, the first Food and Drug Act in 1906 did not even include cosmetics within its purview – it was not until the 1938 Act that cosmetics came under FDA regulatory authority. Contrary to popular belief, FDA regulation under the 1938 Act has primarily been limited to regulation of cosmetic products after their release into the marketplace; in other words, despite popular understanding of “the mighty FDA [as] a powerful organisation,” “neither products or ingredients are reviewed or approved before they are sold to the public.”[7] This ex post regulation of cosmetics involves a process by which the FDA “functions like a highway patrolman” – “its inspectors look out for products that are dangerous to health, about which it can, like a highway patrol man, do something.... manufacturers routinely do [pre-market] testing, but that is not because FDA demands it.”[8] In place of extensive pre-marketplace regulation, the FDA has a long history of reliance on the cosmetic industry‟s engagement in voluntary self-regulation.

The Federal Food and Drugs Act of 1906
The Federal Food and Drugs Act of 1906, “the progenitor of today‟s regulatory system,” did not include cosmetics within its regulatory scope. This exclusion created a federal regulatory gap in the area of cosmetics; this gap was at the time filled by the U.S. Post Office‟s enforcement of the postal fraud statutes and the Federal Trade Commission‟s enforcement of the Federal Trade Commission Act.[9] The exclusion of cosmetics from the 1906 Act likely occurred because of politics: “in 1906 the beauty industry was considered so inconsequential that its inclusion would have lowered the tone of the legislation. Also, the beauty industry affected only women. And women couldn‟t vote.”[10] In fact, as a general matter, “because „only‟ women used beauty aids, cosmetics and their impact on the economy have been almost wholly ignored in historical analyses about consumption.”[11]While the undeniable reality of women‟s political impotence in 1906 surely constituted a major factor in the exclusion of cosmetics from the 1906Act, the mere fact of market size also played a role. For, “according to manufacturing census data on toilet items, with which cosmetics were included... sales of cosmetics in 1900 stood at about $100,000.”[12]However, beginning around 1900, the cosmetic industry emerged and rapidly expanded, as “women‟s growing interest in beauty products coincided with their new sense of identity as consumers.”[13] By around the mid-1920s, retail cosmetics sales were estimated at about $125,000,000 per year[14] and about $150,000,000 in 1940.[15]

The federal regulatory gap created by the 1906 Act‟s exclusion of cosmetics grew in significance as the industry grew in size during the early 20th century. This gap was quickly felt by “the very agency charged with enforcement” of the Act, the Bureau of Chemistry: “In annual reports as early as 1918, the bureau bemoaned both a lack of funding and a lack of true protection for consumers. Many consumers assumed protection where none existed, unconsciously expanding the power of the law and the enforcement ability of the bureau to protect them.”[16] The disparity between consumers‟ assumptions and regulatory reality became dangerous when cosmetic products began harming consumers, and “by the 1930s, the industry was getting away with murder”: A fifty-two-year-old woman was fatally poisoned by Lash-Lure, a mascara substitute. Koremlu, a depilatory made with rat poison, crippled scores of women. Cuticle removers removed fingernails and fingertips along with cuticles. Acetone, carbolic acid, coal-tar dyes, formaldehyde, and mercury were common ingredients.... In 1933, the FDA put together its „Chamber of Horrors,‟ an exhibit intended to pump up support for the Tugwell Bill, an amendment to the 1906 act that would have given FDA jurisdiction over the beauty industry.... The shock tactics got publicity, but didn‟t get the bill passed.... The beauty industry had lobbied aggressively against the bill, arguing that factory inspection would reveal trade secrets and ingredient names would only confuse women...[17] Many point out that a historical pattern of tragedy and its attendant publicity provided the political impetus and momentum for legislative change in the form of increased federal regulation of cosmetic products. For example, one writer argues that “some well-publicized incidents caused by unregulated products, particularly cosmetics, spurred consumer activism in the years from 1900 to 1945.... It was grassroots political activism, combined with the power of personal tragic stories, I argue, that ultimately challenged, and changed, national law culminating in the 1938 Food, Drug, and Cosmetic Act.”[18] A notable player in this consumer activism was M.C. Phillips and her 1934 report Skin Deep – an “expose of the beauty industry that did much to whip up the demand for cosmetics regulation”; through this expose, Phillips “denounced the „cosmetics racket‟ for selling illusions, and she claimed women‟s right, as voters and taxpayers, to safe, honest cosmetics.”[19]

The 1938 Food, Drug, and Cosmetic Act
The 1938 Food, Drug, and Cosmetic Act provided the first authority for the FDA to regulate the cosmetic industry. In fact, a major purpose of this Act was the regulation of cosmetics in response to some early twentieth century tragedies involving unsafe cosmetic products.[20] The major provisions of the 1938 Act regarding FDA regulation of cosmetics involve adulteration and misbranding of cosmetics. These provisions are as follows: § 361. Adulterated cosmetics. A cosmetic shall be deemed to be adulterated-(a) If it bears or contains any poisonous or deleterious substance which may render it injurious to users under the conditions of use prescribed in the labeling thereof, or under such conditions of use as are customary or usual, except that this provision shall not apply to coal-tar hair dye, the label of which bears the following legend conspicuously displayed thereon: "Caution--This product contains ingredients which may cause skin irritation on certain individuals and a preliminary test according to accompanying directions should first be made. This product must not be used for dyeing the eyelashes or eyebrows; to do so may cause blindness", and the labeling of which bears adequate directions for such preliminary testing. For the purposes of this paragraph and paragraph (e) the term "hair dye" shall not include eyelash dyes or eyebrow dyes. (b) If it consists in whole or in part of any filthy, putrid, or decomposed substance. (c) If it has been prepared, packed, or held under insanitary conditions whereby it may have become contaminated with filth, or whereby it may have been rendered injurious to health. (d) If its container is composed in whole or in part, of any poisonous or deleterious substance which may render the contents injurious to health. (e) If it is not a hair dye and it is, or it bears or contains, a color additive which is unsafe within the meaning of section 721(a).[21] § 362. Misbranded cosmetics. A cosmetic shall be deemed to be misbranded-(a) If its labeling is false or misleading in any particular. (b) If in package form unless it bears a label containing (1) the name and place of business of the manufacturer, packer, or distributor; and (2) an accurate statement of the quantity of the contents in terms of weight, measure, or numerical count: Provided, That under clause (2) of this paragraph reasonable variations shall be permitted, and exemptions as to small packages shall be established, by regulations prescribed by the Secretary. (c) If any word, statement, or other information required by or under authority of this Act to appear on the label or labeling is not prominently placed thereon with such conspicuousness (as compared with other words, statements, designs, or devices, in the labeling) and in such terms as to render it likely to be read and understood by the ordinary individual under customary conditions of purchase and use. (d) If its container is so made, formed, or filled as to be misleading. (e) If it is a color additive, unless its packaging and labeling are in conformity with such packaging and labeling requirements, applicable to such color additive, as may be contained in regulations issued under section 721. This

paragraph shall not apply to packages of color additives which, with respect to their use for cosmetics, are marketed and intended for use only in or on hair dyes (as defined in the last sentence of section 601(a). (f) If its packaging or labeling is in violation of an applicable regulation issued pursuant to section 3 or 4 of the Poison Prevention Packaging Act of 1970.[22] § 363. Regulations making exemptions. The Secretary shall promulgate regulations exempting from any labeling requirement of this Act cosmetics which are, in accordance with the practice of the trade, to be processed, labeled, or repacked in substantial quantities at establishments other than those where originally processed or packed, on condition that such cosmetics are not adulterated or misbranded under the provisions of this Act upon removal from such processing, labeling, or repacking establishment.[23] Cosmetic products are also considered misbranded under the 1938 Act if they fail to comply with the ingredient declaration provisions of the Fair Packaging and Labeling Act, for “the ingredient list on a cosmetic container is the only place where a consumer can readily find out the truth about what he or she is buying.”[24] Thus, retail sale cosmetic labeling must contain a conspicuous ingredient declaration which lists ingredients in descending order of predominance, according to 21 CFR 701.3. The FDA has promulgated specific regulations regarding adulteration, misbranding, and voluntary registration. The legislative history for the 1938 Act does not indicate any legislative intent to require “premarket testing, premarket notification, premarket approval, or any other form of listing or registration” for cosmetic ingredients or final products.[25]

History of FDA Reliance on Industry Self-Regulation
The early years of 1938 Act enforcement manifested a spirit of collaboration among the FDA and various industry organizations which would endure and come to characterize the current regulatory framework: “What emerged in the first years of enforcement was a loose collaboration between physicians, manufacturers, and the FDA.... problems continued to crop up, but the FDA and manufacturers responded much more quickly than previously.... The cooperation of the [Toilet Goods Association] and other food, drug, and cosmetic associations was, some felt, indicative of the broad support the new law enjoyed.”[26] In fact, despite earlier (and possibly more recent or enduring) indications of potential industry aversion to regulation, it seemed that at least some major cosmetic industry players and organizations were in support of the 1938 Act at its time of enactment; although this support perhaps was based upon the Act‟s minimal pre-market safety regulation requirements. The early regulatory regime in a way bifurcated industry attitudes towards cooperation with the FDA: in general, more prominent cosmetic empires with more established reputations were more cooperative as compared to smaller, less reputable operations. FDA Chief Walter Campbell wrote in January 1940: „Really, the big cosmetic houses aren‟t sorry that the regulation has come.... One spokesman for the industry said that they realized for some time that they were being driven too far by the „lunatic fringe.‟ When some fly-by-night put out a paste and promised that one application would make a hag into a candidate for the front row of the chorus, more reputable houses felt pushed into making some assertions or suggestions which were on the inflated side.‟[27] The 1938 Act, and particularly the early era of its enforcement, was aimed at improving consumer safety across the industry by limiting the assertions and actions of both larger and smaller cosmetic firms. In these early years of regulation, the pervasive spirit of collaboration between the FDA and the industry also encompassed consumers and their physicians: “The FDA... relied in no small measure on the American public and physicians to alert the agency about possible problem products.” Theodore Klumpp, Chief of the FDA Drug Division, addressed consumers and physicians in 1940: “„Congress had not provided us with facilities nor the personnel to make clinical tests of drugs, devices or cosmetics, ourselves.... We are dependent upon the reports of your experiences.‟”[28] This early history of across-the-board and comprehensive collaboration paved the way for the modern regime of voluntary industry self-regulation and cooperation with the FDA. The 1938 Act does not grant the FDA authorization to require registration of cosmetic manufacturers, ingredient listing submission, or submission of pre-market information or safety substantiation for cosmetic products. The FDA website explicitly defines the limits of FDA authority over cosmetics and affirms the important role of the industry in assuming responsibility for safety in the face of these limitations. The website section entitled “FDA Authority Over Cosmetics” prominently features two subsections which plainly declare the respective roles of the FDA and the industry: Does FDA approve cosmetics before they go on the market? FDA‟s legal authority over cosmetics is different from other products regulated by the agency.... Cosmetic products and ingredients are not subject to FDA premarket approval authority, with the exception of color additives. However, FDA may pursue enforcement action against violative products, or against firms or individuals who violate the law.

Who is Responsible for substantiating the safety of cosmetics? Cosmetic firms are responsible for substantiating the safety of their products and ingredients before marketing. Failure to adequately substantiate the safety of a cosmetic product or its ingredients prior to marketing causes the product to be misbranded unless the following warning statement appears...[29] The FDA‟s establishment in 1971 and 1972 via regulations of a three-part voluntary program for the submission by manufacturers of establishment and ingredient information occurred at the request of the CTFA. This voluntary program initially included: 1) registration of cosmetic establishments (21 C.F.R. Part 710), 2) voluntary filing of cosmetic product ingredient statements (21 C.F.R. Part 720), and 3) voluntary filing of adverse reaction reports (21 C.F.R. Part 730). The third part of the program was withdrawn in 1997. Shortly after the voluntary program began, former FDA Commissioner Alexander Schmidt commented on the industry‟s successful participation: “„I know of no other industry which has a better record of voluntary accomplishment.‟”[30] When in 1998 the FDA suspended the establishment registration and ingredient listing programs because of severe budgetary constraints, the CTFA helped to rescue the programs by successfully lobbying Congress to “restore adequate funds for a credible cosmetic regulatory program.”[31] The FDA website provides information and instructions about the voluntary program in a straightforward style which signals to the industry both the “do it yourself” nature of the regulatory regime and the mutually beneficial (to both FDA and the industry) importance of industry participation in the program: The Voluntary Cosmetic Registration Program is an FDA post-market reporting system for use by manufacturers, packers, and distributors of cosmetic products that are in commercial distribution in the United States.... The VCRP helps FDA in its mission to protect consumers, while also helping cosmetic manufacturers and distributors make informed decisions. The greater the participation by the cosmetic industry, the better this program works.[32] The “How to Participate” section of the webpage employs clear and accessible, non-legal, non-statutory style of language to delineate the two simple voluntary steps for cosmetic manufacturers: 1) Registering cosmetic manufacturing establishments. Cosmetic manufacturers or packers whose products are in commercial distribution in the United States should register their establishments, using a separate Form FDA 2511 for each manufacturing location. Only manufacturers and packers should register, not distributors. FDA assigns a registration number to each manufacturing establishment registered and sends you a receipt. 2) Filing Cosmetic Product Ingredient Statements (CPIS). A cosmetic manufacturer, packer, or distributor should file a statement for each product the firm has entered into commercial distribution in the United States. With the distributor‟s permission, a private labeler or packer also may file these forms. Use a separate Form FDA 2512 for each formulation.[33] The website then goes on to explicitly point out the benefits to all – industry participants, FDA, and consumers – of industry participation in the program: VCRP participation enables FDA to easily and quickly provide manufacturers with important information about cosmetic ingredients, and the VCRP program enables safety evaluation of cosmetic ingredients by the CIR.[34] FDA utilizes this website to emphasize the voluntary nature of this program, the need for ensuring consumer safety, and the cosmetic industry‟s important responsibility to self-regulate and self-police in the face of minimal FDA regulatory authority and capacity: “The VCRP is not a cosmetic approval program. Cosmetics are not subject to FDA premarket approval or mandatory establishment registration or ingredient reporting. It is the firm‟s responsibility to assure that its cosmetic products and ingredients are safe and properly labeled, in full compliance with the law.”[35] The VCRP provides a nexus for informational flow between the FDA and the industry, and thus its effectiveness depends upon the percentage of industry participation. Currently only about 35% of eligible companies in the industry participate in the program; the FDA would prefer a higher participation rate.[36] A recurring safety issue in cosmetic regulation history is the distinction between drugs and cosmetics. The Drug Amendments of 1962 strengthened the new drug provisions of the 1938 Act, making the distinction between a drug and a cosmetic very important.[37] The diverse outcomes of 1960s cases regarding “wrinkle remover” products claims established what would be an enduring difficulty in differentiating between drug and cosmetic claims in cosmetic labeling.[38] Further difficulties in this area arose in the 1980s with the emergence of new, more technologically advanced skin care products. FDA regulatory letters alleging that the advanced claims made by these skin care products were in fact illegal new drugs were ultimately resolved through industry adjustments of marketing claims. The blurry distinction between cosmetics and drugs resurfaced in the 1990s with the popularity of alpha hydroxy acids products.[39] Thus, it appears that inevitably “this will remain an area of contention for years to come.”[40]

The Color Additive Amendments of 1960 constitute the only legislative amendments to the cosmetic provisions of the 1938 Act. Congressional consideration of additional legislation has never resulted in new legislative authority for cosmetic regulation, as “there has been no credible evidence that existing cosmetic ingredients and products pose a significant health hazard to consumers.”[41] For example, 1988 House hearings conducted by Representative Ron Wyden regarding the safety of cosmetic ingredients and products did not result in additional legislation; the proposed legislation included a pre-market testing requirement, increased FDA access to industry data regarding safety, mandatory registration of establishments, products, and ingredients, and mandatory ingredient listing for professional products. CTFA‟s vigorous defense of the industry‟s safety record constituted a critical focal point of these hearings. CTFA responded to allegations of toxic chemicals in cosmetics by the National Institute of Occupational Safety and Health with a statement that these chemicals are not in fact toxic as used in cosmetics and in fact are commonly used in various other consumer products.[42] Overall, CTFA‟s response to criticisms made of the industry during the hearings focused on “three major points: (1) cosmetics are safe; (2) the industry's voluntary programs work; and (3) FDA has existing and adequate authority to act if deemed necessary.”[43] The strong defense of the industry by CTFA in these hearings is emblematic of the prevailing regulatory regime founded upon industry safety assurance via voluntary self-regulation. This regime will likely endure, for “as long as the combined efforts of FDA and CTFA do in fact protect consumers from significant health hazards and assure the public of adequate information about cosmetic products in the marketplace, there will be no justification for new cosmetic legislation in the future.”[44]

III. REGULATORY REALITY: COSMETIC INDUSTRY SELF-REGULATION
“Cosmetics are among the safest of all consumer products. Their continued safety is ensured by ongoing industry voluntary programs, as well as by ample FDA authority to regulate.”[45] The Cosmetic, Toiletry, and Fragrance Association maintains a website entitled “Cosmetics Are Safe”[46] which emphasizes both FDA regulatory authority and industry self-regulation in order to diffuse any consumer concerns about the safety of cosmetic products, particularly in light of recent criticisms. The website states: “The FDA has the legal authority to regulate the safety of cosmetic products; however, it has comparatively little need to use its authority because cosmetics are composed of safe ingredients and because, when necessary, the cosmetic industry has acted voluntarily to prevent safety problems.”[47] Glossing over the details of precisely what forms of legal regulatory authority the FDA specifically wields, this CTFA-sponsored website statement instead emphasizes voluntary industry efforts to ensure safety. In so doing, this statement aptly encapsulates the essence of the current regime of extensive industry self-regulation. This spirit of industry self-sufficiency perhaps grew out of the historical conditions of the industry‟s emergence. The beauty industry began as a consumer empire built by women for women – an industry whose foundational forerunners embraced a spirit of determined self-sufficient entrepreneurship and a fiercely consumer-oriented retail ethic.

Industry Emergence
While “nineteenth-century American women inherited a tradition of cosmetic preparation, which freely borrowed from a variety of sources and reached back through the centuries,”[48] traces of the modern cosmetic industry as we know it today began to emerge around the end of the nineteenth century. The commercial manufacture of cosmetic products at this time occurred in diverse forms, but primarily on a fairly local or regional level: the “more commonplace were the hundreds of local druggists and hairdressers who compounded their own powders and creams.... in the late nineteenth century, cosmetics manufactured solely for a local or regional market far outnumbered those that achieved national distribution.”[49] Focused predominantly on limited regional markets, cosmetic manufacturing “remained a small-scale business, highly entrepreneurial and without a distinctive identity.... until the years immediately before and after World War I... [when] the industry experienced substantial growth.”[50] The localized, entrepreneurial self-sufficiency of this nascent phase of cosmetic production can perhaps be viewed as foreshadowing the self-sufficiency of the cosmetic industry in the modern regulatory arena. Around 1900, as “women‟s growing interest in beauty products coincided with their new sense of identity as consumers,” “a new, self-conscious notion of the woman consumer emerged”[51] and the cosmetic industry evolved in tandem with this new woman consumer – a female consumer who was beginning to find herself freed from the constraints of Victorian era anti-cosmetics attitudes. Department of Commerce statistics indicate an extraordinary increase in the number of firms manufacturing perfume and toilet goods around 1900: from 67 firms in 1880 to 262 firms in 1900.[52] Naturally, women‟s societal context has intimately influenced the evolution of the cosmetic industry over time, as the industry has continued to respond to women‟s needs and desires by creating the appropriate products and marketing strategies. At this important juncture, some of the most influential and enduring industry players emerged and were critical in shaping the future of the industry: “At least five enduring companies got their American start in the first fifteen years of the twentieth century. Each company took

advantage of women‟s (and society‟s) changing perceptions and conceptions about beauty. These companies effectively parlayed a standardized, homogenized perception of beauty into a multimillion dollar business.”[53] Many of the pioneers of this stage of industry formation were women who were able to create new opportunities both for the industry and for their gender: ...this business for women was largely built by women. In the early stages of the developing cosmetics industry, from the 1890s to the 1920s, women formulated and organized „beauty culture‟ to a remarkable extent. The very notion of femininity... opened opportunities in this business, even as it restricted them elsewhere. And women seized their chances, becoming entrepreneurs, inventors, manufacturers, distributors, and promoters.[54] Early female entrepreneurs in the industry such as Elizabeth Arden, Madam C.J. Walker, Annie Turbo Malone, etc. worked for the betterment of women‟s opportunities in a way that challenges many feminist critiques of the beauty industry as oppressing all women; for these women “consciously created job opportunities for women, addressed the politics of appearance, and committed their profits to their community. Indeed, the history of these businesswomen flatly contradicts the view that the beauty industry worked only againstwomen‟s interests.”[55] In utilizing the cosmetic industry to provide both products and opportunities for women just like themselves, female pioneers in the industry fostered a spirit of self-sufficiency – an idea of a group creating something for itself and by itself. [56] This form of proprietary independence perhaps established some organic roots of for the modern industry‟s regime of self-regulation and industry independence; the emergence of an industry via the efforts of the natural users and consumers of its products lays important thematic groundwork for an enduring history of industry self-sufficiency in the context of regulation. In addition to progressively challenging prevailing limitations on women‟s career opportunities by creating new roles for women in business, early female cosmetics entrepreneurs contributed in positive and progressive ways to American social democracy through example and through ideological imagery. For, “strikingly, many of the most successful entrepreneurs were immigrant, working-class, or black women. Coming from poor, socially marginal backgrounds, they played a surprisingly central role in redefining mainstream ideals of beauty and femininity in the twentieth century.... they made the pursuit of beauty visible and respectable.”[57] By means of their own success, these women carved out the possibility in American society for the similar advancement of other socially marginalized women. They also worked – albeit with profit-based incentives – to de-stigmatize and socially legitimize the consumerist pursuit of beauty, thus democratically expanding the array of physical self-improvement options available to all women: “By promoting the idea of improving nature, women entrepreneurs validated beauty culture for a broad range of women.... In the female democracy of manufactured beauty, all could improve their looks – and those who did not had only themselves to blame! These ideas, of course, circulated in the service of profit.”[58] As societal acceptance and consumer enthusiasm for the cosmetic industry grew during the early twentieth century, the mass market for cosmetics emerged, flourished, and continued to grow at a remarkably rapid rate. “Between 1909 and 1929 the number of American perfume and cosmetics manufacturers nearly doubled, and the factory value of their products rose tenfold,” and in 1929, Americans spent an estimated $700 million per year on cosmetics and related services; thus, “in a very short time, cosmetics had become an affordable indulgence for American women across the socioeconomic spectrum.”[59] This growth continued, and in the 1930s, “makeup had become an aesthetic expression woven deeply into women‟s daily life, a life increasingly entwined with commodities, advertising, and mass media that promoted, in Charles Revson‟s famous phrase, „hope in a jar.‟”[60] By the 1940s “manufactured beauty formed a major sector of the economy and informed the everyday practices of women,” and “in the decades that followed, mass media tied cosmetics ever more closely to notions of feminine identity and self-fulfillment.”[61] The early twentieth century explosion of industry growth and its attendant culture of consumerist marketing eventually provoked some critical reactions of skepticism and concern. While some were simply not ready to entirely buy into the industry‟s sanguine promises of “hope in a jar,” others were more specifically concerned about the safety of the suddenly ubiquitous cosmetic products. Thus, the late 1920s brought the onset of consumer and market research groups which were often particularly critical of cosmetics. One such organization established in the late 1920s was Consumers‟ Research Inc., whose philosophy and goal was to “„develop a science of consumption so that consumers can defend themselves against the aggressions of advertising and salesmanship.‟”[62] In 1934, Consumers‟ Research Inc. published M.C. Phillips‟ expose Skin Deep . Ms. Phillips‟ book “was an early expose on not merely the content of product, but the cost-to-profit ratio enjoyed by manufacturers and the dubious habit of selling illusions; „as deleterious‟, claimed the author, „as some cosmetics ingredients.‟”[63] Ms. Phillips‟ 1934 work was a precocious harbinger of the progressively extreme product claims and the increasingly massive profits that the modern cosmetic industry would make in years to come, and Skin Deep stands as an important forerunner to modern criticisms of the industry. The federal government and the industry have historically responded to such

criticisms and addressed such safety concerns by establishing a comprehensive system of self-regulation.

Industry Self-Regulation

Voluntary self-regulation by the U.S. cosmetic industry is considered by many to be both a regulatory anomaly and an exemplary success, forged from years of cooperation and experience: No industry in the history of this country has ever made a greater commitment to self-regulation or has been more successful in achieving it than the U.S. cosmetic industry. Virtually all aspects of the cosmetic industry are subject to some form of voluntary CTFA program initiated by the industry itself to assure FDA, the medical profession, and the public that cosmetic products are safe and appropriately labeled.[64] The primary incentives for industry self-regulation are twofold: 1) industry image, and 2) industry independence. Protecting industry image entails the maintenance of favorable consumer perceptions of safety levels in order to achieve steady retail sales. John Bailey, director of FDA‟s division of color and cosmetics has noted the importance to the industry of protecting its image: “„The cosmetic industry is sensitive to the image of an uncontrolled market where anything goes.... They counter this image with well-established self-regulation programs.‟”[65] Protecting industry independence entails ensuring adequate industry safety levels in order to avoid the need for increased federal regulation which would externally impose more stringent requirements upon the industry. Bailey has commented on the industry‟s utilization of self-regulation protect its independence: “„Part of the incentive for such industry policy is to avoid increased regulatory authority.‟”[66] Thus, the cosmetic industry since the 1960s or so has relied on self-regulation, particularly in times of problems, to convince Congress not to enact new, more intrusive legislation. The industry has kept federal regulation at bay by doing it themselves, often citing the industry‟s record of minimal safety crises and few products liability cases as evidence of the effectiveness of this “do it yourself” industry approach. For example, when faced in the 1970s with the prospect of “onerous legislation... the industry established a broad philosophy of voluntary self-regulation and then implemented it in a truly unprecedented way.... the CTFA voluntary programs have sought to assure FDA, Congress, and the public that no further governmental effort is needed to provide safe and properly labeled products for the consumer”[67] The Cosmetic, Toiletry, and Fragrance Association is the leading national trade association for the cosmetic, toiletry, and fragrance industry founded in 1894 by industry leaders. CTFA‟s approximately 600 member companies include both active members who manufacture or distribute finished personal care products and associate members who supply raw materials, produce trade and consumer magazines, etc.[68] CTFA‟s mission is as follows: CTFA strives to ensure that the personal care products industry has the freedom to pursue creative product development and compete in a fair and responsible marketplace. CTFA represents the industry‟s interests at the local, state, national, and international levels, promoting voluntary industry self-regulation and reasonable governmental requirements that support the health and safety of consumers.”[69] This mission demonstrates the industry‟s desire to protect its independence by promoting extensive self-regulation. CTFA president and CEO Pamela G. Bailey points out the collaborative nature of the industry‟s internal commitment to consumer safety: “Our industry works everyday with leading medical and scientific experts to ensure the safety of our products. We start with ingredients that are thoroughly tested and shown to be safe, and then we further test the finished products to make certain they are safe.... We are ready to maintain this commitment to doing the right thing for our consumers.”[70] The CTFA was originally founded in 1894 as the Manufacturing Perfumers‟ Association of the United States (MPA), led by New York perfumer Henry Dalley. The MPA came together largely in response to pending Congressional legislation threatening to increase the tariff on imported raw materials, which would increase the cost of toilet goods production. Dalley organized his industry peers together in order to more effectively oppose the tariff, and the first ten years of the MPA‟s existence were similarly spent lobbying against such tariffs and taxes. In 1922, the MPA changed its name to the American Manufacturers of Toilet Articles (AMTA). The 1938 Food, Drug and Cosmetic Act found overall support from the AMTA because it promised a uniform federal standard of regulation rather than varied state regulatory standards which would make interstate commerce more complicated for cosmetic manufacturers.[71] The late 1960s and early 1970s brought increasing pressure on the Toilet Goods Association (TGA) in the form of consumer safety and environmental concerns, and the TGA changed its name to the Cosmetic, Toiletry and Fragrance Association in 1971 as a means of symbolizing “an organizational „metamorphosis‟ that prepared the association, and the industry to face a new decade of challenge.”[72] During the 1970s, the CTFA began what would become “a decade-long struggle to convince regulatory agencies and consumer groups that the industry's commitment to product safety and self-regulation precluded the need to introduce new legislation.”[73] A monumentally important part of this struggle occurred in late 1970, when FDA staff declared at a meeting with

CTFA that the agency would not seek Congressional legislation regarding mandatory registration and reporting if the industry would agree to voluntarily supply such information. In response, the CTFA proposed the current program, which was the first of its kind; then CTFA President Jim Merritt hailed the program a “„desirable and innovative example of industry cooperation with government to better consumer protection.‟”[74] This form of innovative cooperation has since proven itself to be enduring and effective, and “the success of this program represents a remarkable tribute to CTFA and its members and stands as a model for other industries throughout the world.”[75] FDA reliance on CTFA voluntary cooperation and collaboration has been not only effective but also necessary given pragmatic budgetary constraints on agency resources and capabilities. For example, in 1998 FDA announced a 50% reduction in the staff of the Office of Cosmetics and Colors and the elimination of several cosmetic regulatory programs. The industry responded by successfully lobbying Congress for restoration of funding. More recently, CTFA offered a similar statement of support for adequate FDA cosmetic regulation funding, recognizing the importance of that funding to sustain even voluntary industry regulatory programs. On February 15, 2006, CTFA President Pamela G. Bailey issued a statement on the FDA budget for cosmetics: CTFA is sensitive to the challenge of budget realities that the Administration is facing in funding existing programs at FDA while redeploying assets to high priority programs.... At the same time, CTFA wants to emphasize the importance of fully funding the existing FDA cosmetics program which helps to ensure cosmetics are among the safest products the Agency regulates. CTFA is committed to working with the cosmetics program at FDA to enhance effectiveness with existing resources. CTFA continues to strongly support voluntary industry efforts such as the Cosmetic Ingredient Review (CIR) Expert Panel and the Voluntary Cosmetic Reporting Program that support FDA‟s cosmetics program.[76] The Cosmetic Ingredient Review (CIR) is an independent nonprofit organization comprised of a group of scientists which reviews the safety of cosmetic products ingredients. Established in 1976 by CTFA after FDA declined to create a program for safety assessment of cosmetic ingredients, the CIR is financed by the cosmetic industry but is scientists are independent academics who are prohibited from working for any cosmetic company. In fact, CIR staff and consultants are kept separate from CTFA and the industry and are required to abide by the same conflicts of interest standards that apply to special federal government employees.[77] Upon establishment of CIR, CTFA recognized that acceptance of the program and its results would depend on three major factors: (1) the safety review process had to be conducted with no cosmetic industry bias; (2) the Panel of Experts who would review the safety test data on each ingredient had to be given complete independence; and (3) the review process, the reports, and all of the data used in the safety evaluation had to be available for public and scientific scrutiny.[78] The CIR Expert Panel consists of nine academic scientists who review both published and unpublished scientific data regarding ingredients in order to ascertain their safety as used in cosmetic products, whether additional testing on certain ingredients is required, etc. The seven CIR Expert Panel voting members are chosen via public nomination by consumer, scientific and medical groups, government agencies, and industry; the three non-voting Expert Panel members are liaisons who represent the FDA, the Consumer Federation of America, and CTFA.[79] The configuration of the Expert Panel is designed to reflect and foster a sense of cooperation and collaboration across government, industry, and public: “By uniting industry, consumers and government, the Expert Panel creates a unique environment for discussions affecting public safety.”[80] The resultant data and all panel deliberations are open and available for public review and comment: “The Cosmetic Ingredient Review thoroughly reviews and assesses the safety of ingredients used in cosmetics in an open, unbiased, and expert manner, and publishes the results in the open, peer-reviewed scientific literature.”[81] In addition to these ingredient reports, CIR publishes a CIR Annual Report and a CIR Compendium which is updated annually.[82] The 2005 CIR Compendium summarized safety assessments for 1205 individual cosmetic ingredients.[83] CIR procedures are modeled after FDA procedures for OTC Drug Review and Biologics Review. The CIR is a paradigmatic example of cooperation across the industry and with the FDA, and is one of CTFA‟s most applauded “success stories, winning praise from regulators as well as consumer groups for its efforts to ensure product safety.”[84] CIR continues to be one of CTFA's success stories, winning praise from regulators as well as consumer groups for its efforts to ensure product safety. The industry recognizes that by participating in CIR and pooling safety information on cosmetic raw materials, it can minimize the enormous expense and inefficiency of duplicate safety testing. CTFA developed and published the International Cosmetic Ingredient Dictionary and Handbook , which provides a complete list of ingredients used in cosmetic and personal care products, along with their definitions and trade names. This dictionary is recognized by the FDA, and FDA regulations refer to it as a primary source for ingredient nomenclature in cosmetic product labeling; it is widely accepted worldwide as a resource for cosmetic ingredients. CTFA also worked with the American Academy of Dermatology to develop Cosmetic Industry on Call , an updatedyearly directory of contact information for cosmetic company employees who will respond to requests for information on cosmetic ingredients and formulations. The directory is distributed to dermatologists in order to

assist them in treating allergic reactions. Another CTFA publication is the CTFA Labeling Manual: A Guide to Cosmetic and OTC Drug Labeling and Advertising , which explains FDA regulations for cosmetic labeling under the Fair Packaging and Labeling Act and the Food, Drug, and Cosmetic Act. The Research Institute for Fragrance Materials (RIFM) reviews the safety of fragrance ingredients which are used in cosmetics and other consumer products. RIFM maintains a Database of Fragrance and Flavor Materials which is “the most comprehensive source worldwide for toxicology data, literature and information on the safety evaluation of fragrance and flavor materials.”[85] The database classifies more than 4500 materials and is operated in full cooperation with the Flavor and Extracts Manufacturing Association (FEMA). RIFM operates via a Panel of Experts (REXPAN) – an independent, international group of dermatologists, pathologists, environmental scientists and toxicologists who are not employed by the fragrance industry.[86]

Industry Example: Estee Lauder

Estee Lauder Companies is one of the world‟s leading cosmetic manufacturers and one of the United States‟ largest cosmetic houses: “Founded in 1946, this technologically advanced, innovative company has gained a worldwide reputation for elegant, luxurious products. Products that come with a promise to uphold the finest standards of excellence through extensive research and stringent product testing.”[87] Estee Lauder‟s 2004 net sales were $5.79 billion and net earnings were $342.1 million.[88] “Through its own brands and specialist acquisitions, Estee Lauder is estimated to control 46% of America‟s prestige cosmetics business, and in 2000 had a volume of $4.37 billion.”[89] As a leader in the industry, Estee Lauder constitutes an instructive example of a specific industry approach to internally managed cosmetic safety. In several places on its website, Estee Lauder invokes its 60 year record of company product safety in order to repeatedly express its commitment to internal safety regulation: “We are proud of the enviable safety record the Estee Lauder Companies Inc. has sustained since our Company was founded in 1946, and our continued commitment to producing quality products that are clean, pure and safe.”[90]Thus, not only does the cosmetic industry regulate and police itself as an industry through industry-level compliance with voluntary regulatory programs, but individual companies within that industry also pride themselves on another level of self-regulation. Estee Lauder‟s corporate website features a section entitled “Citizenship,” which delineates what it considers to be its corporate responsibilities – two of these responsibilities are “Product Safety and Testing,” and “Consumer Awareness.”[91] The Product Safety section emphasizes the company‟s high internal standards and commitment to scientific testing: Consumer safety has always been a top priority at The Estée Lauder Companies Inc. Therefore, our product safety evaluation procedures require collaboration of efforts and expertise across several biological and dermatological sciences. To ensure the greatest possible safety of all products brought to market by The Estée Lauder Companies, formulations and packaging must meet the exceedingly high Company standards for ingredient preservation and stability, product efficacy and compatibility. Our extensive Research and Development teams use state-of-the-art laboratories to assess the safety of our product formulas against our own ongoing quality assurance and global safety evaluation standards, continuously referencing current peer-reviewed scientific research as well as international regulatory guidelines.[92] In the “Product Safety FAQs” section of the website, the company characterizes its internal regulatory approach as extremely conservative in terms of ingredient safety: “The Estée Lauder Companies places great importance on the safety of its consumers and takes an extremely conservative view of the ingredients it uses in its products. The Company uses a stringent system of ingredient review, evaluation and testing to ensure that consumers are protected.”[93] The company also references the essentially safe nature of cosmetics in general – “among the safest of all consumer products” – and the joint efforts by the industry and the FDA to utilize voluntary industry regulation program to safeguard consumers.[94] The Consumer Awareness section of Estee Lauder‟s website features subsections entitled, “Cosmetics are Safe,” “Understanding Your Cosmetic Label,” and “Debunking Industry Rumors” – all directed specifically at consumers in order to assure them of cosmetic safety. The “Understanding Your Cosmetic Label” section urges consumers to, in addition to relying on the industry‟s assurances of safety, take some responsibility themselves for understanding what the products that they are purchasing contain. In particular, consumers can utilize the product ingredients listing to avoid specific ingredients (or seek them out).[95] The company also provides ongoing, post-marketing and post-sale consumer support, indicating a desire to work with consumers to together ensure utmost cosmetic safety: “we place high value on consumer communication and awareness. We have many systems in place to provide outstanding customer service and open dialogue on behalf of our Company and its brands. We offer stateof-the-art service and individualized attention to our customers via brand web sites, toll-free hotlines and six global Consumer Care Centers.”[96]

IV. REALITY OR ILLUSION? CURRENT CRITICISMS OF THE INDUSTRY

“In the cosmetics industry... there is one quality that counts for more than money.... Illusion, backed by entrepreneurial flair, is the essential element.”[97] In an industry that is premised upon selling cosmetic illusions, vociferous industry proclamations of self-regulation can logically be interrogated as illusory and self-serving. Various critics have accused the industry of a range of nefarious motives and actions: from misleading consumers through marketing, to knowingly deploying products that are unsafe and even toxic to consumers‟ health. However, these criticisms often fail to acknowledge both the industry‟s respectable safety record and the industry‟s powerful and effective incentives for conducting true forms of self-regulation. As discussed above, the cosmetic industry has historically acknowledged that both its image and its independence are dependent upon its maintenance of a real, not merely illusory, industry-wide program of selfregulation.

Safety Criticisms
The 1938 Act was the first comprehensive federal program to regulate cosmetics. In the years since then, the FDA and the industry have cooperated to build a unique regulatory regime which supplements a lack of direct FDA premarket supervision with broad industry self-regulation. Thus, the logical conclusion arrived at and maintained by many is that the current regulatory regime is far superior in terms of consumer safety assurances than that which existed in the 1930s prior to 1938 Act enactment. However, in recent years some critics have cast doubt upon the veracity of this assumption, positing (and in the process, fostering) “a sense of public discomfort and distrust about unregulated cosmetics.”[98] For example, one historian of the cosmetic industry questions whether or not we are currently residing in a significantly safer cosmetic environment than we were in 1933: Without any federal laws regulating cosmetics, or more specifically, their ingredients, consumers [in 1933] had little reassurance that many of their daily purchases and habits were safe. In 2005, temporary tattoos and henna / mehndi products contain PPD, despite laws specifically delineating acceptable PPD use. Has anything changed in the intervening seventy years to create a safer environment for consumers? Recent scholarship has largely ignored the devastating effect of serious accidents...[99] This critic focuses on the federal portion of the current regulatory regime, implicitly ascribing safety uncertainties to a federal failure to regulate. In other words, one line of safety criticism in the cosmetic market emphasizes federal/FDA deficiencies. Along this line, another critic of the cosmetics market notes that sixty-five percent of consumers erroneously believe that the FDA conducts pre-market safety approvals of cosmetics, and argues that this widely-held consumer illusion has dangerous safety consequences: “In the beauty industry, appearance is everything. And one of the illusions that keeps the cosmetics industry thriving is that its products are carefully monitored by the government.... Operating under the 52-year old Food, Drug, and Cosmetic Act, cosmetic manufacturers are largely left to regulate themselves.”[100] The implication of this criticism is that the presence of a formal federal regulatory framework is arguably just as dangerous as no regulation at all, if not more so, when it is merely an illusory form of regulation. For the formal inclusion of cosmetics under the 1938 Act perhaps deceptively lulls consumers into false, unjustified confidence in the safety of cosmetic products. Thus, the illusion of regulation can be more dangerous than no regulation at all. Safety-oriented criticisms focusing on federal regulatory deficiencies often compare cosmetic regulation to regulation of food and drugs, pointing out the disparity in FDA pre-market requirements for the two groups of regulatory objects. For example, one article criticizing the cosmetic industry notes that food and drug manufacturers must, under federal law, do pre-market safety and effectiveness testing, while cosmetic manufacturers are not required by the FDA to do such testing. While the article concedes that many cosmetic companies do in fact conduct such testing, the standards for safety are still permitted to be independently determined by each manufacturer – “a practice that critics say leaves consumers particularly vulnerable to longterm problems from hazardous substances in cosmetics.”[101] Criticisms of federal regulatory deficiencies thus eventually turn down another path – a line of more direct criticism of the industry itself and its actions in (not) maintaining consumer safety standards. Direct criticisms of the cosmetic industry‟s self-regulation programs predominantly allege insufficient safety substantiation procedures by the industry. One recent influential voice in this line of criticism is the Environmental Working Group (EWG), a Washington, D.C. based non-profit research and advocacy organization which focuses on public health and the environment. EWG has researched and lobbied for personal care product safety for the past five years, citing three major reasons for their concerns: 1) industrial chemicals constitute basic ingredient components of personal care products, 2) FDA does not require premarket safety testing, and 3) personal care products are used by everyone, every day.[102] EWG points out that the FDA does not have the authority to mandate safety studies of cosmetics, and argues that current attempts at industry self-regulation are insufficient because the cosmetic industry‟s review panel has only studied and assessed about 11 percent of the 10,500 ingredients that are used in products.[103] In other words, “the industry‟s self-policing safety panel falls far short

of compensating for the lack of government oversight.”[104] The combination of a lack of federal regulatory power and insufficient industry self-policing is particularly dangerous in light of consumer misperceptions of regulatory reality: „Most of us expect that the products we find on store shelves have been tested for safety, but the government has no authority to require tests,‟ said Environmental Working Group (EWG) Vice President for Science Jane Houlihan. „An average adult is exposed to over 100 unique chemicals in personal care products every day – these exposures add up.... Without federal oversight or standards, companies should inform consumers of their own internal studies, and how they decide if a product or ingredient is safe enough to sell.‟ [105] This criticism posits that if self-regulation is to be effective, cosmetic industry players must be more transparent and forthcoming in providing consumers with specific information as to what their safety testing entails, what standards are used, etc. In its study and report Skin Deep, the EWG revived M.C. Phillips‟ 1934 concern that the cosmetic industry is deceiving consumers and exposing them to dangerous health hazards. After an extensive survey and study of cosmetic products entitled Skin Deep, EWG declared that the current regime of self-regulation is not working and thus not sufficient for adequately protecting consumer safety. Skin Deep is an online personal care product safety guide that provides in-depth information on 14,393 products and the 6,961 ingredients that form them.[106] The Skin Deep report argues that the lack of federal regulatory power of pre-market safety substantiation of cosmetics creates dangers for consumers in the form of products that they use every day. The project provides safety ratings and brand-by-brand comparisons of cosmetic products to assist consumer decisions through use of linked databases of ingredients, products, brands, companies, hazards, and regulatory status.[107] EWG‟s safety assessment rating system was methodologically based on the known and suspected hazards associated with cosmetic component ingredients, and utilized a weighted scoring system for categories of ingredients – from “known human carcinogen according to EPA” down to “skin irritant identified by the Cosmetic Ingredient Review panel.” Ingredients were scored according to the sum of the weights of these categories, and products were assigned hazard scores (safety assessment ratings) based on the sum of the hazard scores for each product‟s component ingredients. Brand and company ratings were then compiled based on respective product hazard scores.[108] The Skin Deep assessment of products found that less than one percent of the 14,000+ products surveyed are made from ingredients that have all been assessed for safety. Some of the major findings are as follows: 6.6% of products surveyed contain ingredients that are unsafe for use in cosmetics; 63.5% of products surveyed contain ingredients with reproductive/developmental toxicity; 34.8% of products surveyed contain cancer hazards, and 78.6% contain ingredients with the potential for harmful impurities.[109] The June 2004 EWG cosmetic safety petition to FDA states that the Environmental Working Group has identified serious probable safety violations of the 1938 Act by the cosmetic industry, and requests enforcement actions by the FDA such as: recalls or injunctions and seizures, clarified safety substantiation requirements, requirement of removal of any toxic impurities, requirement that internet vendors list ingredients online, and investigations of certain ingredients. The petition emphasizes the wide, nearly universal usage of a multitude of cosmetics in order to convey the importance of regulatory change: “more than a quarter of all women and one of every 100 men use at least 15 cosmetic products daily.... Despite this population-wide exposure to cosmetic chemicals, the existing law governing cosmetics has cast a disturbingly narrow safety net.”[110] In pointing out that “a self-regulating industry panel is the only existing safety screen for cosmetics,” EWG implies that the CIR Expert Panel is an insufficient safeguard because it is in the industry‟s own interest to avoid being very cautious or thorough in its review. As evidence of this insufficiency, EWG argues that 89% of the 10,500 personal care product ingredients remain untested by the CIR; this deficiency in scope of ingredient testing is particularly unsettling given the FDA‟s statement that “„a cosmetic manufacturer may use almost any raw material as a cosmetic ingredient and market the product without an approval from FDA.‟”[111] The EWG is a founding member of the Campaign for Safe Cosmetics, a coalition of environmental and public health groups which works with cosmetic manufacturers to achieve safer ingredients and product formulations. Over 200 cosmetic companies had signed the “Compact for Safe Cosmetics” pledge to make safer products as of October 2005, in an effort to reformulate personal care products in ways that eliminate toxic chemicals linked to cancer, mutation, or birth defects from products.[112] Other founding groups for this campaign are: Alliance for a Healthy Tomorrow, The Breast Cancer Fund, Commonweal, Friends of the Earth, National Black Environmental Justice Network, National Environmental Trust, and Womens Voices for the Earth. A major victory for this campaign, and a defeat for the cosmetics lobby[113] , was the California Safe Cosmetics Act of 2005, which requires companies to report to the state the usage of cosmetic ingredients linked to cancer. This state law on chemicals in cosmetics represents a new approach to regulation – filling the federal regulatory gap by supplementing industry selfregulation with state oversight of the cosmetic industry. A California representative for the National Environmental Trust commented, “„The new [California state] law has national significance.... For decades the FDA has allowed the cosmetics industry to police itself. Now, California is stepping into the breach in order to address the latest science on chemicals and health.‟”[114]

Responses to Criticism
The FDA issued a final written response on September 29, 2005 to the EWG cosmetic safety petition. In this response, the FDA denied EWG‟s petition, noting that enforcement action requests are not appropriate for citizen petitions, and regardless concluding that there was insufficient data and information to support EWG‟s requests. The FDA stated that fulfillment of EWG‟s other requests was not warranted at that time given FDA constraints and priorities.[115] The FDA noted that the cosmetic industry, largely via the CIR, conducts ingredient testing and that the FDA relies on this as well as other scientific data to determine regulatory actions and priorities. The CTFA issued a response statement on July 14, 2004 asserting that cosmetics are safe and directing the public to a website, www.cosmeticsaresafe.org , in an effort to reassure consumers about the safety of cosmetics and the effectiveness of the current regulatory schema. This response statement opens with the following declaration: “The cosmetic industry is committed to providing the highest quality, safest personal care products possible. Constant research into new ingredients and new formulations ensures that the industry provides such products. Cost is never a consideration for safety.... The bottom line for American consumers is that they can have complete confidence that the products they use are safe.”[116] The 2005 CTFA Annual Report directly addresses the EWG report, arguing that may of EWG‟s allegations are unfounded and unsupported, but using the fact that EWG has raised safety issues to point out the ways in which CTFA has worked cooperatively with FDA to ensure utmost consumer safety: While pointing out that many of the issues raised were in error, CTFA urged FDA to act on the Environmental Working Group‟s (EWG) Petition raising many issues related to claimed safety concerns for cosmetics. EWG... makes a number of unfounded allegations in the petition.... FDA reviewed and flatly denied every request in the EWG petition. FDA repeatedly noted that the petition lacked evidence or scientific data to support EWG‟s points. CTFA also urged FDA to adopt a Guidance establishing criteria for cosmetic safety substantiation and for the implementations of the warning required by 21 CFR 740.10... where appropriate.[117] The CTFA‟s Cosmetics Are Safe website proclaims the safety of cosmetic products and details both FDA authority to regulate and voluntary industry safety programs. The website states the cosmetic industry‟s response to EWG‟s report as follows: The „Skin Deep‟ report was filled with mistakes and unfounded conclusions. In fact, careful review of the „Skin Deep‟ report shows that many of the „ingredients‟ it lists are not ingredients at all, but rather name fragments, duplicates and misspellings, which were somehow overlooked by EWG investigators.... Any statement that relies on the Environmental Working Group‟s report should be automatically suspect, as the report is filled with mistakes and unfounded conclusions.[118] The website also provides links to other internet websites which detail what it considers to be unfounded and unsubstantiated internet rumors about personal care products and safety issues.[119] Estee Lauder‟s website similarly has specific sections dedicated to directly reassuring consumers of Estee Lauder‟s clear commitment to cosmetics safety. One such section is entitled “Debunking Internet Rumors” – it encourages consumers to seek out factual information in order to avoid being unnecessarily frightened by internet rumors of “health scares.”[120] Estee Lauder‟s website also asserts that “recent statements that cosmetics contain ingredients that may be harmful to your health are both inaccurate and misleading,” and argues that this “phantom risk” is dangerous because it distracts attention from the “known, preventable causes of cancer and birth defects.”[121]

Other Criticisms
Other criticisms of the cosmetic industry set aside consumer safety issues and focus more specifically on the ethical implications of selling illusions. One such critique of the cosmetic industry emphasizes the dynamic between ethics and consumerism. This critique entails disapproval of an exorbitantly lucrative industry utilizing misleading or even false marketing claims to trade on consumers‟ gullibility[122] – in selling illusions to consumers of cosmetics, the industry deceives and arguably even defrauds their consumer base. Gerald McKnight, in analyzing the beauty industry, raises the issue of cosmetics and ethics: “In persuading us to part with billions for their products, the moguls of make-up and skin care, of anti-ageing and beautifying, genuinely believe they are doing us a service. The question is, how fair are the business practices involved? How ethical is it for the dream merchants to trade on our susceptibilities?”[123] Other critics use even stronger language to wage an ethical attack on the beauty industry for capitalizing on human insecurities and gullibility. For example, feminist critic Naomi Wolf cites McKnight but goes rhetorically further by likening cosmetics sales tactics to those deployed but cult conversion artists: “The holy oil industry is a megalith that for forty years has been selling women nothing at all. According to Gerald McKnight‟s expose, the industry is „little more than a massive con... a sweetly disguised form of commercial

robbery‟ with profit margins of over 50% on a revenue of 20 billion dollars worldwide.”[124] This line of criticism focuses on the ethics of a massive profit to actual product ratio. Wolf accuses the industry not only of unethically exploiting consumers via exorbitant profit margins, but also of making false claims that have gotten increasingly outrageous as technology and marketing capacities have evolved: “As women encountered the computerized work force of the 1908s, the ads abandoned the filmy florals of „hope in a bottle‟ and adopted new imagery of bogus technology, graphs and statistics, to resonate with the authority of the microchip.”[125] Capitalist exploitation of consumers seems all the more nefarious when coupled with borderline fraudulent marketing ploys designed to deceive. The line between aggrandizing and deceiving along the spectrum of consumer marketing claims seems to be dissolving at the hand of the cosmetic industry. Wolf quotes one industry insider as acknowledging this phenomenon with dismay: “The professional collegial spirit that has helped keep the fraudulent nature of the industry‟s claims fairly quiet was belatedly broken by Professor Albert Kligman of the University of Pennsylvania... „In the industry today,‟ he wrote presciently to his colleagues, „fakery is replacing puffery.‟”[126] One industry example of the arguable disintegration of the line between puffery and fakery is Body Shop International (BSI), a company that has “long been touted as the premier socially responsible business” made successful largely through its marketing of “natural” products and a socially conscious corporate ethic.[127] However, 1994 investigative journalism and research “revealed a huge ethical gap between BSI‟s marketing image and its actual practices,” including an allegedly forged company myth, misrepresentations regarding fair trade programs, and non-natural chemical and fragrances in its product formulations.[128] When confronted on the usage of non-natural ingredients in the company‟s products, BSI‟s chairman of the board Gordon Roddick employed “the classic ethics rationalization: „all [cosmetic] firms‟ do it.”[129] A more abstract line of criticism adopts an administrative standpoint and argues that self-regulation is an inherently improper form of regulation when federal legislation exists. This abstract reliance on the inherent impropriety of self-regulation ideologically underlies many of the above criticisms of both the FDA and the cosmetic industry and is explored further in the following section.

V. THE ADMINISTRATIVE STANDPOINT: IS SELF-REGULATION PROPER?
“When it comes to the clinch, the industry is always on the side of deregulation.”[130]

The Theoretical Perspective
From an administrative standpoint, the prevailing regulatory schema of voluntary industry cooperation with the FDA raises the broad theoretical question of whether or not, from a normative administrative perspective, selfregulation (in lieu of more extensive federal regulation) is a desirable regulatory approach. The current system of voluntary industry self-regulation was born out of pragmatic necessity in the 1970s, when FDA budgetary constraints necessitated industry self-regulation in order to attend to consumer safety. The cosmetic industry now argues that not only does it effectively and efficiently self-regulate, but that it does a better job at ensuring safety than direct federal regulation would be able to accomplish. Despite the professed success of cosmetic industry selfregulation, the administrative standpoint must ask whether or not this is the way that government ought to run, particularly in light of the fact that no other industry in the United States self-regulates in the way that the cosmetic industry does.[131] Some critics disapprove of self-regulation because it represents a political model in which federal regulatory inaction occurs in conjunction with industry lobbying against more extensive regulation. This model is critically characterized as the improper “purchase” by major industry players of political inaction. For example, one article entitled “How Cosmetics Lobby Maintains Its Luster; Even Distant Threat of Regulation Spawns Industry Scurrying” links contributions to political campaigns by the cosmetics lobby to deliberate industry disregard for safety issues; the article is critical of the political process in which industry lobbying results in decreased regulation because the author implicitly reads into such a political model an industry motive which is antithetical to consumer safety interests.[132] Similarly, another article defines politicians‟ decisions against regulatory legislation as the direct result of payments to such politicians in the form of industry lobbying efforts, payments tainted by undertones and implications of scams, racketeering, and threats: “private persons and firms are being shaken down and forced to pay protection money to politicians. There is no shortage of anecdotal and statistical evidence of this practice of purchasing government inaction. For example.... the cosmetics industry... maintain[s] very active lobbying offices in Washington, all pressuring not to be regulated, all pressuring not to have anything done to them.”[133] This line of criticism characterizes the system of self-regulation as tainted by the extortion-like efforts by the cosmetics lobby to minimize federal regulation; it equates self-regulation with self-interested non-regulation at the expense of consumers.

The Consumer Perspective
FDA reliance on cosmetic industry self-regulation inevitably places some of the responsibility and burden on consumers to be informed, discerning, and vigilant in order to safeguard their own health and safety. Critics of the current regulatory regime depict the FDA as wrongly abandoning consumers: “Where does this leave consumers? Public health is in the hands of an impotent agency, safety testing is voluntary, safety decisions are at the discretion of the individual companies, and the burden of choosing safe cosmetics falls squarely on the shoulders of each consumer.”[134] The three main forms of consumer responsibility are to: 1) stay informed about cosmetic ingredients, 2) exercise common sense in usage, and 3) be discerning in their expectations of cosmetics. In order to facilitate consumer assessment and information about cosmetic ingredients, the FDA website has posted various types of information for consumers and presented this information in a straightforward, highly userfriendly style: Consumers can check the listing to identify substances they wish to avoid. And becoming familiar with what cosmetics contain can help counter some of the alluring appeal showcased elsewhere on the product. „Our best friend is the ingredient label,‟ says beauty consultant and 14-year veteran consumer reporter Paula Begoun. „And spending the time to read it may be all that is needed to protect ourselves from hurting our skin.‟[135] This information encourages consumers to take initiative in the protection of their own health and safety by familiarizing themselves with various ingredients and with their own bodies‟ reactions to those ingredients. FDA efforts to increase public safety via cosmetics regulation have “also increased... the onus of individual responsibility: by listing ingredients, for example, the task of avoiding ingredients to which one is allergic rests squarely upon the individual. The right to increased knowledge and information about products means increasing responsibility as well.”[136] Thus under the current regulatory regime, the responsibility for consumer safety falls in some (arguably large) part on the consumer herself to educate herself and remain vigilant in utilizing that education. The consumer also necessarily bears the responsibility for reporting any problems or complaints to the FDA: “the FDA is aware of the problems and pressured to take action only when comments or complaints are officially registered. The onus and the responsibility for safe products and good health (still) rest, ultimately, with the consumer.”[137] Both the FDA and the cosmetic industry argue that a crucial component of any regulatory regime is consumer common sense – consumers must be responsible for safeguarding their own safety through the exercise of common sense. For example, the FDA alludes to the fact that the few hazards and injuries that result from cosmetic usage are typically caused by a consumer‟s lack of common sense: “Serious injury from makeup is a rare occurrence, according to John Bailey, director of FDA‟s Office of Cosmetics and Colors. But it does happen. Good common sense and a few precautions can help consumers protect themselves against hazards associated with the misuse of cosmetics.” Bailey then goes on to list consumer safety common sense tips such as: don‟t drive while applying makeup, don‟t share makeup, throw away old products, et.[138] The cosmetic industry similarly emphasizes the importance of common sense on the part of consumers: “Consumers must take an active role in keeping product contamination and potential infection to a minimum once they take a product home, says Gerald McEwen, Ph.D., vice president for science for... Cosmetic, Toiletry and Fragrance Association. „You need [to follow] good personal hygiene – clean hands, clean face,‟ he says. „And common sense.‟”[139] The current regulatory scheme also relies on consumers to be discerning in their consumption of personal care products. For example, the FDA‟s website provides information designed to help consumers understand cosmetic labels, and encourages consumers to be discerning in their interpretations and beliefs about the claims that manufacturers make on those labels. One such article directed at consumers is entitled “Decoding the Cosmetic Lable”: “Don‟t be fooled by claims made for certain cosmetic ingredients. Their presence in the products could be pure puffery because the law does not require cosmetic manufacturers to substantiate performance claims. „Image is what the cosmetic industry sells through its products,‟ Bailey says, „and it‟s up to the consumer to believe it or not.‟”[140] The consumer thus bears a responsibility to separate useful claims from the puffery and make careful decisions about both what to purchase and what to expect from their cosmetic products. The responsibilities assigned to consumers under the current system of cosmetic regulation – to be informed, wise, and discerning – may conflict with consumers‟ expectations about FDA regulatory protection of their safety and interests. This is because many consumers assume extensive FDA protection and are unaware that the current system relies so heavily on industry self-regulation. This type of misalignment of consumer expectations and actual FDA protection was a motivating factor in the enactment of the 1938 Act; advocates of a new, more consumerprotective act were dissatisfied with the 1906 Act because its theoretical existence signaled consumer protection but its actual enforcement was hampered by lack of funding, etc. As a result, in the era between the 1906 Act and the 1938 Act, “many consumers assumed protection where none existed, unconsciously expanding the power of the law and the enforcement ability of the bureau to protect them.”[141] This assumption of protection and

unconscious expansion of the law is arguably at play under today‟s regulatory regime as well, to an even greater degree; for the natural implication of the existence of such a massive industry is the corresponding assumption by consumers that the FDA is heavily regulating this huge industry. Furthermore, the 1938 Act, unlike the 1906 Act, does explicitly provide for statutory regulation of the cosmetic industry by the FDA – so now that the current law does include cosmetics, consumer assumptions of federal protection are likely even higher than in the era prior to the 1938 Act. The irony of course is that the “unconscious expansion” of the perceived (by consumers) regulatory ability of the FDA has steadily increased over the years, as the actual enforcement capacities of the FDA have become increasingly limited in the face of budgetary constraints, etc.

The Pragmatic Perspective
The pragmatic perspective fills in the practical holes left open by many critiques of the cosmetic industry‟s practice of self-regulation, ultimately indicating the probable wisdom and effectiveness of this system based upon the pragmatic constraints and practical realities faced by the industry and by its regulators. The primary pragmatic rationale for the current system of industry self-regulation is the practical reality of a severe misalignment between FDA funding and the sheer size of the cosmetic industry. The FDA recently cut its cosmetic regulation budget by 50%, meaning that the FDA will be forced by budgetary reality to undertake virtually no regulation of this massive industry.[142] In the face of such misalignment, voluntary self-regulation by the industry has become crucial in addressing safety concerns. Budget cuts this severe have in the past even provoked dissatisfied responses from the industry itself, prompting the industry to lobby Congress for more FDA funding. Given the reality of such limited FDA resources, the cosmetic industry points out that the effectiveness of industry self-regulation is particularly noteable in light of other FDA concerns: “The cosmetic lobby... is also arguing that the FDA is already overburdened with more pressing concerns. „Let‟s not ask the FDA to spend more on a problem that doesn‟t exist at the expense of real crises – AIDS, Alzheimer‟s new drug approval, good safety,‟ Kavanaugh [then CTFA president] says. „Why would anyone in their right mind want to direct the resources away from... safety and health?‟”[143] Another argument from a pragmatic perspective is one based on incentives – a system of self-regulation can protect consumers because it is in the industry‟s best interest to create and substantiate a perception of effective self-regulation, thus pragmatically aligning the interests of consumers, the industry, and the FDA. Even those critical of the cosmetic industry‟s anti-regulation stance acknowledge the industry‟s natural incentive to maintain safety through self-regulation. For example, one critic writes about the Cosmetic Ingredient Review: “The CTFA, which administers the voluntary review, argues that no outside watchdog would be more vigilant. After all, who could be better motivated to keep a nice, safe status quo? If makeup did any real harm, customers would die, survivors would sue, women would stop buying, and profits would stop.”[144] In addition to the industry‟s investment in maintaining the safety standards of the industry, individual cosmetic companies themselves have incentives to engage in strict internal self-regulation in order to maintain the company‟s brand image and reputation among consumers. For example, Jacques Courtin Clarins, the chairman and founder of Clarins, was described as “a stickler for purity, possessed of an almost neurotic determination to keep his company and its products whiter than white.... „He‟s never afraid to tell us that it is his name and his reputation on every bottle, every jar.‟”[145] An incentives-based rationale for self-regulation is ultimately grounded in the power of consumers to “impact regulation and legislation on multiple levels,” and to demonstrate that “their real power is in the markteplace, determining the success or failure of a product.”[146] A variant on the incentives analysis is an analogy to corporate self-governance and the industry benefits that arise out of consumers‟ perceptions of efficient and effective industry self-governance. This type of rationale for selfregulation relies on the relationship between corporate accountability and company success, through which consumers can pressure the industry into aligning its incentives with consumers‟ through various forms of selfregulation. “Recent financial scandals, as well as public reaction to social and environmental impacts of corporate activity, have increased pressure for corporate accountability.”[147] Current conceptions of corporate accountability include both corporate social responsibility and financial transparency; both of these forms entail individual corporations parlaying self-regulation into corporate success by way of appeal to consumers. These notions are particularly apt in the cosmetic industry context, in which brand image is of paramount importance and a clear and public commitment to internal safety standards and consumer care can be powerful marketing tools.[148]

VI. CONTEXT MATTERS: THE IMPORTANCE OF HISTORICAL AND SOCIAL CONTEXT
“Beauty aspires to be all things to all women and comes close to succeeding.”[149] The policy implications of cosmetics regulation are context dependent; a full understanding of the cosmetic industry requires analysis of the context within which cosmetics usage occurs – cultural, societal, and historical contexts contribute to the construction of cosmetics practice. More importantly, these contexts are continually changing,

thus lending new importance to the issue of cosmetics regulation. Physical appearance achieves greater and greater importance in American society, usage of personal care products crosses gender lines, the line btw pharmaceuticals and cosmetics blurs, global boundaries become fluid, and women‟s roles in society continue to evolve. These changes frame the evolution of the cosmetics industry in ways that impact regulation of the industry and must be accounted for by any regulatory approach.

A Massive Industry
The cosmetic industry is a massive industry, and is rapidly growing. As it expands and evolves in tandem with society, the industry creates higher and higher profit margins and gleans more and more prominence and power in American consumerism and popular culture: By best estimates, beauty in America is a $29 billion business. Beauty departments are top earners for any store. Beauty licenses subsidize French couture and buoy the bottom lines of the American fashion houses lucky enough to land them. Beauty contracts carry the biggest paydays. offer the most publicity, and are therefore the most coveted prizes in the modeling industry. Beauty trends have replaced hemlines as the hot news from runways. Beauty advertising is a mainstay of women‟s magazines. Beauty editorial always rates among the most-read pages in those same magazines.[150] The beauty industry has not only rapidly expanded in profits and prominence over history, but also in resilience. Despite historical events such as wars and depressions, the cosmetic industry is “a business that never sees a downturn or suffers a serious setback,” for “America‟s fascination with beauty seems never ending, its demand for beauty products insatiable.”[151] Sustained by a powerful ideology of intertwined physical and mental identities, cosmetics marketing and usage has shaped and been shaped by societal trends. Throughout the evolution, “the message propogated by the cosmetic industry – that if one looks good, one feels good – has sustained sales and transcended gender.”[152] This ideology of image and emotion probably in part explains why “American women spend more than half a billion dollars a year” on lipstick alone.[153] In fact, one recent US survey indicated that “the average woman owns seven lipsticks, of which only 2.6 are frequently used. The same woman will probably invest in twelve eye shadows, but only use about five of them.”[154] As capitalist consumerism continues to flourish in American society, the cosmetic industry will undoubtedly continue to grow.[155] As discussed in the previous section, the irony of this huge industry growth is the contemporaneous decline in FDA regulatory capacity regarding the industry; it seems counterintuitive that as the industry grows and grows, the FDA becomes less and less able to directly regulate it. In fact, the growth of the industry leads the average consumer to assume that the FDA must surely have proportionally increasing regulatory power over such a massive industry. The implication of this irony is that the industry‟s program of self-regulation should be made more transparent to consumers so as to avoid misleading them. The cosmetic industry‟s growth has not been limited to the domestic context. As globalization progresses and national boundaries becomes more and more fluid, the size and scope of the cosmetics industry expands instantaneously and exponentially. International regulatory efforts – by both national governments and private industry players and associations – must be coordinated in order provide uniformity of products and standards, harmonized approaches to labeling, and overall protection of consumers worldwide.[156]

A Changing Industry
The cosmetic industry is also a rapidly changing industry. As technology advances and life expectancies lengthen, consumerist quests for youth have impacted the nature, goals, and marketing of cosmetic products, and the boundary between cosmetics and drugs seems to be rapidly eroding. While currently the FDA and the 1938 Act do not recognize the term “cosmeceutical,” the term is frequently employed by the cosmetic industry to market its products as having medicinal or drug-like effects.[157] The FDA website explains that cosmetics are articles intended for application to the body for cleansing, beautifyin, promoting attractiveness, or altering appearance without affecting bodily structures or functions, while products that do affect structure or function of the body are considered drugs; drugs are subject to review and approval process by FDA prior to sale while cosmetics are not.[158] As time progresses, the current erosion of the drug/cosmetic boundary in industry marketing approaches and product formulations will likely continue. Dr. Tatsuo Ozawa, the director of research and development of Shiseido, Japan‟s biggest cosmetics skincare company explains the force driving this rapid erosion: „The present dramatic progress in science and technology...is about to usher in a new era of human civilization. It will bring cosmetics closer to medical products.... Beauty and health... will develop in a completely separate manner, clearly distinct from pharmaceuticals. The extension of man‟s lifespan is already on our scientific horizon.

It will increasingly require the help of cosmetics.... If we are to live longer, the need to hold on to our youth will become essential‟.... Only cosmetics, he believes, can provide the means to do so.[159] The current precariousness of the drug/cosmetic boundary has important regulatory implications and likely will eventually necessitate the imposition of some sort of clearer definitional standard by either the FDA or the industry itself. For, “with pressure mounting on the major companies to alter their rules, to accept that some of their products are or should be listed and tested as drugs, the whole vast, enormously valuable beauty industry is at a crucial state.”[160] The fact that these “cosmeceuticals” entail potentially more drastic risks for consumer safety indicates a need for regulatory clarification and more specific forms of consumer protection. For example, one proposed approach calls for increased FDA authority over these products: Unfortunately for American consumers, the relative lack of attention given to cosmetics regulation by the FDA has resulted in more potent (i.e., more dangerous) materials being sold. These products have... avoided the FDA‟s stringent drug approval process and have passed directly to consumers via the retail cosmetics shelf.... since these products can also cause physical in addition to economic harm, it is even more imperative that the FDA exercise some authority over assessing whether these products should be on the market.[161] An alternative to increased FDA regulation would be increased industry regulation in area of cosmeceutical marketing claims. Thus far, CTFA has not made attempts to self-regulate in this area; the voluntary CTFA programs and the CIR address product safety and safety-related issues rather than attempting to extensively selfpolice advertising and labeling through self-regulation.[162]

A Gendered Industry
Cosmetics hold a special position within the realm of feminine consumerism. Beginning in the early twentieth century, they “took on a new meaning in American culture” and “became part of an ongoing discourse on femininity that made problematic women‟s identity in an increasingly commercial, industrial, and urban world.” As they discursively engaged in this construction of modern femininity through consumerism, “women linked cosmetics use to an emergent notion of their own modernity, which included wage-work, athleticism, leisure, freer sexual expressiveness, and greater individual consumption. At the same time, new forms of mass culture shaped this discourse.”[163] Today, cosmetics in mass culture are situated within the context of new societal practices and cultural pressures as “employers make appearance a job requirement” and “families and peer cultures socialize girls ito the necessity of maintaining a public face.”[164] Women today utilize cosmetics in many ways to convey both personal and social meanings, and beauty culture thus exists as both a “type of commerce” and a “system of meaning” which has “helped women navigate the changing conditions of modern social experience.”[165] The central analytical dilemma which has emerged from theories of beauty culture and social theory is whether cosmetics constitute tools of liberation or oppression for women in modern society. Do they provide women with the positive means of self-expression and liberation through empowered construction of individualized feminine identity? Or, do they coerce women by embodying patriarchal ideologies of female inferiority and artifice, making women the unwitting co-conspirators of their own oppression as they accede to artificial standards of prescribed femininity? The “public debate over cosmetics today veers noisily between the poles of victimization and selfinvention, between the prison of beauty and the play of makeup.”[166] One argument for the theory of beauty culture as liberating and empowering women is that “beauty is uplifting” – it provides a way to align inner beauty with outer beauty by emphasizing cosmetics‟ “underlying philosophy that women deserve time for themselves” and acknowleding “that a beauty regime, good grooming, „putting one‟s face on‟, a healthy lifestyle, vitality and above all the confidence that these things give, are essential tools for coping with life in today‟s combative, competitive and often cruel world.”[167] Another argument that cosmetics represent positive elements of femininity focuses on the larger context of shared feminine identity and the social bonding that is facilitated by the shared experience of beauty culture. This line of theory argues that critics of beauty culture do make valid and important criticisms, but “have overlooked the web of intimate rituals, social relationships, and female institutions that gave form to American beauty culture.... Not only tools of deception and illusion, then, these little jars tell a rich history of women‟s amibition, pleasure, and community.”[168] Furthermore, criticisms of cosmetics who characterize beauty culture as a form of oppression and cooptation of women ignore the simple fact that women often enjoy (albeit perhaps only as the result of extensive ideological coercion) their usage of cosmetics: “In truth, women knew then – as they do now – precisely what they were buying. Again and again they reported their delight in beautifying”[169] Many critiques of the beauty industry are feminist theories condemning cosmetics as implicating women into an oppressive beauty myth. These criticisms argue that cosmetics usage and culture serve as ideological tools which

maintain the subjugation of women in an already gender stratified society; women participate in and contribute to their own oppression through their acceptance of the cosmetic industry and its attendant prescribed roles for women. One leading critic of “the beauty myth,” Naomi Wolf, argues that feminine beauty ideals and pressures to conform to those ideals oppress women: “We are in the midst of a violent backlash against feminism that uses images of female beauty as a political weapon against women‟s advancement: the beauty myth.”[170] More specifically, Wolf explains that beauty culture subordinates women in relation to men by “assigning value to women in a vertical hierarchy according to a culturally imposed physical standard” – this process is indicative of “power relations in which women must unnaturally compete for resources that men have appropriated for themselves.”[171] Women‟s participation in this struggle via usage of cosmetics is “destroying women physicially and depleting us psychologically.”[172] Another critic of cosmetics culture argues that the beauty industry emphasizes women‟s physical appearance in society and as a result confines women‟s experiences and freedom. The result of this entrapment (ultimately selfentrapment, and thus all the more insidious) is that women symbolically concede their own inferiority by signaling through cosmetics usage that they need continual improvement. For example, Una Stannard writes: Women are not free to stop playing the beauty game, because the woman who stops would be afraid of exposing herself for what she is – not the fair sex.... Every day, in every way, the billion-dollar beauty business tells women they are monsters in disguise.... In this culture women are told they are the fair sex, but at the same time that their „beauty‟ needs lifting, shaping, dyeing, painting, curling, padding.[173] Along these lines, another feminist critic of the beauty industry argues that the cosmetic industry equates women‟s worth with physical appearance in a way that negatively characterizes women as inherently artificial and not trustworthy: “beauty transformations maintain female deviance by associating femininity with phoniness. Props and paint undermine credibility, evoke suspicion and mistrust.... The artifice inherent in cosmetic rituals has been used as proof of female inferiority.”[174] Other criticisms of the beauty industry focus more broadly on the role of cosmetics usage in society – in particular in relation to the rampant consumerism and societal preoccupation with physical appearance which characterize modern American society. Critics of physical appearance discrimination criticize the widespread discriminatory practice of judging people‟s dispositions based on their physical appearances. These critics point out the cosmetic industry‟s role in sustaining this form of discrimination: “the evolution of American commercialism and materialism surrounding the burgeoning beauty industry serves to promote physical appearance discrimination.”[175] The ability of cosmetics to alter one‟s physical appearance can contribute to a difficulty in enforcement of antidiscrimination principles in the physical appearance context, for the multitude of cosmetic products available has caused people to “generally view one's attractiveness to be attributed less to fortuitous genetics than to one's desire to become more beautiful. Thus, the line between mutable and immutable characteristics becomes blurred, making it more difficult to draft and enforce laws targeted at protecting appearance traits that are immutable.”[176] Cosmetics‟ omnipresence in consumerism and marketing may also be contributing to what has been criticized as American hyper-consumerism and consumer addictions. For example, one critic writes: “This... phenomenon[‟s]... roots extend back almost fifty years. In 1957, Vance Packard noted the „triumph of the cosmetics industry in reaching the billion-dollar class by the sale of hope and making women more anxious and critical about their appearance.‟”[177]

VII. CONCLUSION
The importance of context in analyzing the cosmetic industry indicates a need for greater regulation of cosmetics. Beauty culture dramatically shapes and is shaped by American societal and cultural milieu, and thus regulation of this powerful force is important in order to protect consumers and society. This need should be continued to be met by the industry itself, through, for example, things like tighter, more transparent, and more uniform industry standards. The unavoidable reality is that the pragmatic constraints of FDA limited capacities cannot be ignored, and thus the current system voluntary self-regulation represents the most practical and effective means of utilizing aligned incentives to ensure consumer safety.

MANAGERIAL CONTRIBUTION
Indian Cosmetics Sector Set to Boom
by: RNCOS E-Services Pvt. Ltd.

According to our new research report “Indian Cosmetic Sector Analysis (20092012)”, the Indian cosmetics industry is expected to witness fast growth rate in the coming years on the back of an increase in the consumption of beauty products. Owing to growing disposable income of the middle class households and changing lifestyle, it is expected that the cosmetics industry will grow at a CAGR of around 17% during 2010-2013. We have done an extensive research and prudent analysis of the Indian cosmetics market in order to understand the factors that will continue to serve as growth saviors for the market in the forecast period (2010-2013). We have found that various factors such as favorable consumer behavior, rising affordability and advertising & promotions of cosmetics products have boosted the usage of cosmetics products in the country. The report also gives an insight into the changing consumer behavior of Indians. Our research indicates that the color cosmetics & fragrances segment will become an important driver for the cosmetics industry in coming years. The increasing consumption of moisturizing skin care products, particularly facial care products, and the latest trend of using foot care products will also contribute significantly to the cosmetics sector. Our report also provides information of the cosmetics services, which is getting popular among people in the form of beauty salons, spas and cosmetic surgery. Besides, “Indian Cosmetic Sector Analysis (2009-2012)” provides comprehensive information and objective analysis of the Indian cosmetics market, with focus on market tends, drivers, competitors and opportunities. It gives profound analysis of products and services offered in the sector. The report facilitates quantitative as well as qualitative information on all prominent segments such as hair care, skin care, color cosmetics, fragrances, oral care, spas, beauty salons and cosmetic surgery. It provides present and future outlook of industry trends that enable cutting edge market intelligence. A brief overview of competitive landscape and emerging market trends has also been included in the report to provide a balanced and complete market understanding.

The Cosmetic Management program will provide you with a solid business base that specifically focuses on current market trends in the cosmetic and fragrance industries. The balanced curriculum touches on all disciplines that students need to enter the personal care products sector. Courses encompass training in all aspects of retailing, merchandising, marketing and sales, make-up application, as well as the skills necessary for running an independent business. Topics such as environmental implications and multicultural sensitivity will be embedded within each course.

About the Curriculum
Innovation in Cosmetics
This program focuses on current market trends in cosmetics, fragrances, skin care and beauty product lines with topics like environmental implications and multicultural sensitivity embedded into each course. As well, you will learn technical skill in cosmetic application across a variety of industries including TV and film and special effects.

How it Works
This three-semester accelerated program delivers a range of business-focused cosmetic courses. It’s designed to give you the product knowledge, business foundation and technical skill you need to lay the groundwork for a successful career in the world of cosmetics. In first semester you will be introduced to cosmetic management, retail buying and management, product knowledge and application including colour analysis and skin care fundamentals. In second semester you will study business ethics, promotions and advertising, selling and counter management. You will learn how to use computer software for business and build on your technical skills with more advanced application techniques and fragrance analysis.

In third semester you will develop your entrepreneurial skills and a portfolio, you will learn how to plan events, launch products and build on your business skills with courses in human resources management and business finance for cosmetics. You will learn more advanced application techniques for TV, film and special effects. This semester will include a fieldwork placement.

Your Career
Enjoy a career in this thriving industry managing a cosmetic/fragrance brand, or a cosmetic counter, or as a buyer. Alternatively, build a career in other capacities such as freelance makeup artist or image consultant.

Sundries/Cosmetics The INTAGE Group assists the marketing activities of clients in the sundries and cosmetics industry in various ways, including new product development, branding, promotion effectiveness, sales support, retail services and production/distribution management. ■Solutions for the Sundries/Cosmetics Industry

Key Solutions

■Brand Management (New Product Development)
Key Solutions Brand Design/Brand Features Consumer research by analyzing market structure and surveying attitudes

Key Solutions Strategy Development

Features using sales/purchasedatabases, to identify which values to offer to specific markets and people. Conduct testing of concepts, products and packaging to ensure that brand values are delivered to target consumers as planned, and help develop products that will appeal to the target consumers. Assist final tests to assess market reaction to products through trial product evaluations. By incorporating category-specific purchasing patterns obtained from consumer data, clients can forecast the demand after launch into the market. Help determine the feasibility of achieving objectives after launch, and identify ways to improve processes from recognition to purchase and evaluation, using sales/purchase data and attitude surveys.

Product Development/Marketing Program Development

Demand Forecast/Simulation

Evaluation and Improvement of Brand Establishment and Marketing Programs

■Brand Management (Existing Products)
Key Solutions Evaluation and Improvement of Brand Tracking/Marketing Programs Features Help determine the feasibility of achieving year-end targets, and identify improvements using panel data (retail/consumer) and ad-hoc research (recognition/evaluation, etc). Identify changes in markets and consumers, health of brands and

Brand Diagnosis and Development of Next-Stage

Key Solutions Strategy

Features marketing issues, and also help conduct benchmark surveys on future targets (extension/protection). Support the development of marketing programs for future marketing efforts, including whether products and packages need reviewing, which communication strategies will enhance brand appeal, and what in-store and pricing strategies will boost sales and profits.

Development of Next-Stage Marketing Program

Case Examples

■Case 1: A major sundries manufacturer
How much market share can be gained when a new product is launched or an existing product is renewed?

●Forecasting post-launch market share through shelf test (SHELF-CHOICE) Forecast market share after launch based on shelf test results and SRI data, and also conduct simulations with different marketing variables.

●Using forecast as an indicator to determine market reaction to products The client can forecast the market share for package options for new products, check whether they meet the objectives and conduct simulations using different marketing variables. ■Case 2: A major cosmetics manufacturer

A new product has not reached an objective. Why not?

●Tracking of new product Examine the acceptability of the product at different stages including contact through advertising, contact at point-of-sale, use/purchase intention and repeat intention. Analyze the current situation and identify issues through comparisons with previously launched products (norms).

●Changes in marketing measures Changes in marketing measures may be required according to the issues at stake, i.e. adjustment of advertising quality and volume, delivery and in-store promotion. ■Case 3: A major sundries manufacturer
On what kinds of criteria do consumers select products? Which companies are our competitors?

●Cluster analysis based on consumer data Perform a cluster analysis using data on what products/brands are bought together with the research item, and show the market structure in a tree diagram, revealing the structure of subcategories from the perspective of consumers. In addition, identify companies with brands in the same cluster as the manufacturer’s brand.

●Use of analysis for planogram proposal for distributors The client can develop an effective shelf display by subcategory, which is based on consumers’ perspective. ●Identifying competing brands The client can consider a differentiation strategy by identifying other brands that are often purchased together with the research item.