How to Conduct Business in the U.S. Distribution and Sales of Cosmetics Market
with Sharon Blinkoff
Cosmetic company brands around the world see the U.S. market as one of the top countries for distribution for its ability to reach the highest number of consumers. This translates to major sales. Revenue estimates from Statista studies show that from the years 2002 to 2013 there has been a financial increase totaling to 16.21 billion dollars. Statista also estimates that between now and the year 2016, revenue for the U.S. cosmetics market will increase to a staggering 3.67 billion dollars.
These studies show this specific market has ample opportunities for business distribution to consumers and sales of cosmetics to customers. The key point to remember is making sure your business understands and follows the U.S. regulation laws so that your target audience can be successfully reached. The cosmetics industry in this market is continuously rising to the high levels of customer standards, and the Food and Drug Administration (FDA) and Federal Trade Commission (FTC) make it a point to uphold company brand products to even higher standards through honest sales and safe products. Sharon Blinkoff, attorney at law is specialized in the practice of FDA and FTC regulatory issues provided a breakdown of what it takes to play by the rules, and efficiently conduct business in the U.S. market.
Sharon Blinkoff spoke at this year’s Cosmoprof North America event in a session produced by Independent Cosmetic Manufacturers and Distributors (ICMAD) and helped clarify how to establish market presence in the U.S. There are two main avenues a business can take in terms of retail distribution, one being store retail sales and the other being direct sales. Retail sales are simply what are generated when we go to our local beauty store, department, or drug store and purchase a product. Direct sales are purchases made via the internet also known as ecommerce; or through TV infomercials.
According to IBISWorld Beauty, Cosmetics and Fragrance Stores in the US: Market Research Report, “Industry Analysis & Industry Trends, beauty and cosmetics retailers have experienced an overall growth over the past five years”. The rise of profit from distribution follows the population of a region. For instance, California, which is located in the western region of the U.S. market has the highest shares of industry establishments at 13.1%. The overall western region accounts for 17% of the U.S. cosmetic market industry. This goes to show California is the place where beauty businesses have greater opportunity to get their products distributed into stores and in return increase their potential of getting their products into the hands of consumers.
This market is highly competitive, so any window of opportunity allowing access to gain greater reach is essential to the sales of cosmetics. IBISWorld’s article touches on this idea stating that, “Rising disposable income levels and new product introductions will continue to support revenue growth moving forward and competition is on the rise from department stores, mass merchandisers and retailers.”
There is a long list of U.S. federal government agencies that uphold regulations for the cosmetics industry different aspects of doing business in the U.S. market. The two main regulatory agencies the Federal Drug Administration (FDA) and the Federal Trade Commission (FTC), along with others such as The U.S. Department of Customs, The Environmental Protection Agency (EPA), Occupational Safety and Health Administration (OSHA), and The U.S. Patent Trademark Office all providing regulation.
During the session “Are you ready to import into the USA?”, Sharon explained that The U.S. Department of Customs enforces regulations for imported cosmetics and drug products, who deny entry for products that don’t comply. They review product labels and product claims, test for micro contamination in products as well as banned ingredients; misleading claims can result in a company’s products being denied the ability to import into the U.S. The FDA focuses on claims made by a beauty brand product relative to their formulations as well as enforces the limitations imposed on beauty company labeling and cosmetic claims. Mandatory registration is necessary for OTC products featuring active ingredients and sunscreen products; all other cosmetic products have voluntary FDA registration.
OSHA holds the position of making sure beauty businesses are maintaining healthy and safe work spaces as well as manufacturing procedures. The EPA enforces the Clean Air Act, Clean Water Act, and the Superfund Act. These acts aren’t necessarily directly associated with the structure of beauty distribution, but as Sharon explained in areas with poor environmental quality, such as the city that of San Francisco, there is a high air pollution rate that can affect the makings of a product. The U.S. Patent Trademark office is responsible for issuing registration along with trademark source identifying.
The beauty industry in the U.S. focuses on serving customers to the best of their ability and they’re always held accountable through regulation laws. Sharon is a New York attorney at Edwards Wildman Palmer LLP. As part of her practice she has a strong focal point on FDA and FTC regulatory matters. Sharon is currently Secretary of ICMAD and Chair of government Relations Committee and she continues to offer her key insights into the world of laws and regulations for beauty businesses and the beauty industry overall.
To access the selection of topics reviewed in our blog. Click Here! For Sharon Blinkoff’s actual presentation from CPNA 2014
ICMAD Publishes New Guide to the U.S. Beauty Market