SIC 2844 Perfumes, Cosmetics, and Other Toilet Preparations

Encyclopedia of American Industries | 2005 | Copyright

SIC 2844
PERFUMES, COSMETICS, AND OTHER TOILET PREPARATIONS

This category includes establishments primarily engaged in manufacturing perfumes, cosmetics, and other toilet preparations. Manufacturers of shampoos, shaving products, personal deodorants, hair preparations, suntan lotions and oils, talcum powders, toothpastes and powders, mouthwashes, and premoistened towelettes are included.

NAICS Code(s)

325620 (Toilet Preparation Manufacturing)

325611 (Soap and Other Detergent Manufacturing)

Industry Snapshot

In 2001 the total value of industry shipments was $28.8 billion, up from $19.7 billion in 1994 and $22.8 billion in 1997. Traditionally, retail products are classified as upscale, mid-level, or low-scale, depending on where they are sold and their pricing structure. Upscale product lines are typically sold in major department stores or specialty boutiques; mid-level product lines are sold in department stores at lower prices; and low-scale product lines are sold in drug stores, discounters, or through catalogs. The trend through the 1990s and into the 2000s was away from upscale markets toward mass discounters.

According to Chemical Week, the typical cosmetic product stays on shelves for just four years—at most. This creates a unique situation of continual renewal, revival, and innovation. To meet the expectations of consumers, the cosmetic and toiletries industry must remain in sync with rapidly changing fashion trends and preferences.

Organization and Structure

Many participants in the cosmetics, fragrances, and personal care products industry were members of the Cosmetic, Toiletry and Fragrance Association (CTFA). The CTFA, which was founded in 1894, represented manufacturers and distributors, as well as industry sup-pliers. It provided scientific, legal, regulatory, and legislative services.

The federal agency most often involved in regulatory encounters with the industry was the Food and Drug Administration (FDA). The FDA required that color additives be tested and approved before use. It banned or restricted the use of some specific ingredients including mercury compounds, chloroform, and methylene chloride. Other regulations dictated that cosmetics contain no poisonous or harmful substances and no filthy, putrid, or decomposed substances; they must also be made and held under sanitary conditions. The FDA also instituted labeling requirements that compelled manufacturers to list cosmetic ingredients in descending order according to the quantity used, with some flexibility allowed for the protection of trade secrets. The FDA also had the authority to take legal action against cosmetic companies if problems developed with the safety of products already on the market. To do so, the agency was required to prove in court that the product was harmful or misbranded.

The FDA, however, did not require the same type of pre-market approval for cosmetics as was required for drugs. According to a report published in FDA Consumer, cosmetics were legally defined as "articles other than soap that are applied to the human body for cleansing, beautifying, promoting attractiveness, or altering the appearance." The FDA recognized 13 categories of cosmetics: skin care products, fragrances, manicure products, eye makeup, makeup other than eye makeup, hair coloring preparations, shampoos and other hair products, deodorants, shaving products, baby products, bath oils and bubble baths, mouthwashes, and sunscreens.

The distinction between cosmetics and drugs was sometimes vague. According to FDA guidelines, products claiming to offer medical benefits or physiological effects were over-the-counter (OTC) drugs. Examples of items with controversial classifications included antiperspirants, which were classified as OTC drugs in the late 1970s, sunscreen products that listed a Sun Protection Factor (SPF) number, hair care products claiming to protect or restore hair, and shampoos professing to cure or remove dandruff. If the FDA deemed a cosmetic product to be an OTC drug, it was regulated as a new drug. The manufacturer was then required to demonstrate product safety and efficacy to gain FDA approval.

The cosmetic industry, under the sponsorship of CTFA, developed the Cosmetic Ingredient Review (CIR) in the mid-1970s to gather information about ingredient safety and make the information available to manufacturers. Reviews were conducted by a panel of scientific and medical experts. One report claimed that by 1988, 85 percent of the most frequently used 700 cosmetic ingredients had been reviewed, were under review, or were being regulated or studied by other...

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