You probably don’t think about the types of companies that make your cosmetics and beauty products but if you did, you might make different choices in the products you buy.
Big and Small companies
The majority of beauty products you can buy at supermarkets & department stores are made by big companies like P&G, Colgate-Palmolive, L’Oreal, Unilever, etc. If you’re curious, here is a list of the Top 50 Us companies and this list of the Top 30 International companies. But most of the unique beauty products you can buy on the Internet or in specialty shops are produced by small companies, often mom n pop shops started by an enterprising marketer, chemist, or other person interested in the cosmetic business. So, you might wonder, what’s the difference?
How are the products different?
There are many differences between the products produced by big companies and those made by small ones. Here is a list of 6 key characteristics of a beauty product and how big companies stack up against small ones.
Cosmetic Technology
Big companies have lots of money to spend on research and development. They hire the most scientists, pay the highest salaries, and consequently get the best people. This doesn’t automatically translate into superior products but it’s a good bet that they will be. Big companies also are given special privileges by raw material suppliers, so they can also get exclusive use of the best technologies available.
Small companies usually don’t have much money to develop their products so they end up using generic formulas made by their contract manufacturer. This is the company that actually makes the batches of products for them.
When it comes to the technology of your beauty products, small companies have a hard time competing.
Product Testing
Big companies spend more money on testing their products. There are two main reasons for this. First, they want to protect themselves from lawsuits. If they have testing to back up their claims, it’s much harder to sue. Second, they want to give themselves a competitive advantage over other products. In the beauty biz, it’s difficult to differentiate your product from a competitor. Testing can help reveal differences.
Small companies can typically afford to do only the bare minimum of testing required.
More testing doesn’t automatically mean better but it certainly doesn’t hurt.
Quality
Big companies have large staffs of people dedicated to testing the raw materials and finished products of everything they make. Small companies have one or two cosmetic chemists who have to test everything.
Safety
Big companies are sensitive to lawsuits and will be extra careful to ensure that their products do not cause someone to sue them. They are also more likely to get fined by governments for not complying to regulations so they are ultra cautious.
Being cautious is a disadvantage for small companies because it interferes with their ability to come out with unique products. Some also might be more likely to use lower quality raw materials because they can get it for a lower cost. This doesn’t apply to all small companies and most of their products are perfectly safe.
Products from big companies are more likely to be safer.
Cost
The more of a product you buy, the less money it costs. Big companies buy lots of raw materials so they get them for a much lower price. This is why they can charge less for their products. If a small company tries to sell a lower cost product, they will eventually run out of money & go out of business. It is not a good strategy. This doesn’t mean every product from big companies are reasonably priced (P&G tried to sell Physique for $12 a bottle when it didn’t cost more than Pantene to make). But for the most part, lower cost, better value will be found from big companies.
Advertising
This is where big companies spent the bulk of their money. TV commercials are not cheap. Of course, advertising doesn’t make the products better so this is actually a disadvantage for big companies. However, small companies do advertise, it’s just usually on the Internet. Unfortunately, the Internet is not regulated like mass media so anyone can pretty much claim whatever they like on the Internet. (e.g. the advertising is less believable). You are just more likely to be misled by the advertising of a small company than a big one.
Having said that, big companies can also be misleading in their advertising.
Uniqueness
Big companies formulate products for the maximum number of people they can. This means they won’t come out with special products for special problems. This is where small companies can thrive and shine. They don’t need to satisfy shareholders and have record sales and profits every quarter. They can make a living selling to a small select group of consumers and have a thriving business. If you have a unique problem (e.g. you want gluten free beauty products), you’re more likely to find a solution from a small company.
Beauty Brains bottom line
So who’s product should you be buying?
If you are most concerned with getting the safest, highest quality products with the newest and best-tested technology, you should buy your products from big companies
If you are interested in finding unique solutions for your particular beauty problems, aren’t as concerned about cost, and are willing to risk some quality issues, you should look to small companies for your beauty products.
Would you rather buy your products from small or big cosmetic companies? Does it matter to you? Leave a comment below.
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This website has given me more information than my 20 year interest in beauty products has ever had and this post will change my beauty shopping behaviour completely. I’ve been buying mostly natural and niche brand’s products till now buying into the hype, although the reason for big brands should have been clear. But one question: How about the difference between the mainstream and smaller brands within the same company, like would L’Oreal invest more to Lancome than Kiehl’s according to the same logic (thus providing more benefits to the larger brand’s products)?
@coco – great question. The amount of resources (lab workers, marketers, advertising, etc.) dedicated to a brand is usually related to the profit or potential profit the company can make from it. For example, Unilever owns both Suave and Dove. On a profit basis, Suave generates much less than Dove and has less potential to grow too. So, Unilever would dedicate more money and resources to Dove than they will to Suave. Just think of how many more commercials you see for Dove versus Suave.
The other thing is that many of the brands in a big company started out as brands in a small company. For example, both Lancome and Kiehl’s were bought by L’Oreal. The first thing a big company does when it buys a new brand is to look through all their formulas, claims, etc. and make them compliant with the big corporation’s policies. Then they reformulate them to use suppliers the big company is familiar with & try to find cost savings. At first, lots of money is dedicated to them. But after a while, the amount of money & resources will depend on how well the product is selling. More sales = more resources. Less sales = less resources.
If you think that small companies have 1 or 2 chemists doing everything, you are sadly mistaken. Small companies are subject to the same laws as large companies. The cosmetic industry is FDA regulated and getting stricter every day. There are a set of laws 21 CFR 210-211 that small and large companies are required to follow in order to just produce products.
Within those laws are the requirements to have a Quality Department separate from your research and development department.
As for testing: we as an industry are not allowed to make any claims which are unsubstantiated.
guys, I’ve got news for you — ALL advertising in not believable, big or small. Big companies just get to have recognizeable, expensive faces attached to their stuff.
Otherwise, I tend to agree with you. I want to buy a product that works, not one that feeds into someone’s personal philosophy unrelated to what actually works.
The problem with big companies, and one that you didn’t mention though, is the monopoly problem. And I’m sorry, but when you have a very few companies all making six million products, that’s a problem. They do what they want, and we have a choice of their stuff, or their stuff. That’s not good, either.
@Janis – While you’re right that “practically” all advertising is not believable, “technically” the advertising from big companies is more frequently true than that of little companies.
At big companies, all the scripts for TV commercials, magazine articles, etc. are filtered through legal departments and lawyers who know that it is illegal to promote demonstrably false advertising. The copy is changed so that it will withstand any legal scrutiny. It’s not a perfect system as big companies often have to remove advertising but it is something that small companies do not have the resources to do.
I agree that monopolies can be a problem. It makes big companies less innovative too. They never take real risks or market to small niches. This is why small companies will always be around. They are like the rookie leagues in baseball. Most of the players are bad, but there’s always a chance someone will become great.
@L – I don’t think all small companies have 1 or 2 chemists doing everything. But I know many that do.
You are correct that small companies are subject to the same laws as big companies, but there is a difference in the level of enforcement. The FDA doesn’t have the time or resources to go after every small company that doesn’t follow the rules.
For example, while it is against the “rules” to use non-INCI Dictionary names for chemicals on your labels, many, many small companies do it. And they continue to do it because the FDA doesn’t stop them. A big company couldn’t get away with false advertising in the same way that a small company can.
I have a friend who started her own lip-stick company. She makes all the product herself, does all the quality testing herself, and does all the marketing herself. She has a website and sells product on the Internet. There is no way anyone would know that her company has no separate QC department & the FDA is certainly not going to find her and shut her down.
We all follow the same rules in this industry but they are not all enforced the same.
Oh no fair guys!! You are making us small cosmetics companies out to look like a bunch crooks. I have a niche product, but you can bet that I take more care and pride in my product than the CEO of any of the big companies. We also have to follow the same laws and we come face to face with our customers everyday who will tell us in no uncertain terms if we are getting it wrong. When did you last buy a product from say, L’Oreal that didn’t work for you that they gave you a refund for? Ever? The small guy has to give exceptional customer service to be competitive, that’s what you are paying for.
@Jackie – no offense was meant and we were not disparaging small companies nor endorsing big ones. (Although I can see how you might come to that conclusion). The analysis was meant to give a general picture but is not applicable in specific cases.
For example, just because big companies can hire more and better chemists doesn’t mean that there aren’t chemists working for small companies who are worth more than 10 of their colleagues. More certainly doesn’t mean better.
You’re also right that small companies have the potential to give better customer service too. Although, big companies have entire departments dedicated to customer service so it’s a wash on average.
I love small cosmetic companies and find them to be more innovative and run with more passion than any big company. It’s just that they are often underfunded and or unaware of regulations which makes buying products from them a bit more of a gamble.
i feel lucky to be a part of a relatively small company’s customer base…i’m a huge “isomers” lover! based out of canada, they sell exclusively through home shopping channels and directly from the manufacturer(their canadian base). i say ‘relatively’ small because they just expanded from the u.s. and canada to australia(this week past…sounds silly but i’m excited for both isomers and the aussies!)!
i love the quality of their products, as well as their dedication to ‘transparency’ and customer service. their spokesperson, manuela, cofounder and cosmetics chemist, is very passionate, personable and tries to provide info on an intelligent level. she doesn’t just ooh and aah and say how nice the cream feels when it goes on and how good it smells(which it doesn’t, they are fragrance free for 99.9% of their line, the small percentage of fragrance being only in the body wash). she tries to explain intelligently, which some people don’t love(they feel it’s over their head)but many of us DO love! we want to be treated like we have a brain! anyway, sorry for the ramble….
I’m a small cosmetics company. No one formulates for me. I don’t folow anyone elses recipes. I make mineral makeup that is safe with saftey tested products, have liability insurance, independant labs test my products for safety, and proper labelling and I make the best products I can for people who want products that are more personal and to have a personal experience.
I know a lot of small companies that are well read, well researched and use cutting edge products. Ganpowder Lumiere is on my purchase list for a week from now. Not cheap, but I have a clientale that would love it.
I cater to my clients. I don’t put money into hype, or bashing others. I support other small companies, because I see how hard those people work to make a good product and I’ve seen those companies approached by large companies to purchase them and their niche. The first person to buy a mineral makeup companie products are usually labs. Why? They want those formulas. What does a small company have over a large one? We work out hind-ends off for our customers. We care if we lose one, or have dissapointed someone.
As for the FDA, I know a small company they fined. I cannot afford it. My labels are dead honest, 100 of the time. I cannot afford a lawsuit, fine or the loss of customers the FDA could cause me. We’re subject to those laws and all of the small company owners I know follow those laws to a T. A large company has a team of lawyers defending it. I can’t afford a team of dogs to do tricks on a commercial.
This is a great article. Of course there are many more points that can be made, which is why reading the comments is also helpful.
Big companies do have the advantage, but you’re right, there are a lot of great small companies out there.
So much is spent on advertising it’s not even funny. The ones that can cut back on that cost, are then able to provide quality products for slightly less then the ones we see in every magazine and billboard.
Thanks for a great read!
Susanna Hess
What about the fact that some of those “big companies” like Unilever and P&G still test on animals!! Johnson and Johnson markets themselves as “a family company”. But they’d have no problem taking your family pet and subjecting it to tortuous and unnecessary testing. Every time you purchase one of their products, you support cruelty to animals. But your skin looks great, so who cares, right?
Packaging is another important factor in price. As technology improves, so do design concepts and capabilities. I belong to a beauty packaging org (not financially affiliated and they probably don’t even realize I’m there) and the bulk of product pricing stems directly from marketing and packaging. The actual cost of ingredients usually hovers between 10-20 percent.
If you’re a packaging junkie (like me) you shop with your eyes first, and then quality. Beauty products are luxury items, and the packaging HAS to reflect the value and investment of the product. The amount of money invested in packaging is over the top but crucial to success since beauty shoppers are visual/tactile shoppers (again, like me).
It frustrates me to no end when I think about what I pay for packaging. Purchasing testers in the grey market is a more accurate price point, but still inflated.
And I’m such a packaging whore that I save empty niche/high end product jars for travel, refill, and dramming out for friends.
You didn’t mention that most large beauty product producing companies like L’oreal and Proctor and Gamble participate in inhumane animal testing, and most small cosmetic companies like (Avon, Mary Kay, Marc etc.) don’t.
@ Victoria
Avon, Mark, and Mary Kay are no small companies.
In the top 50 US based companies in the household and personal products industry, Avon ranks number five, even before J&J. Mary Kay ranks number twelve.
Where can I find a company to produce and package my product I have all the ingredients that go in the product?????? It is a hair care product. I have searched but maybe I am searching in the wrong places.
THANKS
Go to Happi.com and check out their Buyers Guide. There will be contract manufacturers who can produce and fill your product.
Good luck!
There are companies in california that will modify and repackage an approved product formula for you Amy, just google it, they do it with pharmaceuticals too.
Wow, I have read this article and all the comments
Thanks for all this great information beauty products.
Btw, love Beauty Brains as well,
Beaut xxx
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Good post. You did a good work,and offer more effective imformation for us! Thank you.
You provide enriched information for us,thank u.
Me along with a good friend had been also referring to Who Sells the Best Beauty Products? the other day together the same opinion as you, one of the web sites we loved has been this one.
You have provided ample information here on your post that can easily be understand by your readers. I am admiring you for that. Thanks for this insightful post and I am hoping more to come.
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I notice how beauty brains more often stick to the question at hand. They usually focus on how a product performs, all other thing being equal.
I understand how some are really concerned about stuff like animal testing, eco-friendliness.
But in this post, it’s not what they’re talking about. I think.
Anyway, the beauty brains made some valid points. That being said, I’m still willing to try out products from small companies–if within my budget