Beauty & Homecare Companies Battle Supply Chain Issues

The Federal Reserve announced its largest interest rate increase in 28 years. The move is an effort to contain soaring inflation rates. Specifically, the Fed raised its benchmark interest rate by three-quarters of a percentage point—the biggest increase since 1994. The move follows a quarter-point increase in March and a half-point jump in May. The Fed’s aggressiveness was the result of May’s higher-than-expected inflation rate. Consumer prices rose 8.6%. While most of the blame was tied to gasoline and groceries, nearly every sector is battling higher prices. Higher prices are certainly here for the global household and personal products industry. In The Top 50 (p. 56), nearly every company bemoaned higher prices for raw materials. But at the same time, a lot of industry leaders insist they’re well-positioned to handle rising prices.

At the Deutsche Bank Access Global Consumer Conference, L’Oréal CEO Nicolas Hieronimus told investors that the world’s largest beauty company can handle inflation…for now.

“We are managing inflation. We’ve seen neither a slowdown today or a trade down,” he said. “If there is a trade down, we have the mass market products that are there to cater for consumers who may need this to have more affordable products.”
Is Hieronimus whistling past the graveyard? After all, there’s been a downgrade in the US 2023 economic outlook.

“Looking toward 2023, we do not currently forecast the US economy to enter a recession but instead anticipate a period of stagflation,” said the Conference Board.

If stagflation becomes a reality, marketers and their suppliers may not find relief in any retail channel.

This issue of Happi also includes our annual look at preservatives, that most important of raw materials. Turn to p. 44 to learn more about the latest strategies from leading suppliers.

Also in this issue, we report on the latest trends in facial cosmetics (p. 50). As masks come off, formulators roll out multi-benefit formulas.

We hope you enjoy this edition of Happi. As always, we welcome your comments and suggestions.

Tom Branna
Editorial Director
tbranna@rodmanmedia.com