AN INDUSTRIALIST LOOKS AT THE COSMETIC INDUSTRY {359 range" of consumers. Some are becoming conglomerates, in that they are extending themselves into packaging, the rag trade, haute couture, plastics, and pharmaceuticals. I think that this would be the way I •vould approach the future, if I were still in the industry proper, because this would be taking the industry's entrepreneurial flair into rather staid but solid fields. But we also have the reverse operation where pharmaceutical companies have made incursions into this fashion industry. Well-known cosmetic names are now divisions of ethical houses. Strange professional management is going into the glamour field. More and more international pharma- ceutical houses are looking for acquisitions in the cosmetic industry, as its pioneering personalities fade away. Has this really worked so far? Will it work in the future? I do not know the answers, but the pharmaceutical industry's pressing necessity in the United Kingdom to safeguard its high margins against the implications of the Sainsbury Report may well cause us to see more of this type of merger. But now there is a third tendency. Your industry is such a good one that some concerns in other fields, whose original businesses have declined or are under attack, have in effect become financial institutions and are fast turning themselves into conglomerates. The last purely British com- pany of size and world fame has been joined with three other smaller houses under the umbrella of a financial conglomerate. Will it work? For the sake of your business and mine I hope it does, but how far financial mergers will go, or can go, without detriment to the famous names of this fashion industry has yet to be seen. The conglomerate or merger phase in which you find yourselves at the moment is a western world phenomenon of the 60's, with the British government fast becoming the biggest conglomerate of the lot. But in my view, mergers should not exist solely so that clever financiers can make money by rape exercises or stock market manipulation. They should be nationally and internationally, commercially and socially beneficial to all. They can - and should - be used to improve efficiency and production, and to prod lethargic managements to do better by funnelling capital into enterprises where it can be more profitably used. But beware - this does not alxvays happen and sometimes profitable companies, component parts of conglomerates, are used to perpetuate the existence of unprofitable ones and this is why conglomerates become sus- pect.

JOURNAL OF THE SOCIETY OF COSMETIC CHEMISTS Four years ago I coined the phrase "de-conglomerate" in forecasting the future and I was, therefore, tickled to find in the current issue of "Fortune" an article on conglomerates, ending with these words: "Given plenty of competition, the great conglomerate movement of the 1960's might conceivably be succeeded by the great de-conglomerate movement of the 1970's." My purpose has been to provoke thought, so let us look backwards and then forwards for the lessons of the past and the questions of the future: 1. In the cosmetic field, American influence and impetus has been so great and so beneficial that the U.S.A. virtually controls the world industry. Their standards, their requirements, their marketing know- how have changed the face of the industry, and they have had a rich return. But one must reflect on the opportunities that were ignored by the British and the French. 2. The British cosmetics industry, prodded by the American houses operating here, did not wait for the Common Market. They dug deep into every market of the world and the United Kingdom now benefits to the extent of at least t20 000 000 per annum in exports, even though the profitability eventually finds its way to America. 3. The industry is no longer a "paint and powder" business but a highly scientific, exciting and useful one to the world. It is very interesting to note that one international cosmetic company alone today employs more chemists than the whole world industry did in the 30's, the 40's, and maybe the 50's. 4. Cosmetic advertising is becoming so ddightfully, but blatantly, sexy that, in stimulating as it does, desire, by using charming lovelies, one is tempted to ask whether the advertisements were influenced by the pharmaceutical side of the business in order to boost the sale of the Pill. 5. We should now ask two questions: Is the industry reaching saturation point for its products? Will there be a cutback in its growth rate? I am tempted to suggest that any fear of this could be countered by producing toiletties for children. This must obviously be the next market to be tapped. Children are such television addicts and are subjected to so much television advertising, and mature at such a frightening age that they become experts in motivating parents to keep up with the Jones's. Or, one may ask, is there a foreseeable increase in turnover to be found in special cosmetic products for consenting males? I forecast that the next big line will be "antiperspirants", dispensed, thank goodness, by aerosols.