Misunderstood motivations of big cosmetic companies

There is a lot of misinformation posted about beauty products on the Internet. For consumers this is a big problem because it causes them to end up paying more for products and using things that don’t work. It also gives them the false sense that they are behaving in a more ethical way than they actually are. For cosmetic chemists this represents a problem because they end up having to avoid perfectly safe ingredients and make products that cost more, are less sustainable, and don’t work as well.

Often this information is generated by people who frame it as Big Corporations are evil and Small Companies are good. Here are my thoughts on why this heuristic is mistaken.

Myths about Big Beauty Companies

Claim:  Big cosmetic companies produce inferior products

This common claim takes the form of disparaging name brand products that you can buy at Target or Walmart. In the business we call these “mass market” beauty products. They are called that because they are popular. Most everyone knows these brands and have tried the products. They are also relatively inexpensive which is why people come to believe they are inferior.

Reality:  But mass market beauty products are not inferior. The biggest cosmetic companies who make them like P&G, Unilever, L’Oreal, etc. also spend the most money on Research & Development. They pay the chemists who make the products the most money in the industry. They do the most testing. And they use the latest technologies. Overall, beauty products produced by large companies are the best performing products on the market.

Claim: Big companies make cheap products

This goes along with the first myth but the notion is that big companies water down their formulas with unnecessary fillers and cheap ingredients that don’t work as well. That is how they can make them so cheaply.

Reality:  Companies can make products cheaply because they make a lot of them! When they buy chemicals they get what’s know as “economies of scale.” That just means when P&G wants to buy a surfactant they can buy tanker truckloads which costs much less. And when a company owns multiple brands who use the same ingredient, they can buy more to save even more. Big companies do not use “filler” ingredients. There are no filler ingredients in cosmetics. Every ingredient in the formula is there for a reason.

Claim: Big companies produce unsafe products

This is perhaps one of the most mistaken claims I’ve seen about cosmetic products. It’s easily shown to be false. In fact, the products produced by big corporations are among the most safe consumer products you can buy. There are a number of reasons why.

Reality:  First, corporations are compelled by governments to follow regulations. And in the cosmetic industry it is illegal to produce unsafe cosmetic products. This is true in the US, the EU, Japan, and in all the other cosmetic markets around the world. In some places companies will face government fines and in places like the US, companies face aggressive litigation. In the US, most anyone can sue any beauty corporation for any harm caused. Big companies want to avoid lawsuits and they have entire regulatory departments reviewing products put on the market to ensure they are safe. They conduct extensive safety testing prior to launch and even after a product is on the market.

Small companies on the other hand, typically are ignorant of what safety testing is required or they don’t have the money to conduct the proper tests. They also have products created by people who don’t necessarily have any idea about what is actually safe or not.

Pro tip - Don’t buy beauty products from small companies online! They may not be safe

Claim: Big cosmetic companies are only out for profit - Greedy big corporations

This notion taps into a wider societal feeling about big corporations. Namely, that they are evil and self-interested. Certainly, there are corporations that do some shady things. And some of the big corporations in the beauty industry are no different. But there are a few things to consider.

Reality: First, while corporation are not people, they are made up of people who work at the corporation. When I worked for a corporation I had agency and the chance to make decisions. Cosmetic chemists who work at big corporations also have families and friends. That makes a difference in the types of behaviors and choices the corporation will do. Next, while making money is a primary goal, corporations also spend a lot of money on charities to help make the world a better place. To brush everything off that they do as “about profit” is dismissive.

But the bigger implication of this claim is that small beauty companies are out for something other than profit. This is clearly not true. EVERY business is only able to stay in business if they are able to make a profit. If they don’t make a profit they are either a Non-profit charity or they are a failed business. Small companies are also in it “for the profit.” This is most evidenced by the price that many small companies charge for their products. It is obscene when I see a small start-up charge $80 for a 2 ounce product I know which cost them less than $2 to make. Some smaller companies charge even more. It’s ridiculous.

Claim: Big companies don’t care about the environment

This goes along with the claim about being only for profit and there have certainly been instances of big corporations polluting the environment.

Reality: But numerous corporations have also taken the problem of global warming and sustainability seriously. They have implemented programs to reduce the harm they are causing. They have pledged to reduce harm in the future. Now, you may not believe they really will live up to their claims. And I’m not sure if sustainability is actually possible under a capitalistic system. However, big companies clearly are making efforts to address environmental problems.

Claim: Big companies are against regulations

It’s commonly thought that corporations in the beauty industry are against regulations or that they have written them in a way that is beneficial to the company.

Reality: The fact is big corporations have been supportive of cosmetic regulation reform. And there is a good reason why. They are already compliant with regulations in the EU which are more strict than the US. If more strict regulations are passed in the US, this will create a roadblock to smaller companies in the industry. Big companies are happy to put hurdles in front of future competition. It’s small companies that are against new cosmetic regulations.

Claim: Big companies lie about their products

There is a general feeling that big companies and advertisers are lying about their products to get you to buy them. I understand this. Certainly there is a lot of exaggeration that goes on in cosmetic marketing. However, if you read what companies really say, you’ll see that this isn’t true.

Reality: In the US and around the world it is illegal to blatantly lie in advertising. In the US, the FTC patrols the media for cosmetic claims. They even take action on companies that make directly false claims. Big corporations are not interested in being fined by the FTC so they have entire departments dedicated to ensure their advertising never directly tells lies about their products. They have Claims departments (I was in one of these) who design experiments to prove every claim that is made about the product.

Small companies do not have the luxury of this so they’ll often make false claims about their products. They may be able to sell a lot of product using false claims as long as the FTC or FDA doesn’t find them. But in the event that they do, they can just declare bankruptcy and start another beauty company. If you are looking for false claims, small companies are much more likely to do it than big companies.

Are big beauty companies evil?

Hopefully, you’ve seen from the list above that big corporations are not automatically evil. That is not to say that they don’t do some shifty things or that the push to get people to buy more and more products is bad for society. Remember big beauty companies are made up of actual people. They employ your parents, your friends, and other relatives. They provide a service to the world in making products that people want. And they do it in a way that is safe, effective, and low cost.

Small companies may also have good intentions but they are no more noble than the big guys. There are both good and bad companies. But the size of a company tells you nothing about whether they are good or bad.

January 29, 2021
Copyright 2021 © ELEMENT 44 INC BY, PERRY ROMANOWSKI

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