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NEW YORK -- After a two-year struggle, Procter & Gamble has given up the fight and will pull the plug on its Olay color cosmetics line. Executives said they will focus on better beauty opportunities elsewhere.
Since its U.S. launch in February 1999, Olay cosmetics achieved only a 2.8 percent share of the $3.4 billion U.S. mass color market. A 5 percent share is generally deemed the minimum necessary to be successful in the highly competitive arena. The brand had also been in Canada, England and Ireland.
P&G said it would delete the line over the next two years. Retailers could opt to cut it in spring of 2002 or spring of 2003. Apparently, there is sufficient inventory to keep it afloat until then. The brand is carried in 20,000 doors.
"We are phasing out Oil of Olay cosmetics to focus on our bigger, more global, faster growing and higher return cosmetics and fragrance brands -- Cover Girl, Max Factor, SK-II and the Hugo Boss line," said Alan G. (A.G.) Lafley, P&G's president and chief executive officer. "This represents an important choice we're making. Olay cosmetics has not achieved the market share, sales or profit results we had hoped for. Olay cosmetics represents only 5 percent of worldwide P&G cosmetics and fragrance sales. In addition to helping us focus on cosmetics and fragrances, this phaseout will also help us concentrate within skin care on Olay and SK-II."
When queried, P&G executives readily confirmed reports that had been circulating in the market on Thursday morning. Lafley had scheduled a conference call with security analysts for this morning, in which the Olay decision was on the agenda.
Breaking the historic Olay skin care brand into color cosmetics had been a monumental move for P&G and it tested the line for four years before launching. Up until then, P&G had acquired color brands -- Cover Girl and Max Factor -- but not created a major lineup of its own.
At the time, P&G marketers said its Olay customers...