by Neil Gleghorn, CEO and Founder, Kallik
Benjamin Franklin once said that the only things you can be absolutely certain of in life are death and taxes. Can I qualify that a little bit and say, ‘and regulation!’ – especially if you work in any kind of global business that deals with consumers.
This is particularly the case, of course, with the cosmetics industry, quite rightly one of best-policed of all sectors, given the fact that it deals with people on such a personal basis. But here’s the thing: while you may pride yourself on how up to date you are, can you hand on heart say you are up to speed with all the recent legislative changes that night impact your business?
Whatever else you are working, on your biggest priority right now is almost certainly the major new EU Regulation (number 1223/2009) that came into force in July 2013. Covering the management and transparency of cosmetics product information, this has big implications for any brand marketing its products in Europe – as it affects how manufacturing and promotional activities are managed and monitored, as well as how information is reported. And although penalties for non-compliance have still to be clarified, there are certain to be implications for any brand that does not get its house in order fairly sharply. (A summary of the new legislation can be found on the Europa web site at http://europa.eu/legislation_summaries/consumers/product_labelling_and_packaging/co0013_en.htm)
The ultimate aim is to keep customers safer by allowing easy traceability of individual products and their ingredients, the processes involved in making them and getting them to market, the way they are presented to customers and the quality, consistency and depth of information that is provided to the consumers who buy and use the products. Rule 1223/2009 has also been designed to streamline registration processes so that they are less burdensome administratively, for the various authorities and, in time, for cosmetics companies themselves. This in turn, claims the Commission, will further aid traceability, making it easier to look up the status of particular products, and quickly determine where they came from and who is responsible for them.
Although the vast majority of cosmetics organisations doing business in Europe will be well aware of the new requirements, the reality is that few have so far achieved compliance. Aligning yourself with the regulation is likely to be a substantial task, affecting the way you capture and manage data right across the product lifecycle – for every product you have on the market today, as well as those you plan to launch in future.
An immediate practical implication you may not have thought through yet, for example: all cosmetics companies must now nominate a single responsible person, based in the EU, whose remit is to ensure the compliance of each product with the rules set out in Regulation No 1223/2009.
This is a huge responsibility, covering as it does manufacturing, testing on animals, consumer safety and customer communications. The role also includes ‘Cosmetovigilance’ – the continuous monitoring and recording (or post-marketing surveillance) of all undesirable effects in a health context that could be due to the use of cosmetic products. The single responsible person is furthermore duty-bound to maintain a ‘product information file’ readily accessible to the public authorities, and in a format they can understand. To ensure product traceability, the nominated person therefore must identify the distributors of each product – information which must be kept for a period of three years following the date on which the batch of the cosmetic product was made available to the distributor. Equivalent information must also be recorded for all other touch-points across the supply chain.
Poison control is another of the requirements, which means you (and all your designated representatives) must be vigilant and transparent about the ingredients used in their products, and be able to show that they have abided by restrictions around certain substances. These include some colorants, and substances recognised as carcinogenic, mutagenic or toxic for reproduction (classified as CMR), apart from in exceptional cases. The Regulation also provides for a high level of protection of human health where nanomaterials are used in cosmetic products.
The Rule also has changes for the way you need to conduct your consumer communications and animal testing. It is clearly a sea-change in the way firms in this sector operate. And it’s becoming evident even this early into the regs settling in that the biggest task facing cosmetics companies as they strive towards compliance, is to do with how they collect and manage information. This must be done centrally, involving the creation of a standard ‘product information file’ (PIF) for each product; each PIF must be readily accessible for a period of 10 years after the last batch of a product was placed on the market; and firms have to submit required information promptly to the requesting authorities through an Internet portal, among other aspects.
Tough – but ultimately helpful?
This isn’t all a one-way street. Though all of these demands appear onerous, not to mention expensive, there will be clear benefits to you, as you will achieve greater transparency in your operations by being able to trace processes and products quickly and efficiently. And in due course, it is likely the US will move towards harmonisation with the EU and raise its own bar on cosmetics industry transparency, which implies any work done now could pay dividends as other international markets fall in line. (Asian markets are already showing interest in basing their own requirements on the strictures, so this could be an opportunity to make one big set of changes whose application ultimately might be global.)
Nonetheless, getting from where you are likely to be now to where Brussels demands you get will require a lot of work. To do so, one of your first objectives must be to improve relationships and communications between different departments in the company, and with suppliers and distributors. IT systems will play a big role here by helping to organise and automate the way data is collected and managed., it is clear.
The important thing is to take action now. Big global brands such as L’Oreal started their projects several years ago so any organisation that has yet to take the first steps will have a lot of catching up to do. Whatever penalties are or aren’t introduced, non-compliance inevitably means risk – risk of product recall, brand impact and, ultimately, cost. And it will take more than a cosmetic cover-up to counter that kind of damage.
The bottom line is that in a globalised market, labelling requirements also vary considerably between different markets and different regulatory regimes. The question you need to not just ask, but get answered: Will such requirements impact you?
And are you sure?