1939: Cosmetic Industry

An approximate sales volume of $200,000,000 at wholesale for the cosmetic industry in 1939 indicates an increase of approximately 20 per cent over the wholesale figure of $182,107,000 for 1938. Furthermore, it means a definite topping of the 1937 business which totaled $192,045,000 at wholesale and an approach to, if not an actual increase over, the hitherto unbeaten high of some $201,689,154 wholesale, established in 1929. This shows that 1939's cosmetic business approached the all-time high established by this industry in 1929.

It may also be of interest to note that so far as can be determined, the war has had no perceptible effect, one way or another, so far as volume of sales is concerned. Wholesale sales through August were some ten per cent ahead of the same period of 1938 and since, from 30 to 50 per cent of this industry's business, particularly in the high-priced lines, is represented by Christmas trade, it is evident the year's total represents continued good business through the closing months of the year.

From a regulatory point of view the most important event of the year was the beginning of the enforcement of the Food, Drug and Cosmetic Act in June. Although an extension of time was granted on the labeling provisions of the Act, this was merely to give manufacturers in this industry until Jan. 1, 1940, to handle the fairly large task of relabeling the millions of products involved. In other words there is no conflict between the industry and the government concerning the nature, spirit and purpose of the Act which was welcomed by all of the reputable manufacturers. This is not to say that there have not been and will not continue to be differences concerning the Act's enforcement but once the period of transition and adjustment is over, the cosmetic marketing picture will remain relatively unchanged.

The same cannot be said of the Robinson-Patman Amendment to the Clayton Act which continues to be a potential threat to the marketing of cosmetics through demonstrators as practiced by many of the larger companies with so-called 'treatment lines.' The threat is potential because complaints entered against these companies more than three years ago by the enforcement agency, the Federal Trade Commission, have still not been brought to any conclusion. In the meantime, the Commission has been very active with respect to advertising claims and revisions in the advertising approach, both voluntary and stipulated, have been constant.

Any review of the cosmetic industry's year would be incomplete without reference to the 10 per cent excise tax on cosmetics. This tax was made part of the government's revenue in 1934 and since that time the industry has made strenuous efforts to have this burden lifted or partially removed. Although the tax remains at 10 per cent in the current revenue act, two amendments were added which, it is believed, set a more equitable base for the tax, thus resulting in a considerable saving for many of the manufacturers in this field. However, the wording of these amendments is somewhat vague so that rulings by the Treasury Department and perhaps review by the courts will be necessary before their effect becomes entirely clear.