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Color Selection—Economics

By: Edwin B. Faulkner
Posted: August 28, 2012, from the September 2012 issue of GCI Magazine.

Editor’s note: This article is an edited excerpt from a chapter of the book Coloring the Cosmetic World: Using Pigments in Decorative Cosmetic Formulations (Alluredbooks, 2012). All rights reserved.

If this had been written 25 years ago, the overarching subject of color selection would have had only three elements: regulations, stability and aesthetics. A fourth element, concerning economics, would not have come into play because, at that time, there were far fewer cosmetic companies in the market than are presently there, meaning less competition and therefore little concern about the cost of ingredients and packaging. Furthermore, the vast majority of global cosmetic manufacturing was in the United States and Europe, which placed most of the manufacturers on a level economic playing field.

Today, there are many more cosmetic companies, both in the more traditional Western markets and the burgeoning Eastern and Asian markets, and there is also now a huge manufacturing base in Asia, particularly in China and Taiwan, resulting in a much more cost-sensitive environment in which companies must operate. So, in today’s competitive marketplace, it is essential for [brand owners and product developers] to consider the most economical way to reach the color point desired for each shade in a decorative cosmetic product line.

Dye Content

The cost of manufacturing pigments is no different than the costs to manufacture other chemical substances, divided into two parts: raw material costs and conversion costs. Raw materials are comprised of the major intermediates used in the manufacturing process, the substrates necessary in laking and any other minor chemical materials needed to set the process conditions and facilitate the chemical reactions. The intermediates account for the majority of raw material costs, often up to 85% of the total. Conversion costs include, but are not strictly limited to, labor, utilities, equipment depreciation, supplies and packaging materials.

Organic colors are available in a very wide range of dye contents, starting from as low as 10% for lakes and going as high as 98% in the case of primary colors. The conversion cost to make these colors is constant across the range of dye contents—in other words, the labor, utilities, supplies and packaging do not vary as the dye content changes. The dye is the most expensive component of the color additive, so the higher it is in a particular product, the more expensive that product will be. But—and it’s a big BUT—the cost increase is not directly proportional to the increase in dye content because the conversion cost remains constant as the dye content increases.

The lesson in all of this is that higher dye content lakes are much better money values than lower dye content lakes, as their increase in intensity is far greater than the higher cost per kilogram paid for them.

Dry Pigments vs. Pre-dispersed Pigments

Decorative cosmetic companies generally buy dry pigments and disperse them in their production facilities (dispersion is defined as the process that converts a raw pigment into a usable form, providing the best color and money values). However, pigments are also marketed in dispersed forms in a wide range of vehicles, including low-viscosity synthetic waxes, high melt point waxes, castor oil, water and others.

The decision to use pigment dispersions versus dry color can be a complicated one, but it boils down to convenience, color consistency, equipment and technology. By way of illustration, think about cooking meals from scratch versus popping a frozen one into the microwave. Intuitively, it’s obvious that the microwave meal is more expensive—you’re paying for the convenience of not having to put the dish together yourself and you’re also paying for the name brand that has done so for you—but if a person doesn’t have the time to prepare a meal from scratch, doesn’t know how to cook well, wants the meal to turn out the same every time, or doesn’t have all the pots and pans to cook a particular dish, it’s the way to go. Judging by the amount of freezer space allocated to frozen microwavable dishes in most grocery stores, the vast majority of the public turns to these dishes for one or more of the reasons described above.