Cosmetics Recall Saves Face

Hilary Tuttle


December 1, 2013


By mid-October, Japanese cosmetics giant Kanebo confirmed more than 15,000 incidences of clients developing sizeable skin blotches after using products in their popular line of skin-whitening treatments. Officials believe the “vitiligo-like symptoms”—blotching and inflammation—are due to the whitening chemical substance 4-(4-hydroxyphenyl)-2-butanone, which the company calls  Rhododenol. Kanebo scientists developed the “brightening ingredient” and the company uses it in more than 54 different products, all of which have now been recalled and discontinued.

One-third of the complaints were from people with “serious” symptoms, defined as at least three blotches or a single patch of discoloration five centimeters or more in diameter, the company said in a press release. One-fifth of patients had “already or almost recovered” within four months of their initial complaints. Yet the company’s road to recovery was not so smooth. Kanebo had to issue a humiliating apology in September after the revelation that it continued shipping flawed cosmetics for a week after deciding to recall them, possibly increasing the number of customers affected, the Agence France-Presse reported.

“Product contamination can have diverse consequences including brand damage, product unavailability, production shutdown due to decontamination operations, and loss of contract,” said Nicky Alexandru, vice president for crisis management and global casualty at AIG. “All of these can be very severe from a financial standpoint. In fact, in most incidences, product recall is the least of the concerns for the company involved.”

The most effective way to manage product recall reaches far beyond notification processes and collecting recalled pieces. An aggressive plan should include provisions for maintaining or rebuilding brand reputation, securing inventory so that the supply chain is not interrupted throughout the company, and preserving client base and consumer confidence for future business.

While on the surface, it may sound like Kanebo Cosmetics experienced a fairly standard product recall incident. Aside from initial missteps, however, the company’s handling of the process exceeded expectations and serves as a case study in comprehensive, proactive handling of such crises.

Kanebo Cosmetics issued initial voluntary recall notices on July 4, prompting more than 100,000 calls from impacted consumers in the first month alone. By July 23, the company had set up a “Rhododenol Task Force” headed by company President and CEO Masumi Natsusaka, dedicated to “the mission of taking full responsibility for the care of all customers who experience vitiligo-like symptoms following the use of the affected products, through to the stage of full recovery,” according to a press release.

The task force sent company representatives to visit customers who reported symptoms so that they could perform in-home evaluation of their conditions and access the extent of the physical damage. They then established the goal of visiting each and every customer to collect data about the different reaction levels and the effectiveness of responses to either treatment or discontinued use.

To maximize transparency, Natsusaka disseminates this data in weekly press releases, documenting visits to more than 12,000 customers by the end of October. Updated charts accounted for the number of patients in each of four categories of affectedness, then detailing patient improvement per category on subsequent visits from company representatives.

Establishing a broader system for long-term care was also helpful in restoring brand integrity and mitigating the fallout from any recall. Kanebo reached out to the Japanese Dermatological Association in July to establish a committee to examine the best medical treatments, independently investigate the pathology of symptoms, and establish methods for diagnosis and treatment for use by professionals throughout the skincare industry.

Further, designated staff from the cosmetics company—most from the beauty care sector—were assigned throughout Japan as consultant contacts for customers undergoing prolonged treatment. These consultants were tasked with providing continuous follow-up for every customer by checking their skin condition, providing information on possible treatments, and even offering personalized advice on makeup choices for future purchases of company brands.

Hilary Tuttle is managing editor of Risk Management.