Diversification driving growth at Crown Laboratories
by Scott Robertson
At a recent local event, the host was speaking in glowing terms about Crown Laboratories’ sharp upturn in growth and hiring. Unfortunately, the host repeatedly referred to the company as “Blue Lizard.” It was an easy mistake to make, as Blue Lizard was the product that put Crown Laboratories on the map over the last decade. But the remarkable growth the company has undergone in the last year has had relatively little to do with its primary legacy brand and much more to do with its other offerings. In fact, the Blue Lizard line of sun protection products is no longer Crown’s top selling line.
That distinction belongs to PanOxyl, one of five over-the-counter brands Crown purchased from GlaxoSmithKline (GSK) on Nov. 30, 2018. The PanOxyl 10% Acne Foaming Wash recently became the top selling acne wash in the United States, according to data from the NielsenIQ’s ScanTrack Service released in early March.
“Some people do consider us a sunscreen company,” said Steve Gallopo, vice president, Global OTC Sales & Marketing. “But, we are anything but a sunscreen company now. We are a fully integrated consumer product and consumer healthcare company. We are a skin innovation company. We are not building an organization solely on the laurels of a sunscreen. We are going to build brands and we are going to potentially acquire others if it makes strategic sense for us.”
Still, despite the fact that the company manufactures not only PanOxyl and Blue Lizard products in Johnson City, but also Sarna anti-itch products, local consumers often have no idea the products they are buying at CVS, Walgreens and other national retailers were made and packaged locally.
The company currently employs 375 people in the Tri-Cities, and operates its manufacturing operation on a 24/6 schedule, said COO Jack Songster. “We’re manufacturing somewhere between 1.5 million and 1.8 million units per month,” Songster said. “So, we’re in the 20 million units per year range.
“Just to give you some perspective, it was probably a couple of years ago when we were between 400,000 and 600,000 units in a given month,” Songster added. “This is across all product lines.”
That growth curve has not peaked, Songster said. “We certainly have additional growth opportunity on the weekend shifts and we are adding capacity in our manufacturing to be abe to make more bulk batches. We also have additional packaging equipment that will be arriving in the next three to six months to support additional growth.”
During the Business Journal’s tour of the Johnson City plant in late March, the company was roughly 90 percent of the way through building a fifth production bay. “This will go online around April 15,” Songster said.
Innovation driving brand revitalization
So how did Crown Laboratories take PanOxyl, which had not performed at nearly current levels for GSK, and essentially double the brand’s sales? Gallopo said Crown took the same novel approach to the brand that it applied to all the GSK acquisitions.
“There is new product development pretty much across the portfolio,” Gallopo said. “Historically, when companies buy or acquire tenured assets like this, they have a tendency really to just milk them – throw a little money at them and get a little market share gain. That was not our strategy.
“Our intent was to take these (former GSK brands PanOxyl, Sarna, Zeasorb, Desenex and Mineral Ice) and not only make the existing SKUs successful, but through innovation and understanding where the white spaces were in the marketplace, to grow the franchises through new product development.”
PanOxyl, for instance, is a benzoyl peroxide-based anti-acne product that has been in the marketplace for more than 40 years, having been delivered in largely the same way over the history of the product. Crown Laboratories married the PanOxyl product with a hydrocolloid patch delivery mechanism.
“Hydrocolloid bandages had just started making it into the acne space,” Gallopo said. “This was being done largely in China and Korea, and they were positioned within the beauty realm as little hydrocolloid dots that act as little sponges to absorb the impurity. My idea was to bring this under PanOxyl and get slotted into the acne category where there was a complete white space.”
The Asian marketplace for the hydrocolloid anti-acne dots has been seeing products marketed as all-day, wear-under-your-make-up, beauty aids. Crown Laboratories, however, is marketing the PanOxyl patches it produces as overnight wearables that the consumer removes in the morning.
“We call those patches PanOxyl PM,” Gallopo said. “We introduced that in October 2020 and it has just taken off,” Gallopo said.
In addition, Crown Laboratories plans this month to introduce a PanOxyl-branded oil-absorbing moisturizer with a 30 SPF sunscreen. “One of the challenges with benzoyl peroxide is – although any dermatologist will tell you it’s a part of every anti-acne regimen – it’s very drying. So, we developed internally a 30 SPF moisturizer we call PanOxyl AM. You use this in the morning and it helps with any drying effects from a benzoyl peroxide wash,” Gallopo said.
“So, what we have done is determine the white space and then uniquely positioning the new products within that white space in the franchise,” Gallopo said. “Now, as an organization, we are struggling to keep up with demand.”
To that end, the company is in the process of bringing all PanOxyl production in-house in Johnson City. “Anything that we have the current capabilities of doing at Lafe Cox Drive (the Johnson City manufacturing plant),” Gallopo said, “we are bringing into the facility.”
Waking up the Blue Lizard
The fact that PanOxyl has overtaken Blue Lizard in sales doesn’t mean the company is content to watch the sunscreen fade away. Just the opposite is true, Gallopo said.
“The company was born on the heels of Blue Lizard and the sunscreen market is very near and dear to our hearts,” Gallopo said. “But, the challenge for the organization has been two-fold. No. 1, we were an SPF 30 operating in an SPF 50 world, and No. 2, we were a lotion operating in a spray sunscreen world.”
In other words, when it came to the two most important buying factors in the current marketplace, Blue Lizard has not adjusted to market shifts in either.
“We’ve come from being the leader in mineral sunscreens to now chasing the market,” Gallopo said. “We were the only company fully focused on mineral-based sunscreens and now the whole market has shifted and everything is now focused on mineral-based sunscreens. So, we have had to adapt and adapt rather quickly.”
The company launched its first line of SPF 50 sunscreens, marketed for sensitive skin and for kids, in late 2020. Then, in March 2021, Blue Lizard SPF 50 Sport Active Lotions shipped.
As this issue of the Business Journal goes to press, the company is launching its own Blue Lizard SPF 50 sprays. Crown Laboratories is marketing its entry into the SPF 50 market as being environmentally sound because of its lack of titanium dioxide, a common chemical compound found in sunscreen lotions, but considered harmful to the environment when released in a spray.
In April, the company will further expand the Blue Lizard SPF 50 line with a face-and-body sheer mineral product. At that point, Gallopo said, Blue Lizard will be, “where it needs to be to compete within the marketplace.”
If there’s one word that Crown Laboratories holds holy, it’s “data.” The company goes to great lengths to gather data on the constantly shifting marketplace, Gallopo said. Once the company has the data, and understands the data, then it can make decisions that will drive the kinds of innovation that have created the growth of the last year.
Crown Laboratories makes extensive use of third-party market research companies like Nielsen to provide data. “If we want to go out and do a mail-intercept study where you have two white-label sunscreens and you want to get people’s perspective, so you pay people $25 to sit down for 10 minutes with you, we’ll outsource that,” Gallopo said. “If we want to do in-depth online panel discussions, we will outsource that.”
However, when it comes to analyzing the data and synthesizing it to the point where it can guide the business decision-making process, that all comes back in-house. “We have an analytics group that is solely dedicated to over-the-counter, for instance,” Gallopo said.
That research shows more possibilities for growth in the short term, Gallopo said. “We’re really going to take off. We’re not even going to realize the full potential of what we have from all our new sunscreens into 2022, and again, we’re not your same old sunscreen company.”