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India would become the largest market for Swedish direct-selling company Oriflame over the next 10 years, said Niklas Frisk, its vice-president and head of South Asia and managing director for India.
Oriflame operates in 60 countries. India, where it started business in 1995, is its fifth largest market in revenue.
“India is the fastest growing market for us and is seen as the largest market in the near future. The timeframe depends on the growth of other regions,” Frisk said. Russia is the largest market for Oriflame now.
The Nasdaq-listed company does not disclose revenue details of the countries in which it operates. It has euro 1.5 billion in annual sales globally.
Oriflame launched its wellness range of products in India on Tuesday. It sells around 500 products in six categories, including cosmetics, skin care and hair colours. “We introduced wellness as a category globally in 2005. It took time to bring these products to India as we needed to develop India-specific products that are vegetarian and produced here,” Frisk added.
Over the next year, the company will expand its portfolio with 100 new products in India across categories. Oriflame sells about 1,000 products across the world.
It might look at new segments like health drinks and juices. “We will have to create this. We are open to opportunities, including the inorganic route,” Frisk said.
“We have been growing at a good rate in the past few years. During the past couple of months, the growth rate has jumped to about 50 per cent month on month, backed by fresh launches and increasing penetration,” said Frisk. Oriflame has around 250,000 consultants in India and 3.2 million globally.
The company produces 80 per cent of the products it sells here locally in two factories. “We have plans to put up the third factory in 2018-2020 if growth sustains,” Frisk added.
He said the company was talking to the government over regulation of the direct-selling sector. “The industry needs independent regulations here,” he added.
In the past couple of years, direct-selling companies have faced hurdles as some of their executives were arrested under the Price Chits and Money Circulation Scheme (Banning) Act. The government is working on amendments to the Act and has indicated there might be an independent regulator for the direct-selling sector.
Recently, KPMG-Ficci said in a report there was a need to bring regulatory certainty for the sector, mistakenly coupled with fraudulent money circulation schemes because of a lack of clarity in existing legislation.
According to KPMG-Ficci estimates, the direct-selling sector in India could with the right policy stimulus, reach Rs 64,500 crore by 2025 from Rs 7,200 crore now. The sector has the potential to provide work for 18 million people, 60 per cent of them women. The direct-selling sector in over 100 countries has a $167 billion market.
