For Swedish cosmetics maker Oriflame, Asia contributes to only 10 per cent of the company’s turnover of 1.5 billion Euros. Yet the Indian cosmetics market sized at Rs 4275 crore and growing at 15-20 per cent annually is a promising one. CEO and President Oriflame Cosmetics Magnus Brannstrom speaks to Preeti Khicha. Excerpts.
What makes the Indian cosmetics market interesting?
First, it is the sheer economic growth. People have more money to spend. More Indians are travelling and exposed to a world that is focused to a large extent on beauty. The young generation is very quick in adapting themselves to this. There is also a growing understanding that your skin is very valuable.
Do you see Indian consumers up trading?
We have seen a broadening of our product portfolio. Earlier there were very few people who consumed very expensive products which were not even bought in India, and then we had the super masses that consumed the cheapest products as possible. There is a trend now for a middle ground.
In your cosmetics basket, which categories are seeing maximum growth?
Skincare. But there is a huge upside in fragrance as well. Skincare and colour cosmetics are the largest contributors to sales (60 per cent). We had planned to introduce ‘wellness’ (health supplements) but dropped the idea.
Any specific product lines doing extremely well?
Anti-aging is doing well and so is our men’s fairness lines. We are also strengthening our youth ‘dare to be’ range targeted towards 18-25 year olds.
Yet your prices are relatively higher than competitors…
In most of our markets, our products are priced higher than brands like Avon. I am sure it is easier to sell cheaper products but price is also coherent with your brand. We do not see long-term benefit in short-term sales.
How often do you introduce new products?
In direct selling, when a consultant comes to a consumer, the first question they ask is what is new. Therefore we have a higher demand than normal retail for new products. In India we have 600 products compared to 1200 in the world. This year, it will be 350 more.
Any plans to increase your distribution network?
We have 30 offices in all the major cities. We are also going into the Tier 2 and Tier 3 cities with Service Point Oriflame (SPO). We have 270 SPO’s which are like miniature offices where consultants can come and collect products. We are targeting around 500 by end of 2011.
Will you go open ‘touch and feel’ stores like competitor Avon?
We have such stores in Moscow and Sweden but we have not seen much benefit. These are more for image building. As a company, we will invest in products and catalogues as our main communication tools. We are also doubling our advertising spend.
Are you profitable in India?
We are profitable enough to be able to invest in India. From a profitability perspective, the key markets are Eastern Europe but also countries like Greece, Spain, and Czech Republic. From a sales perspective, India has grown and features in one of the top 10 countries in the world. In 5-10 years, India will be important both from a sales and profit perspective.
