13 minute read
Balancing core products, quality, and innovation: Beiersdorf's formula for success
Stephanie Barraud
Founded in 1882 by pharmacist Paul C. Beiersdorf in Hamburg, Beiersdorf has evolved into a globally successful consumer goods company, known for its iconic brands, particularly NIVEA and Eucerin.
As a GTCC member since 1986, Beiersdorf (Thailand) Co., Ltd. has been long-standing in Thailand with more than 700 employees at its office in Bangkok and the production centre in Bang Phli. GTCC is pleased to interview Ms. Stephanie Barraud, Senior Vice-President –ASEAN, Beiersdorf Co., Ltd., on the company’s endeavors in Thailand and ASEAN market, which a strong focus on sustainability.
Prior to her current position, Ms. Barraud spent four years honing her professional skills at J&J Consumer France. Her journey with Beiersdorf commenced in 2002 when she joined Beiersdorf France as Senior Brand Manager, responsible for NIVEA’s facial products. In 2003, she took on the position of Group Brand Manager at Beiersdorf Brazil. As Marketing Director at Beiersdorf Russia since November 2005, she has successfully managed marketing and trade marketing activities not only in the Russian Federation but also across the 11 countries of the CIS (Commonwealth of Independent States of the Former Soviet Republic). In October 2021, Ms. Barraud embarked on her current position, based in Thailand.
Beiersdorf (Thailand) Co., Ltd. has been operating in Thailand since 1972. What opportunity did Beiersdorf see in the cosmetics market here at that time?
NIVEA products first arrived in Thailand in 1926 through our established distributor network. With Beiersdorf’s 140-year history, we are an old lady, but with a very nice mixture of being true to our past, and modern at the same time. One of the secrets that made the company one of the world’s leading skincare brands is our ability to strike a balance between long-term vision and time-tested excellence. For instance, the iconic blue tin NIVEA Cream has remained unchanged for 112 years, a testament to its enduring quality.
On the other hand, we're committed to innovation and have a 140-year history of pioneering the skincare industry. Our journey began with Dr. Oscar Troplowitz, an assistant at Mr. Paul Beiersdorf's pharmacy, who discovered a way to blend water with lanolin from sheep wool, creating the first water-in-oil emulsion and birthing NIVEA Cream. Since then, we’ve continued to lead with innovations, introducing groundbreaking products like sunscreen under the NIVEA and Eucerin brands and trailblasing in men's skincare.
What have been the major transitions of Beiersdorf’s business activities and market position in Thailand from then until now?
The journey has been marked by not just major transitions but a continuous evolution since the company's inception. I think one of the significant accomplishments of Beiersdorf in Thailand is pioneering the deodorant and men’s skincare categories, which were nonexistent before our involvement. We hold a global leadership position in sunscreen products and have successfully increased the adoption of this category in Thailand’s daily usage. Our factory in Bang Phli, was renovated for expansion in 2019 due to the production extension, serving most of the worldwide NIVEA brand’s production requirements.
What's the proportion of the NIVEA products and Eucerin products in Thai market?
We are the leaders in the market for both NIVEA and Eucerin. We're very proud of that. NIVEA is our flagship product, enjoying a marketing size two to three times the size of Eucerin. In the more niche Dermocosmetics market, Eucerin stands out as a dominant leader, boasting an impressive market share of nearly 60 per cent. This achievement is truly remarkable.
How does Beiersdorf adapt its product portfolio to cater to the needs of Thai consumers? Are there any specific challenges or opportunities unique to the Thai market?
With 140 years of skincare expertise, we develop ingredients based on fundamental research, and these innovations are utilised globally. We recognise the importance of tailoring products to cater the unique requirements of each local market. Encompassing both product benefit and product textures. Thailand's warm and humid climate, for instance, calls for lighter textures, distinct from the richer and nourishing creams preferred in colder regions such as Europe or Russia, where temperatures can plummet to -30 degrees. Therefore, our products are thoughtfully adapted to suit these varying needs and climates.
In the Asian market, consumer skincare preferences prioritise addressing concerns like brightening spots and melasma rather than wrinkles, reflecting the distinct characteristics of Asian skin. This adaptation encompasses our entire product range, including body, face, deodorant, and sunscreen products. The influence of Korean and Japanese brands in this market shapes format preferences, such as larger sachets and smaller-sized packaging, like serums available in 50 ml, compared to the standard 30 ml elsewhere. Additionally, Thailand stands out as a highly innovative market, known for its rapid pace of innovation, alongside Malaysia, within South-East Asia. Adapting to and keeping pace with these dynamic markets is key.
Key opinion leaders hold significant influence globally, but the role of celebrity endorsements distinctly shapes the market dynamics. TikTok has a strong focus on South-East Asian because its flourishing presence in this region. When it comes to digital and e-commerce, the rapid growth of TikTok shops in South-East Asia break away from the other parts of the world, with the presence of two major players like Shopee and Lazada. While the core principles remain consistent worldwide, we ensure our approach is finely attuned to these nuances, enabling us to adapt to local needs, with the right products and strategies.
How competitive is the market in Thailand compared to that in Germany?
It’s competitive everywhere. The main competitors are multinationals, not different from Germany. Although Thailand’s skincare market exhibits more diversity, catering to local needs. While Thailand lacks prominent local brands like Indonesia and Malaysia, it boasts a blend of strong innovations and enduring core products. Our approach involves marketing a single brand worldwide with consistent positioning while ensuring product relevance to local consumers, striking a balance between global and local adaptation. We take pride in our innovation, consistently introducing new, impactful products such as NIVEA Super 10 and a recent clear face care range, alongside maintaining successful core product lines to sustain a substantial portion of our business.
We recently revamped our brightening product range, a significant contributor to our sales, by improving textures for increased efficacy. Rather than completely overhauling our products, we focus on ongoing updates and improvements, all while introducing fresh innovations to strike the right balance. Our dynamic approach has positioned us as an innovative brand with strong market leadership in deodorants, men's care, and sunscreen (ranking second) in Thailand. We take pride in our enduring, consumer relevant product lines, maintaining success through continuous innovation and the rejuvenation of our hero products.
How many segments of the market do you have? Which of your products perform better in either the women's market or men's market?
You can segment the market as much as you want. However, our product categories encompass eight main segments: (1) body, (2) body care, (3) face care, (4) face cleansing, (5) sunscreen, (6) lip care, (7) men-care and (8) deodorants, with district divisions between men and women.
The female market is extremely dynamic with rapid growth, particularly in the body care category. We came up with an introduction to new, lighter texture and more efficient products like the recent Super 10 serum, which has garnered fantastic consumer response. Conversely, the male market, primarily in deodorants, shows steady growth, while men-care, although increasing post-pandemic, does so at a comparatively slower pace.
Thai consumers exhibit sophistication in understanding their skin needs, demanding precisely targeted products. Our Hamburg headquarters houses a significant R&D center, and we also maintain research extensions, such as our Shanghai centre, to cater to diverse Asian skin needs and keep a finger on the pulse of consumer trends and market requirements.
Are there any extensions of other brands of Beiersdorf planned for entry to the Thai market in the next five years?
Currently, we primarily operate with two major, iconic brands. The Thai market has been experiencing rapid post-COVID growth, consistently in double digits. Given the market's dynamism, our commitment is to consistently provide top-quality products that cater to Thai consumers' diverse needs through these two iconic brands. Although it may appear as one brand, these encompass various products across multiple segments, including sunscreen, body, face, face cleansing, men-care, cleansing, and deodorants for both women and men. These brands function as comprehensive umbrella brands, covering a wide range of product categories.
In expanding the production facility to twice its size at the Bang Phli Industrial Estate with the grand opening in 2019, is it aimed at the Thai market or an expansion in markets of neighbouring countries?
We operate two production centres in South-East Asia, situated in Thailand and Indonesia. NIVEA products are developed in Hamburg, and a significant portion of their production occurs at Beiersdorf's facility in the Bang Phli industrial estate in Thailand. These products serve not only the Thai and Asian markets but also global distribution. Approximately 80 per cent of the requirements for the South-East Asian market are met by NIVEA products. In contrast, Eucerin primarily relies on imports from Europe.
Which emerging markets are more active in the ASEAN region?
In South-East Asia, Indonesia, with its population of 300 million, stands out as a notably large and rapidly expanding market, accompanied by substantial economic growth. The Philippines and Vietnam, each with 100 million inhabitants, offer significant growth potential due to the relatively low penetration of various product categories in their markets. On the other hand, Malaysia and Thailand are more mature and sophisticated markets, thus reflecting a division between markets characterised by substantial population and growth potential and those that are further developed and sophisticated.
What were the key trends in the cosmetics/skincare industry?
In this ever-evolving market, textures are playing an increasing role. The body care sector, which is experiencing rapid growth, is witnessing a strong trend towards lighter body serums with higher ingredient concentrations. Additionally, a notable trend is the emergence of single-use masks, now a sizable and sophisticated market. What might be considered niche in Europe, such as single dosage ampoules with highly concentrated serum, holds significant prominence in Asia. Asian skincare routines, involving the application of essence, serum, moisturizer, and sunscreen, reflect a more comprehensive approach compared to the simplified all-in-one solutions favored in Europe. This heightened sophistication can be attributed to the influence of skincare practices from the Republic of Korea and Japan.
What we’re observing here is a delayed yet evolving trend in the realm of skincare. Previously, the market predominantly featured wash-off foams that required rinsing with water; now, it’s progressing toward more advanced methods like micellar water applied with a cotton pad. This trend initially gained traction in Europe and Latin America and has now made its way here. Consequently, the most rapidly growing category in face cleansing is micellar water, known for its skin-friendly, especially for sensitive skin, and convenient properties.
In addition, the trend encompasses a broader range of packaging sizes, including sachets, small packages, and larger ones, perhaps due to the convenient format in Consumer Value Stores and budget- conscious consumers. The assortment of available sizes in Asia surpasses that in the other markets, providing consumers with more choices.
Sustainability is a significant global trend, which has already gained strong momentum in Europe and is steadily marking its presence felt in Asia. As a European multinational, we have been at the forefront of sustainability efforts, firmly committed to our goal of reducing greenhouse gas emission by 30 per cent by 2025, using 2018 as a reference point. Our achievements in this area have been substantial, with key milestones such as eliminating the use of microplastics in both our NIVEA and Eucerin brands. Furthermore, 100 per cent of our carton boxes are ecologically certified, and we exclusively employ 100 per cent certified kernel oil. These concerted efforts demonstrate our dedication to sustainability, and it’s evident that this trend is on a clear route to come in Asia as well.
This year, we achieved an exceptional “AAA” rating by the Carbon Disclosure Project (CDP), a non-profit organisation. Out of over 15,000 companies globally, only 13 were honored with this esteemed “AAA” award, highlighting our significant strides in sustainability. We are deeply committed to further advancing our sustainability efforts. Additionally, diversity and inclusion (DNI) are becoming increasingly significant for companies worldwide, poised to transform our work dynamics positively. We have made a resolute commitment to achieve gender diversity, aiming to fill half of the management positions across the globe with women by 2025.
Sustainability and ethical practices are becoming increasingly important in the cosmetics industry. How does Beiersdorf address these concerns in its operations and product offerings in Thailand?
Beiersdorf is dedicated to a clear global agenda called “Care Beyond Skin”, with a particular focus on children’s education for Thailand, a commitment spanning over a decade and implemented in 68 countries. This endeavor has seen participation from over 10,000 employees worldwide, who have volunteered for related projects.
Additionally, we run a two-year programme called “Library for Lifelong Learning Empowerment” in cooperation with Ashoka Thailand and Thailand Collaboration for Education across Thailand. This initiative involves the renovation of libraries in underserved and impoverished areas, providing advanced technologies and games to ensure equal educational opportunities for underprivileged children. With the active involvement of more than 200 employees in library renovations, we recently celebrated the completion of the latest library, marked by a ribbon-cutting ceremony at Wat Mongkhon Khothawat School, Samut Prakarn. We have plans to sustain this program as it contributes positively to society.
During the COVID-19 pandemic, Beiersdorf contributed over Euro 50 million to support communities. Beyond financial support, we also engage our employees in making a tangible impact on the community and the environment. A month earlier, we collectively planted over 10,000 trees, and the feedback was exceptionally positive, prompting plans to repeat this initiative next year. It’s a source of pride for all participants in contributing to repeat meaningful projects.
Could you elaborate on any collaboration or partnerships that Beiersdorf has engaged in within Thailand's cosmetics industry? How does such collaboration contribute to the company's success?
In South-East Asia, market engagement relies significantly on television and influencers. We foster collaborations, enlist ambassadors, and partner closely with influencers for product launches and specific brand campaigns. This collaboration is an integral part of our daily operations. Consumers place trust in individuals and influencers, not just brands, and the region boasts numerous channels with exceptional expertise in various fields.
What are the specific regulations that you need to apply and comply with the Thai standards?
As a European company, every of our products adhere to the rigorous standards and regulations of the European Union, which are often more stringent than those in Asia. When launching products in Thailand, our dedicated regulatory team collaborates with the Thai Food and Drug Association (FDA) to ensure strict adherence to local regulations, ensuring the utmost quality and safety. Likewise, we are actively involved in the Thai Cosmetic Manufacturers Association.
Our commitment to quality is unwavering, and as a robust German company, we take immense pride in our products, having received prestigious production quality awards from the Thai FDA for three consecutive years, alongside Renault. Our company is dedicated to delivering innovative, efficient, highly qualitative, and safe skincare products to people.
Contact details:
Stephanie Barraud
Senior Vice-President ASEAN
Beiersdorf Co., Ltd.
info.th@Beiersdorf.com
