Nature’s beauty secrets Oriflame

NATURE’S BEAUTY SECRETS

Oriflame Cosmetics offers a wide range of high-quality beauty products that are sold in more than 60 countries worldwide. The company, which celebrates its 45th anniversary this year, believes in using natural extracts of herbs and plants as the basis for its cosmetics and skincare products. Joseph Altham spoke to Johan Rosenberg, Oriflame’s executive vice president global marketing and R&D, to find out how this philosophy has helped Oriflame to succeed in emerging markets.

When Sweden’s Oriflame started to make beauty products in the 1960s, the company adopted an approach that has proved to be very popular with consumers. At the outset, Oriflame created a range of beauty products such as skin creams and mascara that used natural Swedish ingredients like birch extract. From the earliest days, the company always followed a strict policy of avoiding testing on animals.

Another distinctive feature of Oriflame’s operations, which has been part of the company’s business concept from the very beginning, is its reliance on direct sales. Rather than selling through retail outlets, Oriflame operates through sales consultants who can make money for themselves by selling Oriflame’s products. Many of these 3.5 million sales people deal in Oriflame’s wares as a sideline, but for some, becoming a sales consultant for the company is an opportunity to make a complete change in their lives and to build a new career. “Our business is built on independent sales consultants,” said Mr Rosenberg. “For these people, Oriflame represents an income opportunity. Our products offer value for money, which is an important consideration nowadays, and we have a strategy which enables our sales consultants to take their business online.”

Natural ingredients

Oriflame’s range runs to around 1000 products and the company brings out almost 500 new items every year. “Innovation is important to us. We are introducing new products all the time to excite our sales consultants and capture the interest of our customers.”

Oriflame has just released a new fragrance for men, the Fuse eau de toilette. This masculine fragrance has notes of sandalwood, cypress and cedar. The fragrance also contains an unusual ingredient, rock crystal extract, and the bottle is designed to look like a shard of rock crystal. “Right now we are at the point where we have just launched our Valentine’s offering. As well as the Fuse eau de toilette for men, we have brought out a new fragrance for women, Ultra Glam, together with another new fragrance for women called Paradise.”

Fragrances are only one of Oriflame’s business areas, which also include Colour Cosmetics, Personal and Hair care, Skincare, Accessories and Wellness products. In skincare, Oriflame has created a new range of eco-friendly products, Eco Beauty, based on natural ingredients like shea butter and coconut oil. “Respect for the natural world is in our heritage and close to our hearts.

Natural Alcohol – making quality alcohol naturally

Cargill is an international producer of food and agricultural products. Its high quality alcohol for food and industrial uses is made from natural resources.

Cargill’s alcohol offers constant superior quality and stable organoleptics: its purity and neutral characteristics make it an essential raw material for a wide spectrum of applications, such as spirits, fragrances, pharmaceuticals, cosmetics and body and face care products.

For the cosmetics and personal care industry, Cargill provides various grades of undenatured and denatured ethyl alcohol. Leading perfume and cosmetics brands place their trust in Cargill’s alcohol because of its excellent and constant neutral odor.

We have developed the Eco Beauty range in cooperation with leading certification bodies like EcoCert, the Forest Stewardship Council, Fairtrade and the Vegan Society.”

Production values

Oriflame is a large-scale operation, employing 8300 people and with annual sales in excess of €1.5 billion. The company manufactures around 60 per cent of its merchandise in its own factories, outsourcing the remaining 40 per cent of production. In Sweden, where Oriflame was founded, the company has a highly automated factory just outside Stockholm for the production of toiletries. Oriflame’s largest factory, in Warsaw, manufactures over 350 different products and opened in 1995.

“Poland was the first of our eastern European markets where we established a factory. The factory is well run and we have been able to build up a strong knowledge base.”

A pioneer in eastern Europe, Oriflame was also quick to move into the emerging economies, and now has factories in China and India. “We operate a similar quality standard in all of our factories. In China, the output is purely for local consumption, but some of the products from our factory in India are intended for the global market.”

Production is supported by Oriflame’s strong research R&D capability. “We have a big development centre in Dublin as well as a skin research institute in Stockholm. In Dublin we conduct tests on whether the consumers like the product. We also verify that the claims we make for the product are accurate, so any claims we make for our antiageing cream have been tested and validated on real consumers. As we introduce so many new products every year, testing is very important to ensure their quality.”

Market opportunities

Oriflame has been particularly successful in Russia and the CIS (Commonwealth of Independent States, the countries of the former Soviet Union). Oriflame already has a factory near Moscow for the production of lipstick and lip gloss and will soon have another production site in Russia as well. “This will be a big complex, containing a warehouse and distribution centre as well as a manufacturing facility. The justification for this investment is that Russia is our single biggest market and the CIS as a whole is our largest sales region. We moved into Russia at an early stage. Our products are well positioned for the Russian market, where Oriflame is a trusted brand.”

The company also identifies great potential to develop business through the medium of the internet. “Direct selling is a social business and hence we see a great potential for working also online using the same principles as traditionally. The entire business model is based on recommendations and that is also what consumers trust and look for online – this is a great opportunity for us and the industry.” n