In Beiersdorf’s first quarter results, published at the beginning of May, sales in Africa, Asia and Australia increased to €254 m - a rise in organic terms of 5.5 percent. Double-digit increases were recorded in Thailand, making this market an obvious one to concentrate on.
Doubling production to match double digit sales growth
Nivea, which is the leading global product in Beiersdorf’s portfolio, is now the largest skin and beauty care brand in Thailand and the Eucerin brand also occupies pole position in the cosmetics segment with a market share of over 70 percent.
“The expansion of capacity at our cosmetics factory in Thailand is a response to the constantly growing demand for care products in Southeast Asia. Our business continued the encouraging performance of recent years in the Thai market in the first months of 2009,” said Peter Kleinschmidt, member of the Beiersdorf’s Executive board in Bangkok.
Beiersdorf’s factory in Thailand manufactures Nivea and Eucerin products, which have been “specialized and developed to meet the needs of Asian consumers”. Currently employing 460 people, it supplies other countries in Southeast Asia, such as Indonesia, Vietnam, Malaysia and Singapore as well as Australia and New Zealand. This €10m investment means that the factory will be capable of producing 31, 000 tons of Nivea product per year.
According to the company, the factory had reached its limits in production and investment was needed to meet the growth in the Asian market. It has said that it will continue to invest in the factory in ‘phases’ so that the capacity could reach up to 60 000 tons in the future.
General trend of expansion in Asia
Kleinschmidt said, “We are expecting to enhance our market position in a focused manner as part of our global business strategy”. The company has previously said that it had a long term strategy to capture 5.5 percent of the global market for personal care products by 2010.
As well as this increase in production in Thailand, the company opened an €18m Nivea factory in China last month, maximizing its strength in the Asian market in line with this long term strategy. As part of the focus on Asian markets, Beiersdorf also appointed an additional Executive Board member for Asia.
This year, many other cosmetics companies have also been expanding in Southeast Asia. Ingredients supplier Rhodia recently completed the acquisition of its minority partner’s shares in its joint venture Rhodia Thai industries in Bangpoo, Thailand.
Clarins also planned to double its sales in Thailand by 2012. It hopes to achieve this by adding more product lines, increasing advertising and samples and spa treatments. The contribution to Clarin’s sales from China, Vietnam and Thailand is expected to grow from 15 to 20-25 percent in the next 3 years, according to the Bangkok Post.