Leading direct selling Swedish beauty company, Oriflame, which has completed 15 years in India, has extensive investment plans to expand its manufacturing base in the country. The company has launched a new campaign to target college-going youngsters. In an interview with Priyanka Singh, Managing Director (India) Marcus Sandstrom and Marketing Director Sharmili Rajput share the company's outlook, marketing strategy and expansion plans: Edited excerpts:
You seem to be strengthening your manufacturing base in Noida. Do you see it as an exporting hub to other countries? Would you come up with other facilities in India?
Marcus Sandstrom: We are investing quite significantly in our facility at Noida. We plan to double the capacity from 200 stock-keeping units (SKUs) to almost 400 SKUs over the next 18 months. Strategically, India is a very important market for us, both for domestic consumption as well as exports. Earlier, we exported about 70 to 80 per cent of our products to almost 63 countries. Now, we are beefing up the capacity to cater to the growing needs of the Indian market, especially in categories like skin care, toiletries, and colour cosmetics. The toiletries segment is the largest contributor in terms of volume, and skin care in terms of value in our portfolio. Currently, we have no plans to set up other facility in India.
Currently, which are the top markets for Oriflame India, and which would be the emerging markets in the future?
Sharmili Rajput: Metropolitan cities like Delhi, Kolkata and Guwahati are the major contributors to our revenue. Their contribution is growing 25-40 per cent every year. Tier-II towns are the new emerging markets, growing above 50-60 per cent every year. Some small markets like Indore and Ludhiana are growing above 100 per cent every year. So, even as the top markets would continue to be major contributors to our turnover, second-rung towns would be the potential emerging markets and the growth engines for Oriflame.
Your products are more expensive than regular fast-moving consumer goods (FMCG) products and are unavailable at retail outlets. You also have a limited number of consultants. How would you ensure your products reach all your consumers?
Where do you see yourself ten years from now?
Marcus Sandstrom: Currently, we are the top direct selling beauty company and we want to retain our position in the future. We want our Indian unit to be the largest revenue generator for Oriflame globally. That is why we are pumping so much money both in manufacturing and marketing initiatives here. Russia is the top market for Oriflame. There, we have 1.65 lakh consultants, a miniscule compared with the Indian population. We have still not exhausted our potential in India and need to increase our consultants’ number to achieve our targets.
You are increasingly focusing on college-going students and had recently launched a campaign and dedicated products for group. What is your strategy behind this campaign?
Sharmili Rajput: Till now, the 30-40 age group contributed almost 50 per cent to our revenue. With this campaign, we aim to make the 18-25 age group the major contributor to revenue, since the range is very economical and this would bring volume sales. We launched our ‘Dare to be’ campaign in February, and this was targeted at college-going people. India has the biggest young population in the world. Oriflame sees this as an opportunity. We have launched products like more vibrant colour cosmetics and affordable pricing.
Compared to FMCG companies which account for almost seven million outlets, your presence is limited to only a few consultants. You don’t even advertise in mass media. How would you create the desired brand awareness in India?
Sharmili Rajput: We are spending extensively on communication. What we have spent over the last 18 months in advertising is much more than what we had spent in the last five years. We have advertised in all prominent lifestyle and fashion magazines, radio and also inserted mini catalogues with magazines this year. We are considering commercials in the next two years for channels like HBO and Star World. In the next four-five years, we should be able to compete with all big FMCG companies in terms of reach, mindshare and brand awareness.
Is the inflation affecting you as much as other FMCG companies? How are you managing your profit in the wake of the increasing input prices?
Marcus Sandstrom: Yes of course. We are facing the pressure of inflation as much as other companies. Our margins are on a par with FMCG companies. The only difference is we pay consultants instead of distributors and retailers. We have been able to sustain our growth by increasing our prices by eight-10 per cent.
Lately, many beauty companies have forayed into India in the direct-selling space. What kind of competition would this pose for Oriflame?
Marcus Sandstrom: We stand by our commitment to give our consumers the best of quality, products and services, depending on their personal needs. We have already patented many technologies in the beauty and personal care segments. We would continue to play to our strengths.