Amway India is increasingly betting on growing alternative channels, having run into rough weather over the last two years. The subsidiary of the $12-billion US-based Amway Corporation had got into trouble with regulatory issues over its direct-selling (through multi-level marketing), which even saw its senior management being charged with financial irregularities. It is now planning to expand its retail base with some of the premium brands in its bag.
The Rs 2,280-crore company, which has been operating in the country for 15 years, has opened an Amway Beauty store in Chennai and plans to open more across major metros. These stores will not only showcase Amway's healthcare and beauty products, but offer customised services too.
Amway India Enterprises MD & CEO Bill Pinckney says, "Our beauty category has been giving a healthy double-digit growth for the last couple of years. In the next few years, our major focus would be on the health and beauty segment."
Anshu Budhraja, chief operating officer, Amway India, says these stores will have experts who would give recommendations. "The future in this industry is customisation."
Budhraja says health supplements and beauty-care account for around 60-65 per cent of sales. With the Artistry range to be showcased at these retail outlets, Amway aims to play in the prestige segment which also has brands such as Clinique, Estee Lauder and Lancome and Shiseido. Of the total Rs 5,600-crore (in 2012) skincare market, the prestige category is close to 5 per cent, i.e. Rs 270-280 crore. Artistry, Amway claims, is around a Rs 120-crore brand.
Besides retail expansion, there would be new brands from the FMCG company's global portfolio of 450 brands. Some of them would need an after-sales network that it is looking to put in place in the next three-five years such as its water and air purification machines (eSpring) and cookware (i-cook), that contributes 10 per cent to Amway's global revenues.
By the first half of FY-14, Amway would be entering the skin-brightening segment that already has major skincare brands with its Artistry Ideal Radiance. Nearly 57 per cent of the skincare market still lies with skin-brightening products. Herbal Life, Amway's entry in the weight management category is also slated to be launched in 2015, says Budhraja
Amway is making investments to strengthen its presence: It already spends 3-4 per cent of revenue on advertising. It would also be investing in channels, now that it is looking beyond multi-level marketing to brick-and-mortar point-of-sales as well; for an FMCG company it can range between 12-15 per cent. The company had announced a Rs 550-crore plant in Tamil Nadu to bolster its supply chain. Besides wellness and beauty, it is also present in home care, personal care and insurance.