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Monday, December 26, 2005

Esthetics profit driven by Clinelle product

AmResearch expects EIG to improve its turnover by 33% to RM66.6mil for financial year 2006. Turnover growth would come primarily from increase in sales from Clinelle

The aggressive marketing of its in-house brand, Clinelle, has raised contribution from the company's distribution division to 70% of total revenue from 60% previously.

Revenue from the provision of professional services under Leonard Drake and Belle Lina is projected to grow 7-8% annually in financial years ending Jan 31, 2007 and Jan 31, 2008 respectively via the company's distribution activities.

EIG raised prices for its Dermalogica franchise to dealers and consumers by 3% to 5% in the middle of this year due to margin erosion as a result of higher transportation costs.

While the price increases have dampened demand, AmResearch Sdn Bhd believes that the EIG management team would carry out promotions to drive sales and sustain revenue.

The company has exclusive rights to distribute Dermalogica products in South-East Asia and Hong Kong.

The company is also entitled to use the Leonard Drake trademark at its professional care service centres via its business arrangements with Dermalogica Inc., United States.

Meanwhile, the company has put on hold plans to move into the male market, despite having done a concept study for the setting up of a professional skin care centre for men under its own range of professional skin care products, Belle Lina.

AmResearch believes that this decision was prompted by a need to raise awareness of the Belle Lina brand name before attempting to venture on a large scale into the male market.

As a result of the freeze, growth in the Dermalogica and Belle Lina franchises this year and 2006 would continue to come from the opening of skin care centres in new shopping malls on the west coast of the peninsula, it added.

The company has diversified to Multilevel Marketing or direct selling by forming a new company call Lexwell. AmResearch expected growth from this division for Year Ended 2006 is negligible.

The research house has a “buy” recommendation on EIG for its attractive dividend yield, of 9% and 12% for financial years 2006 and 2008 respectively.

Update : Bright year ahead seen for Esthetics International

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Tuesday, December 20, 2005

Estee Lauder launched Tom Ford Amber Nude Makeup Collection today in Malaysia.

My blog has write about Ex-Gucci designer Tom Ford and Estee Lauder previously. But the product is not available in Malaysia then nor available to sell on Estee Lauder website.

For this Chrismas, Estee Lauder launch it Tom Ford Amber Nude Make up collection in Malaysia on 20 December 2005.

Those interested can go to Isetan at KLCC today.

Key products in the bare but somewhat pricier – prices start at RM105 for a bottle of nail polish, and RM140 for a lipstick – limited-edition collection are The Eye Gloss in Amber Black and The Face Gloss in Amber Nude – light, creamy tints that are meant to be layered on for a subtly polished or intense look.

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Monday, December 19, 2005

Kao USD2.4billion concluded deal with Kanebo

Dec. 16 (Bloomberg) -- Kao Corp., Japan's largest household goods maker, said it will buy Kanebo Cosmetics Inc. for 279 billion yen ($2.4 billion) from a government bailout agency to boost earnings in the world's second-biggest cosmetics market.

Kao and three buyout funds, Advantage Partners LLC., MKS Partners Ltd. and Unison Capital Inc., submitted the highest bid, according to statements released today by the Industrial Revitalization Corp. of Japan and Tokyo-based Kao.

Acquiring the maker of T'Estimo lip gloss and Revue foundation will triple Kao's sales of makeup and help it challenge Shiseido Co. in Japan's $12.4 billion cosmetics market. Kao plans to complete the transaction in February. Kao said it will also use Kanebo to expand in Europe and the U.S.

"Kao's growth potential in cosmetics'' was limited because it lacked strong brands, said Keiko Yamaguchi, an analyst at Nomura Holdings. Kao said in July it would buy Molton Brown Ltd., a U.K. maker of cosmetics and luxury consumer products, to expand its cosmetic business abroad.

Yamaguchi also said Kao may benefit more from Japan's economic recovery in the cosmetics business than from selling toiletry products. Consumer spending in Japan rose for three straight quarters this year as households earned higher wages.

Kao said earlier this year that prices of its toiletry products were continuing to fall because of competition.

"This transaction will help us expand in the cosmetics business, where there is high growth potential,'' Motoki Ozaki, Kao's president and chief executive officer, said at a press conference in Tokyo. Consumers are seeking a greater variety of products, portending ``rapid change'' in the cosmetics business, he said.

The Industrial Revitalization Corp. of Japan is selling 86 percent of Kanebo Cosmetics and 31.9 percent of the voting rights in its former parent, Kanebo Ltd.

The bailout agency last year provided 366 billion yen to revive Kanebo Cosmetics. The money was used to buy the stake and provide 130 billion yen of loans. Kanebo Ltd. had posted five years of losses.

The IRCJ paid 86 billion yen for its 86 percent Kanebo Cosmetics stake in March and 20 billion yen for a 32.11 percent stake in Kanebo Ltd. in May. The agency said Kanebo group has debt of 167 billion yen.

The Kanebo sale is the last major transaction for the IRCJ, set up in April 2003 with a two-year mandate to bail out distressed companies.

The revitalization agency helped rescue 41 groups of companies, including Daiei Inc., once Japan's biggest retailer, and Daikyo Inc., the country's largest condominium builder.

The agency had purchased 271.8 billion yen of equity in companies and provided 382.1 billion yen of loans as of March 31, when it stopped looking for bailout candidates. It will be dissolved by early 2008 after completing the sale of stakes in companies already under its charge.

The agency began assessing bids from as many as 10 companies for Kanebo in August. In an earlier round of bidding, Johnson & Johnson submitted an offer, according to Manabu Hirano, director of human resources and administration in Japan for the world's largest maker of medical devices.

L'Oreal SA, the world's largest cosmetics maker, decided not to make an offer after examining the Japanese company's accounts. L'Oreal couldn't find ``enough synergies'' with Kanebo, the Paris-based cosmetics maker said in September.

Kanebo Cosmetics had sales of 156 billion yen in the first nine months of 2005. The company is forecasting full-year annual sales of 197 billion yen, up from 145 billion yen a year earlier, according to its Web site. Kao's cosmetics division had sales of 78 billion yen in the year ended March 31.

Kao, which started selling soap in Japan in 1890, makes Biore facial cleanser and Attack laundry detergent.

Japan's cosmetics market, second that of the U.S., was valued at 1.4 trillion yen in the year ended March 31, according to Machiko Amano, an analyst at Standard & Poor's in Tokyo.

Kanebo Ltd. owns the remaining 14 percent of Kanebo Cosmetics, which in turn owns 37.9 percent of its former parent. Kanebo Ltd. expects sales to drop to 140 billion yen in the year ending March 31, from 269 billion yen a year earlier, as it sells businesses to reduce debt.

Shares of Kanebo Ltd. stopped trading on the Tokyo and Osaka exchanges on June 13 after the company said management overstated earnings by 210 billion yen over five years.

Kao shares rose 20 yen, or 0.7 percent, to 3,120 at the close of Tokyo Stock Exchange trading. The announcement was made after the market closed.
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Sunday, December 18, 2005

Shu Uemura make-up competition

10 make-up artists in Malaysia able to enter final after completing the "Deep Sea" make-up competition.

In the final make-up competition held at One Utama Shopping Complexe recently. The final 10 make-up contestant used Shu Uemura Chrismas Series "Moon Drops" as a theme for their make-up. And come up with First Second and Third prize.

First Prize: 王東明
Second : 張晶荔
Third: 譚惠芳

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Friday, December 16, 2005

Elianto provide business opportunity to UMNO puteri member

A trendy outlet, Elianto, which offers cosmetics and skincare products with the vibrancy and wholesome value of fruits, officially opened in Alamanda, Putrajaya, recently.

The store, owned by local fashion accessories chain Classic Bonita Sdn Bhd, is set to conquer the hearts of young girls here and overseas.

Classic Bonita, which founded Elianto, has more than 15 years of retail experience in costume jewellery, accessories and handbags.

From the humble beginnings of its first brand Bonita, the company, which started in Johor, has grown into a well-known player in the fashion industry with 10 outlets in the country as well as in Jakarta, Riyadh, Jeddah, Dhahran and Dubai.

Having established 15 Bonita outlets locally and five in Saudi Arabia, the company targets to open 100 Elianto outlets in Malaysia.

"Soon, we will expand to more countries in the region such as the Philippines, India, China and Mauritius with six new outlets," Teo said.

"In order to scale new heights, Classic Bonita is venturing into a new market, which is cosmetics and skincare," he said.

Teo said in the domestic market, the first Elianto boutique was set up at First World Plaza in Genting Highland last July, while the Classic Bonita flagship store was officially opened at Alamanda Putrajaya, here Wednesday. According to him, Elianto aspires to be the first and fastest growing local cosmetic brand worldwide.

"We are targeting to open 100 outlets nationwide in the next two years," he said.

The Elianto range comprises make-up, skincare, bodycare and nailcare products, and accessories.

It also signed a Memorandum of Under-standing with F.A. Al-Hokair & Co to open 110 Elianto outlets in the Middle East within two years, at the function.

Also present was Puteri Umno chief Datuk Noraini Ahmad.

“Elianto, which means sunflower in Italian, represents youth, freshness, vibrancy, fun and happiness,” said Classic Bonita's managing director Teo Ai Siong.

“It is the first Malaysian cosmetics and skincare brand to enter Middle East,” he said, adding that the brand catered to teenagers, college and university students, and young working professionals aged between 18 and 28, offering Korean-made products made of natural ingredients like fruits like kiwi citrus, pomegranate and cucumber, at prices ranging from RM5 to RM50.

He said the company is planning to expand its retail outlets via licencing and franchising programmes.

“For the domestic market, we believe that through joint corporation with Puteri Umno, especially under the Biro Ekonomi, we can work hand-in-hand in giving opportunities to the members to venture into business, as encouraged by the prime minister,” he said.

"We believe through collaboration with Puteri Umno, we can work hand in hand by giving opportunities to the members to venture into business," he said.

Noraini said the party could help its members in obtaining resources from financial institutions and urged them to be bold and venture into business.

“The support is encouraging and the products have reasonable pricing. The brand is targeting the young generation,'' she said.

F.A. Hokair, based in Saudi Arabia, is the franchisee of over 40 international brands in West Asia, including Zara, Mark & Spencer, Nine West, Aldo, Saks Fifth Avenue, La Senza, Promod and Gean.

The company is also a shopping mall developer and it owns and operates more than 10 shopping malls in the region.

Teo also said that the Classic Bonita group has targeted to achieve RM30 million in revenue next year compared to RM20 million in 2004.

The company, he added, hoped to go for a public listing by 2010.

Related Link: Business Times

Link to this page : cynthia

Link: Esthetics Vs Diabetic ?

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Wednesday, December 14, 2005

Hi-City Bioscience : personal care healthcare products manufacturer that listed on second board

Personal care manufacturer Hi-City Bioscience Group Bhd expects to spend more on research and development (R&D) this year after having allocated three per cent of its revenue on such activities.

Chairman and Managing Director Heah Chew Teng said that the company would emphasise more on its R&D division due to the changes of technology, consumer lifestyle and fashion sense.
He said that R&D activities were critical in helping operators to keep abreast of changing consumer preference either in the form of selecting key raw materials or utilising advanced technology when manufacturing personal care product.

“We expect to spend more this year on the R&D activities. This is one of our strategy to enhance our capability as the leader in personal care manufacturing,” he told reporters.

He said that operators who have in-house research and testing laboratories and undertaking R&D, would be able to translate latest consumer trends to finished products.

Heah said that there were opportunities to target specific market segments in personal care products including products that cater to the needs and requirements of specific age groups such as teenagers, male segment or older age groups.

The managing director said that each different market segment has very specific requirements including among others, anti-aging products, plant based products, products for sensitive skin or acne.

“We are confident that there is always a market for personal care product because these are the products that customers always use,” he said.

He said 49 per cent of the sales was contributed from the domestic market and the remaining 51 per cent from the export activities.

Hi-City Bioscience exports its products mostly to United States (US), Australia, Africa, China, New Zealand, Taiwan and Brunei.

Hi-City is the OEM for American personal care products under brands such as Refreshment, Dawn Mist and Medichoice.

Hi-City Bioscience Group Bhd has entered into an agreement to be an original equipment manufacturer (OEM) for New Zealand-based Aire Natural Science Labs Ltd in middle of 2004 before listing to the second board of Bursa Malaysia on July 14, 2004. Chairman and Managing Director Heah Chew Teng told reporters after the agreement signing with Aire Natural Science Labs Ltd that Hi-City would manufacture personal care products and supply them to Aire Natural customers in the airline and hospitality industries.

“The personal care products, to be labelled under Aire Natural brands Caire and Rejuvin, will be used in the first and business classes of international airlines. Aire Natural is the only company in the world that offers researched, purpose-designed and effective products for airlines. Their products are specifically designed to counter-balance the effects of prolonged confined air-conditioned environments such as dehydration and jet lag.

“Traditionally, Hong Kong has been the hub of travel and hospitality supplies to the world market. By teaming up with Aire Natural, we are confident that Malaysia, more specifically Penang, will emerge as a strong contender to wrest this position from Hong Kong,” Heah said.

He expects the new business deal to initially contribute between 5% and 7% of the group’s 2005 revenue. “The contribution would gradually grow. Currently, the group's original equipment manufacturing activities generate about 51% of group revenue.

Heah and Aire Natural Director Grant Bittle signed the agreement in the presence of Penang State Executive Councillor Teng Chang Yeow.

Bittle said Aire Natural and Hi-City would collaborate to produce the formulation for the personal care items. “We are in talks with six international airlines to supply our personal care products to them. Currently, we are producing for about 10 airlines,” he added.

In 2003, the market size for the personal care products industry in Malaysia was estimated at RM1.6 billion and the market share of the Hi-City Group was approximately two per cent of the total industry based on local expenditure.

For the financial year 2003, the company posted a net profit of RM5.60 million on the back of turnover totalling RM31.60 million.For the group's first nine months ended Sept 30, Hi-City reported an unaudited after-tax profit of RM4.3 million on the back of RM26 million revenue.

Hi-City Bioscience Group Bhd strategises to be a total supplier of medical products in the region. As part of its plans to produce medical devices and pharmaceutical products, it will launch a new range of drainage bags for collecting body fluids, catheters and tubes under its own brand name, Clinicgoods, next year.

Group Managing Director Heah Chew Teng told StarBiz that production was likely to start in the fourth quarter of 2005. He said the medical devices would be exported to the United States, where the group had already secured customers.

Heah said the group was also eyeing the African market, where the group was currently establishing its networking, adding that the other two important markets are located in South-East Asia and Europe.

Heah said the group had recently introduced new products such as medicated and body wipes for the markets in the US and Malaysia, and nutritional supplements.

"The medicated and body wipes are sold under the group's in-house brand Hanitizer," he said, adding that orders for the bulk of the group's medicated and body wipes would come from the US. Meanwhile, the nutritional supplement, sold under the brand name Clinicfoods, is targeted at the local market.

Heah said the group had invested RM3 million in machinery and equipment from Italy and South Korea for the production of these two new products.

About 70% of the group's raw materials such as chemical ingredients are sourced directly from suppliers in Europe, China and the US.

"We expect the recently launched products to contribute about 20% to revenue next year," Heah said.

A new research and development (R&D) laboratory is among Hi-City Bioscience Group Bhd's strategies to upgrade its product development activities.

The Penang-based company, which aims to incorporate more research-based work in developing its healthcare and personal care range of products, is also looking at tapping the medicinal value of local plants, Chairman and Managing Director Heah Chew Teng said.

Its investments exceeding RM5 million are being earmarked for a new leased facility which will house not only the R&D lab, but also its headquarters and manufacturing site for healthcare products. The proposed plant will be sited on a 4.8ha on the fringes of the Waldor Industrial Park at Sungai Bakap in Seberang Prai. Group executive chairman and managing director Heah Chew Teng told reporters after the company's AGM that the group would move to the new facility, which is under construction, at the end of the year.

He added that the plant would start operations early next year.“This three-storey facility, which we will lease from the developer, will also serve as the group’s corporate headquarters,” he said. “On top of that, it will also house our research and development (R&D) unit to develop healthcare products such as nutritional supplements and vitamins.

“The R&D unit will also work together with public tertiary educational institutions to develop pharmaceutical products using extracts from plants with herbal and medicinal qualities,” Heah said. Hi-City Bioscience also planned to R&D initiatives with overseas pharmaceutical and biotechnological companies, he added.

Production of the company's healthcare products - which include dietary supplements and generic pharmaceutical products under the "Clinifoods" brand - is expected to commence by early 2006.

"We will continue manufacturing our personal care products - now totalling 650 items - from our existing plant in the Prai Industrial Estate," Heah said, adding that the company hopes to expand its existing range of less than 100 healthcare items this year.

Hi-City's products are sold locally, and to customers in countries that include the US, Canada, Australia, the UK, New Zealand, Africa, China, Taiwan, Singapore and Brunei.

The group's own brand of products include "Hyginix", "Hanitizer", "FSMP", "Dermaplex" and "Home Spa".

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Sunday, December 11, 2005

Johnson & Johnson most reputable company in the world

Johnson & Johnson was recognized for having the best corporate reputation in America for the seventh consecutive year, according to the annual corporate reputation survey conducted by Harris Interactive® and the Reputation Institute in 2005.

Second most reputable company is Coca-cola and the third is Google.

The development of the first ready-made, ready-to-use surgical dressings by Johnson & Johnson in the mid-1880s marked not only the birth of a company, but also the first practical application of the theory of antiseptic wound treatment. A new product, based on a new surgical concept, led to a dramatic reduction in the threat of infection and disease, which claimed an appalling number of postoperative victims.

Fred B. Kilmer, the Company's scientific director for 45 years beginning in 1888 was responsible for the birth of one of Johnson & Johnson's most famous product lines in 1890. In response to a doctor's complaints of patient skin irritation caused by the Company's plasters, Kilmer suggested sending the patient a container of Italian talc to soothe the skin. The Company began packaging the talc with the plasters, and soon customers were asking for more of the powder. The scented talc was soon being sold as JOHNSON'S® Baby Powder, which remains one of the most recognized and trusted products in the world. This led to the introduction of a number of other baby products, and a series of advertisements proclaimed the new line of products, "Best for your baby, best for you."

During the 1950s, the management of Johnson & Johnson saw the need to diversify the business, and the Company began expanding into the field of pharmaceuticals. One of the first acquisitions was McNeil Laboratories, Inc., which would later introduce the pain reliever TYLENOL® (acetaminophen).

Further expansion through international growth resulted from the creation of new companies and the acquisition of existing ones.

Johnson & Johnson's skin care business was expanded with the 1993 acquisition of RoC, S.A., of France and the addition in 1994 of Neutrogena Corporation, two manufacturers of high quality skin and hair care products.

In Malaysia, people are more familiar on Neutrogena rather than Roc.

Johnson & Johnson rank no 8 largest beauty and cosmetic company in the world. However, only 8% of it sales are from beauty and cosmetic product. The rest are from healthcare and baby care product.

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Wednesday, December 07, 2005

Eng Kah: The only cosmetic manufacturer listed on Main Board of Bursa Malaysia

The name Eng Kah may not ring a bell among consumers of personal care products, but this Main Board company seems to be thriving in the wings as contract manufacturer to globally renowned brands such as Avon and Johnson & Johnson.

The business was founded by managing director Ewe Eng Kah, a chemist who started in the 1970s making his own shampoo in Penang. The company now manufactures perfumes, skincare, cosmetics, toiletries and household products

When Ewe Eng Kah was offered a job by a reputable steel mill to work in Japan, he turned it down, preferring to stay put in his homeland after years of study abroad. And he has no regrets because soon after that, Ewe ventured into the shampoo business and found his true calling.

He founded Eng Kah Corp Bhd, a contract manufacturer of perfumery, cosmetic, skincare, toiletry and household products, which is shampoo business and found his true calling. Today Eng Kah is the only perfumery, consmetic and skincare manufacturer listed on main board of Bursa Malaysia.

The other public listed company on the main board: Esthetics International Group Bhd is in professional skincare and spa services and distribution. Not in Manufacturing. Another manufacturer Hi-City BioScience Group Bhd is listed on Second Board. Thus, Eng Kah is the only cosmetic manufacturing company listed on main board of Bursa Malaysia.

“Back in the late 1960s, shampoo [in liquid form] had just come into the market and I thought it would be a good opportunity to embark on the growing trend,” says Ewe in an exclusive interview with The Edge.

With his qualification in chemistry, Ewe came up with his own formulation of various variants of shampoo in his own backyard. Having total faith in his innovation, Ewe then marketed his shampoo to salons. It became a success and soon his products could be found on the shelves of retail shops all over Penang.Incorporated as Eng Kah Enterprise Sdn Bhd in 1985, Eng Kah Corp is now the holding company for Eng Kah Enterprise, Eng Kah Enterprise (KL) Sdn Bhd and Eng Kah (HK) Ltd, which is dormant.

Ewe recalls the turning point for the company. “In the mid-Seventies, I was approached by an international brand name which showed strong interest in the company’s products.

“The multinational corporation [MNC] was keen for us to become its supplier, but we were very limited in resources,” recalls Ewe. “At that time, the company was still a cottage industry, operating from a few rented bungalows.”

The event left a deep impression on Ewe. He was then convinced that with the right infrastructure, the company had the potential to be a good contract manufacturer for both local and international brands.

Eng Kah Corp now manufactures approximately 1,000 items for more than 50 companies of various natures, namely, trading companies, direct selling companies, MNCs and even public-listed companies. Among its major customers are Cosway (M) Sdn Bhd and Manufacturing Services Sdn Bhd, a subsidiary of Unza Holdings Bhd.

According to market research carried out by Taylor Nelson Sofres Malaysia, Eng Kah Corp is the only large contract manufacturer with the complete range of perfumery, colour cosmetics and household products in Malaysia. “Eng Kah took off with [the production of] shampoo and hair dye, then we ventured into toiletries in 1986,” says Ewe. “Upon shifting into the existing plant in Bayan Lepas, the company started to manufacture skin care products in 1992.”

Ewe wanted to provide a full range of products so that “the customers would not have to look elsewhere” and in 1997, the group acquired a factory building in Shah Alam for the manufacturing of household products.

Of the RM17.44 million to be raised from the placement and public issue, RM2.5 mil lion will be utilised for the recent purchase of machinery as part of the group’s expansion plans. Both plants in Penang and Shah Alam are currently operating at 90 per cent capacity.

In view of growing demand, the company acquired two plots of land in 2000 measuring a total of 5.8 acres along with a factory building in Nilai for future expansion.

With its subsidiary Eng Kah Enterprise having been awarded the Good Manufacturing Practice (GMP) certificate in 1999, one of the company’s new focuses will be to develop medicated, pharmaceutical and herbal-based products.

“We want to differentiate our products by adding value to them,” says Ewe, who is involved in the research and development of the group. “These types of items will be able provide a stronger commitment to deliver results desired by consumers, such as anti-wrinkle cream and anti-dandruff shampoo, hence creating product loyalty.”

“Eng Kah adds value to its customers by providing total concept solutions in terms of packaging designs including sourcing of raw packaging materials, creating new formulation for its customers and arranging for direct delivery transportation,” states the local stockbroking house in its research report.

Chong Sui San, chief investment officer at Allianz Unit Trusts, says that Eng Kah’s experience and standards of research and development (R&D) give it a good sense of clients’ needs, which enables it to comfortably explore new ideas for products.

“Eng Kah’s know-how is its strength, and this is evidenced by its ability to secure clients like Avon and Johnson & Johnson”, says Wong Ming Tek, an analyst with DBS Vickers Securities.

A good track record and reputation follow on from know-how, and Eng Kah seems to have maintained theirs, analysts reckon. Chong says that hygiene and quality control have to be top-class in the beauty business, as a single customer complaint could affect the entire reputation of a manufacturer.

According to a DBS Vickers Securities research report dated Oct 10 last year, Eng Kah has greater control of the manufacturing process as 95 per cent of formulations are created in-house. These formulas provide the company with a high degree of bargaining power with its clients, because whilst the ingredients are made known to clients, the company retains and owns the “secrets” as to how they are mixed. It is not surprising then that the company’s top three customers by revenue contribution in the financial year ended 2001 (FY01) have been with the company for 14, four and six years, respectively.

The know-how factor also lends itself nicely as a barrier to entry. Chong says that there may be copycat companies in the industry watching Eng Kah with a view to follow in its footsteps. She notes, however, that the industry is very segmented and it would be difficult to undertake a comparative analysis, especially among “backyard chemists”.

She believes that Eng Kah can distinguish itself as international names are behind it. Eng Kah also provides value-added services to its customers in the form of transportation and by designing the packaging for its products. “Compatibility between the product and its packaging is very important, both in terms of design and of how the materials react to each other,” Ewe says.

Another analyst’s view is that there are no major barriers to the cosmetics and toiletries industry, and branding and marketing are what set products apart. Ewe says that entry into the industry is not just a question of having adequate capital. “The strength lies in R&D and it is difficult for a newcomer to gain experience,” he explains.

However, the management is not resting on its laurels. The company has set up another plant in Nilai, Negri Sembilan, with its listing proceeds to add production capacity to its existing Penang and Shah Alam plants.

DBS Vickers’ Wong sees this as a prudent move on the part of the management. “Bulkier, low-margin products like household and toiletry items will be moved to Nilai from land-expensive Penang. Transport costs will also be reduced as Nilai is a more central location,” he says.

Chong says that it makes sense for the higher-margin products to remain in Penang as Ewe is “very hands-on and involved in the business”.

Capacity in Penang for the higher-margin products like cosmetics and skincare will be expanded by 25 to 30 per cent in the next two years.

Eng Kah should also be able to fend off competition from other manufacturers in the region with its embedded skills, experience and long-term relationships.

The company has also bought a piece of land next to the new Nilai plant “to be used for a new idea” and should finalise an agreement with a new multinational client by the end of the month.

AmResearch said Eng Kah's production capacity would grow when its third plant in Nilai was commissioned in the fourth quarter this year.

Manufacturing of household products would be shifted to the Nilai plant to free up capacity of its present two plants to manufacture perfumery, cosmetic, skin care and toiletry products.

The Nilai plant is two times larger than its existing plant. Its two plants in Bayan Lepas and Shah Alam were operating at 90 per cent capacity. This has caused backlog orders over the past three months.

Eng Kah recently acquired a factory building in Bayan Lepas previously owned by Widetech (M) Bhd for RM5.63 million cash, located next to Eng Kah's existing plant. The Widetech plant, together with a new plant in Nilai, which commenced operations last month, will increase its production capacity. Eng Kah is already operating at full capacity.

analysts are bullish on Eng Kah is its innovation and management focus. Analysts note that Eng Kah is among a few players in the industry that not only contract manufactures skin care and household products but also generates new product ideas for its clients. These new ideas include packaging methods as well as new chemical formula for products.

Excerpt from The Edge.

Eng Kah rides on Cosway potential

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Sunday, December 04, 2005

Fortune Magazine feature beauty & cosmetic industry in china

Recent issue of Fortune magazine feature beauty and cosmetic industry in China with it cover story title "Battle for the Face of China".

MAC, a company under US's Estee Lauder, compete with Japanese Shiseido herb-infused face cream developed especially for Chinese skin at Shiseido's R&D center in Beijing, French's Loreal group and LVMH group's Sephora and Dior.

The magazine descripe above is David. Stated that the Goliath is Procter & Gamble. because its Olay whitening skin creams outsell every other brand, and its shampoos (Rejoice, Head & Shoulders, and Pantene) hold the top three hair-care positions in China. In March P&G launching Cover Girl and Max Factor to compete with L'Oréal's Maybelline. Along with its high-end SK-II skin-care line and its other household and food brands. Roughly 70% of that from hair and skin products, compared with a fifty-fifty split with food brand in other countries. "We are the beauty company of the P&G company," says Daniela Riccardi, P&G's president for Greater China. "Nowhere else is beauty such an important part of the business."

L'Oréal's 2004 sales of $350 million (including makeup and other beauty products), were up 58% over the previous year; Shiseido's China sales last year were $204 million, up 27%.

"It's the only big market growing this fast in China," says Jacques Penhirin, a McKinsey partner who tracks retailing. "This is a market that was almost nonexistent 15 years ago, and about 70% of it remains to be developed."

Read the full article above here.

"Chinese people ask for even whiter tone than what is selling well in Japan," says Tadakatsu Saito, chairman of China operations for Shiseido, which has the most experience of all the multinationals with whitening because of the huge market in Japan. "When we try to sell them their exact color, they say, 'Too dark. Do you have anything lighter, brighter?' "

Women in China who can afford it think little of spending at least as much money on facial moisturizer as on clothes. That would be unusual in the U.S., where 87% of women spend less than $20 when they buy skin cream. But at Plaza 66, an upscale mall in Shanghai, fashionable Shanghainese women toting designer purses and Starbucks coffee cups pause all day long to buy expensive moisturizer at the counter of La Mer, another Estée Lauder brand.

One of them, Qiao Hong, 42, says. "It's really worth the money. With money, you can just make more of it, but your skin—if you lose your beauty and youth, you cannot get it back."

La Mer's counter has 32 other women on a waiting list to purchase a 500-milliliter jar of face cream. Cost: $1,750. Shiseido finds similar demand for its Clé de Peau line, which, at $500 for 30 grams, is more expensive than gold. On any given Saturday afternoon, the comfy chairs at the Clé de Peau sections of department stores are filled with buyers and with women waiting to take their places.

Read the full article above here

L'Oréal's new laboratory in Pudong is a 32,000-square-foot facility stocked with pigments, waxes, and oils. Didier Saint-Leger, a biochemist, oversees the microscopes and chromometers that measure the effectiveness of skin-whitening creams, the ovens that heat emulsions to test stability, and the two-way mirrors that enable him to observe the way Chinese women apply face creams and makeup. The center opened in September with 43 Chinese researchers, most of them chemists. Next year, when L'Oréal completes construction of Phase II, currently an empty field at the back of the lab, there will be 75. Chinese herbs, roots, and flowers will be tested there, distilled and researched for their impact on skin and hair. Hua jiao, the flower of the prickly ash tree that adds tongue-scorching spice to Sichuan cuisine, is reputed to clear up acne and will be among them, as will traditional whitening agents such as ginkgo leaf, ginseng, and mulberry.

The R&D center is part of L'Oréal's transition from the image it currently projects in China. Its recent acquisitions of Yue Sai, for a decade the most popular cosmetics brand in China, and the low-end skin-care line Mininurse are steps in that direction.

But Shiseido is already ahead in the traditional-formulations game, with its "Chinese national brand" Aupres and its recently expanded three-year-old Beijing R&D center. It has already launched its first product (Eternal Total Recharge) and has more on the way.

Estée Lauder opened its own 15-scientist Innovation Institute in Pudong in November, stacked with pigments with names such as "gleamer flake" and "magic mauve." As a latecomer, Estée Lauder's strategy has been to build a finally-this-glamorous-American-brand-is-available-in-China buzz for its prestige lines long before they go on sale. It also gives away cosmetics to China's leading makeup artists to encourage them to experiment on models for shows and movies.

Carol Chen, Lauder's Taiwan-born general manager and the only ethnic-Chinese woman heading a major beauty company in China, says "China changes so fast," "You blink, and the market is there." Chen used the same strategy to launch the Clinique and Estée Lauder lines, advertising in the Chinese edition of Elle years before they were for sale in China.

Read the full article above here

L'Oréal may also begin introducing products differentiated by region—heavier creams for China's cold northern climes and lighter ones for the tropical south—as well as by skin tone. "Segmentation is something that's becoming more and more important," says Gasparrini. "There's still huge space in the market to take." L'Oréal, like all beauty companies in China, finds there also is space to educate Chinese consumers, who know little about applying cosmetics or why they need exfoliants. "In other countries women learn how to use cosmetics from the mom," says Gasparrini. "That's not the case in China. We have to substitute the mom."

Shiseido has built a chain of 25,000 stores in Japan, a country one-25th China's size. Last year it started doing the same thing in China. The company is selling hundreds of products it has developed and manufactured through two joint ventures in China, under brands with names such as Za, Uno, and Fitit. Shiseido expects to double its annual China sales, on operating margins of more than 20%, and make China contribute one-fourth of Shiseido's overall global revenue. "Ten years ago we thought that 1% of Chinese women would be Shiseido customers," says Masaru Miyagawa, president and CEO of Shiseido China. "Now we think that 10% of Chinese women will be Shiseido customers."

Read the full article above here

There are Chinese companies in the beauty game as well, and being Chinese, they are best poised to play the tradition card. One of those is Shanghai Herborist Cosmetics, a division of state-owned Jahwa. "We're the Body Shop of China," says Herborist's fashionable brand manager, Lily Xu. Herborist makes 130 products for use from head to toe; one of its most popular is a "whitening revitalizing mask," which uses seven herbs that claim to lighten skin tone in 15 minutes, producing faces "as white as a lotus seed." Herborist now has 180 freestanding boutiques in 40 cities in China and plans 100 more by next year. Xu is excited about a recent agreement with Sephora to sell Herborist products in its China stores and ongoing discussions with the company to sell Herborist abroad. "Back to nature is the cosmetics and skin-care trend in fashion now," says Xu. "Once Origins or L'Occitane come to China, then we'll have real competition. But we'll still be able to distinguish ourselves as coming from Chinese tradition and Chinese medicine."

It's all about mixing tradition and modernity to reach Chinese consumers, says Yue Sai Kan, a TV celebrity in China who founded the cosmetics line acquired by L'Oréal. Sitting on a plush sofa in her New York City townhouse, where she spends her time when not working on a new show in Shanghai, she opens a book of paintings from the Tang dynasty, when China was ruled by an empress, Wu Zetian. She points out the red lips and painted brows in the depictions of women who lived more than 1,000 years ago. "See, Chinese women have always used cosmetics," she says. "In the Tang dynasty they used as many steps of makeup as we do today. Chinese women had been discouraged from using cosmetics for 35 years. It was a world of darkness, of no color. Now it is changing. What you have to do is give them international, yes, but Chinese have a lot of pride in themselves and their traditions. The best thing you can give them is a belief in themselves."

The above is excerpt here.

Link : estee lauder owned cosmetic companies

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Saturday, December 03, 2005

Malaysian firm promotes female arousal oil in Singapore Sexpo

Last month, Singapore held a first Sexpo in the country.

What is a Malaysian company doing in a Sexpo?

“We’re here simply to disseminate information and create awareness on a fabulous product,” said B.B. Teh, who is Biodel Sdn Bhd director.

And the “fabulous” product introduced at the three-day Singapore Sexpo 2005 is Zestra, a female arousal fluid.

“We are not limiting ourselves to the Malaysian market because our company is Zestra’s sole distributor for Asean countries,” said Teh.

“So we take every opportunity to participate in exhibition or seminar revolving sexual health in the region.”

Teh also said that the company’s participation in the Sexpo was timely as Biodel will launch Zestra the next day in Kuala Lumpur.

The response to Zestra in the Sexpo was tremendous, he said, as Biodel received many trade enquires from Singaporeans, Indonesians and Thais.

So what did Teh think of the Sexpo which is the first to be held in Southeast Asia?

“Not as what we expected in term of exhibitors. There was too much emphasise on condoms, dildos and exotic dancing girls. What’s missing are the big players like Durex (international condom manufacturer) and Pfizer (the maker of Viagra),” he said.

However, Teh reckoned the Sexpo to be “low key, less skin and no sleaze” and more informative and educational.

“It is expected because this is Asean and particularly Singapore.”

The American-product Zestra, is an externally applied botanical oil for women who want to increase their overall sexual pleasure and satisfaction.

Zestra, aroused interest among the Sexpo visitors.

“Many older gentlemen were very frank about needing external help to boost their partners' libido and sexual response. The men told me that they themselves had Viagra and Cialis,” said Teh.

“Many were very disappointed when I told them that we were not selling Zestra in the Sexpo.”

The other Malaysian company in the Sexpo was condom manufacturer Luveex which gave away 50,000 condoms.

Excerpt from The Star

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Thursday, December 01, 2005

Avon and Mary Kay

Avon and Mary Kay both are focus direct selling company beauty and cosmetic industry. Job or career opportunity to ladies are limited at the point of both company found. Thus, both company claim to be a job provider to ladies when job opportunity for lady is limited. Even now, both company also claim to be providing "business opportunity" for aspires lady enterpreneur.

Avon was founded by a guy call David H. McConnell in 1886 whereas Mary Kay was founded by a lady call Mary Kay in 1963.

In 1990, Avon was diversified to too many non core business and the company was in trouble. Amway, a health care direct selling company offer a take over bid to take over the management control of Avon. Later, Mary Kay, a much younger company also join in the bandwagon to bid for the company.

Avon rejected both deal, which they view as hostile take over. Avon claim thier company is disimilar with Amway as both company in different indsutry. Avon in beauty and cosmetic while Amway in health care nutrition industry.

Even with Mary Kay. Avon also claim their customer base is different from Mary Kay! Which until now I do not understand.

Avon, after divesting those non core business. Now become 6th largest beauty & cosmetic company in the world while I never saw Mary Kay on the top 10 list.

One of the ruling party in Malaysia UMNO, it Puteri UMNO division claim that majority of their member are unemployed. This is how serious our country unemployed rate especially among bumiputra lady graduate in Malaysia.

As both company Avon and Mary Kay have operation in Malaysia. And both company claim to provide "Business Opportunity" to lady. Perhaps unemployed lady graduate might approach one of the above company!

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Tuesday, November 29, 2005

Gucci designer Tom Ford and Estee Lauder

Estee Lauder, founded 59 years ago, always regarded as "mature" and "conservative" by young generation.

In April 2005, Estee Lauder sign a deal with Gucci Designer Tom Form to resuscitate it brand.

The launch of the Tom Ford Estee Lauder Collection attracted a crowd of over 1000 people to Saks Fifth Avenue in New York City.

Tom Ford is among the most highly respected and successful designers of the last decade. Ford is credited for reviving both Gucci and Yves Saint Laurent through influential collections and provocative ad campaigns. During 10 years as Creative Director, Gucci sales increased from US$230 million in 1994 to almost US$3 billion in 2004, making Gucci one of the largest, most profitable luxury brands in the world.

The 14 Sets Tom Ford collection are said drawing "not bad" revenue. Especially
gold colour Amber Nude: The Lip which cost USD35 and black colour eye-lash costing USD40.

Before the launch of Tom Ford collection. Estee Lauder was view as a old fashion brand, even unable to compete with it own secondary brand: MAC or Bobbi Brown.

NPD Group's NPD Beauty analyst said although Estee Lauder is the top 3 selling brand at Department store. The profit growth of other niche brand like N.V. Perricone M.D. and Philosophy really make Estee Lauder worried.

Those who show up at Saks Fifth Avenue included more mature loyal customer of Estee Lauder. They more attracted by a product transform from 1953 Youth Drew Amber Nude

Market researcher Young Group President Karen Young said "All cosmetic brand are targeting people group age 25 to 30. Which do not hesitate to spend. However, Estee Lauder traditionally is a brand that belong to middle income conservative brand, not a leading fashion brand.

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Saturday, November 26, 2005

Beiersdorf and Nivea

If you mentioned to Malaysian Beiersdorf. They will ask Beiersdorf what? But if you mentioned Nivea. Most lady will heard of it before. Nivea is one of the product produce by Beiersdorf.

Beiersdorf rank no 7th largest beauty and cosmetic company in the world and no 1 in German.

1882: Pharmacist Carl Paul Beiersdorf establishes the Company on March 28.The date of the patent document for the manufacture of medical plasters is taken as the date of the Company’s formation.

Carl Paul Beiersdorf produces gutta-percha plasters in his laboratory on the basis of his patent, laying the foundations for modern plaster technology.

1890: Pharmacist Dr. Oscar Troplowitz takes over the Company.

1892: The first international cooperation agreement is concluded with US trading company Lehn & Fink for the USA.

1900: Patent application for Eucerit, an emulsifying agent. Eucerit is the basis for Eucerin and, later on, for NIVEA Creme.

1906: The first overseas branch is established in London.

1909: Labello is launched on the market. It is the first lip care product in sliding tube packaging. The term Labello is derived from the Latin for "beautiful lip" (labeo = lip; bello = beautiful).

1911: NIVEA Creme – the first stable water-in-oil emulsifier – is introduced. The emulsifying agent Eucerit is made from lanolin, found in sheep's wool, and is the key to NIVEA Creme's unique properties.

It is said that the main ingrediant of Helena Rubinstein (HR) product also comprises sheep's wool in Australia.

1918: The deaths of Oscar Troplowitz and his partner Otto Hanns Mankiewicz result in the formation of a stock corporation (limited company)on June 1, 1922.

1922: Willy Jacobsohn takes over as Chairman of the Executive Board of the newly formed stock corporation. The first self-adhesive plaster is introduced under the name Hansaplast.

1925: NIVEA is relaunched in blue packaging. The new design and communication lead to the crucial breakthrough for the NIVEA brand. The distinctive blue and white tin starts its successful history.

1929: Beiersdorf shares are listed on the Hamburg stock exchange for the first time. Over 20 production sites worldwide are already in operation.

1933: Under the pressure of National Socialist propaganda, the Jewish members of the Executive Board step down. Willy Jacobsohn, the former Chairman of the Executive Board, heads the foreign affiliates from Amsterdam until 1938.

By adopting a policy of "honorable tactics", the Beiersdorf Executive Board, under the leadership of Carl Claussen, succeeds in steering the Company through the Nazi period despite a large number of malicious campaigns by competitors. Although Beiersdorf retains its own business culture, it must still cooperate with the regime

1936: tesa is introduced as the umbrella brand for self-adhesive technology. The first innovative product is its transparent adhesive film, later known worldwide under the name tesafilm.

1945: At the end of the Second World War, a majority of the Hamburg production plants and administrative buildings have been destroyed.

1945-1949: Most of the affiliates and the international trademarks in almost all countries, in particular in the USA, UK and the Commonwealth, and France, are lost. The company Beiersdorf has to start again virtually from scratch.

1950:ph5 Eucerin is launched on the market. This innovative ointment focuses on the importance of the skin’s own natural protective acid barrier in maintaining good skin health.

1951: The first deodorizing soap is introduced under the name of 8x4. The brand is extended into a product family during the 1950s and 1960s.

1955: Beiersdorf launches a protective hand cream on the market under the name of atrix.

1963: NIVEA milk – liquid NIVEA Creme in the form of a water-in-oil emulsion – is introduced "for all-over body care".

1973: The images in the "Only Me" NIVEA advertising campaign illustrate how NIVEA Creme optimally bundles all aspects of skincare into a single product. The campaign defines the look of NIVEA Creme advertising in the 1970s and 1980s.

1974: Beiersdorf diversifies its business and introduces a divisional structure. At this time, the divisions are cosmed, medical, pharma and tesa.

1982: Start of steady expansion of NIVEA as a brand for skin and body care through a large number of subbrands with an international focus. Introduction of NIVEA Gesicht (face) in Germany, Austria and Switzerland.

1989: Change of strategy: Start of the implementation of a strategic reorientation process focusing on the core competencies of skin care, wound care and adhesive technology.

1990: Acquisition of the JUVENA brand, developed by the Divapharma pharmaceutical laboratory, founded in 1945 in Zurich.

1991: Acquisition of the la prairie brand. The company originated in the famous La Prairie clinic in Montreux, Switzerland.

1992: Launch of NIVEA's BLUE HARMONY advertising campaign, which is still running successfully today. It adapts to the current spirit of the times with powerful emotionality.

1995: Acquisition of the FUTURO brand. The company was founded in Ohio, USA in 1917 by Georg Jung, a German, and produced bandages right from the start. The "Futuro" brand with its black and yellow packaging was born in 1936.

1999: The Company's strategy is streamlined further to focus on a small number of strong consumer brands. Professional wound care and self-adhesive technology are given the opportunity to introduce their own organizational structures

2001: The new strategy enables tesa to become an independent affiliate. tesa AG is formed as a wholly owned affiliate of Beiersdorf, enabling it to react more flexibly to consumers and industrial customers.

Professional wound care is spun off in line with the new strategy and contributed to a joint venture between Beiersdorf and Smith & Nephew. BSN medical, domiciled in Hamburg, is founded.

2002: Florena becomes a wholly owned Beiersdorf subsidiary. The cooperation dates back to 1989, and was intensified following the reunification of Germany.

2003: A new functional group organization focusing on the areas of brands, supply chain management, finance and human resources replaces the previous divisional organization

2004: The new skin research center opens in Hamburg, underscoring the innovative strength of the globally successful Beiersdorf group.

Link to this

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Thursday, November 24, 2005

Beneficiary of bird flu outbreak

While world economy under the threat of bird flu crisis. Swiss pharmauceutical manufacturing company Roche, with it only drug that able to provide the best defense in the initial phases of any global influenza pandemic call Tamiflu gain limelight recently. The other drug manufacture by UK Glaxo Smith Kline call Relenza, said to be expensive and have storage difficulties, thus not popular among respective government.

Roche have 6 R&D centre worldwide and operate in over 100 country, is a multinational operate in biotechnology industry. A lot of pharmaucuetical company face the problem of copyright due for expires soon. Roche most prifitable drug, however, is just at the beginning of it lifecycle. Other than Tamiflu, Rocje also own the largest copyright on anti cancel drug in the world.

US company Gilead is the inventor of Tamiflu and it license Roche to produce the drug in exchange to Royalty.

Roche founded in 1898, has a reputation of inventing new drug via R&D. Initially, it manufature Sirolin syrup. In 1930, it produce world first Vitamin C.

Prior to 1999, Roche was the largest Vitamin manufacturer. However, they have been accused of violating Monapoly regulation and has been taken to court and fine 462million Euro in 1999.

At that point of time Vitamin division contribute more than 50% of it turnover. It is a consumer orientated product and facing price fluatuation problem. In 2002, Roche divest it Vitamin and few other division. Remaining only two division: Pharmaceutical and Diagnostics.

Roche spend more than 15% of it turnover on R&D after that. Now, most of the top ten performance drug in Roche are new drug. It also acquired a few medical equipment manufacturer and become world largest medical equipment producer.

Roche also apply growth via M&A. It has acquired Genentech in US and Chugai in Japan. Genetech is the first US biotechnology company that listed on Nasdaq while Chugai is the leading biotechnology company in Japan.

Roche also made strategic alliance, joint venture with other small parmaceutical company.

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Saturday, November 19, 2005

Shiseido, the first to set up counter at Department Store in Asia

Shiseido is the largest beauty and cosmetic company in Japan and it rank No 5 in the world largest beauty and cosmetic company. After Loreal,Unilevel,P&G and Estee Lauder.

Shiseido, Loreal and Estee Lauder is consider the only three focus company in top 10 beauty and cosmetic company in the world. Others like Unilevel and P&G is diversified company in other industry as well, like food and detergent.

Loreal and Estee Lauder acquired a lot of brand over the years. However, to maintain each individual brand is an expensive process. Each brand must have achieve a critical mas and economic of scale to cover cost of spoke person, R&D, cost of international channel.

Unilevel and P&G has start streamlining their brand over the years and only maintain their first and second brand in each category.

Shiseido also face the problem of too much secondary brand.Which face difficulty in resources allocation. A lot of brand unable to recoup the resources invested.

Thus, Shiseido plan to streamline it brand from 140 to 35 (Like Za, Uno and Fitit) at the end of 2005. This will further reduce to 20.

Loreal, however view that if you have 5 or 6 brand in each channel , you may have problem of too many brand and overlap in investment. But if you only have 2 brand, it is insufficient. Loreal now have 4 brand (L'Oreal Professional, Redken, Matrix and Kerastase) under it haircare professional product.It is function much better than only have 2 brand (L'Oreal Professional and Kerastase)previously.

Taiwan Sofnon chairman,Champion Huang which own several international brand like New York Alway Black , German Nobori, low cost product for teenages JUSTa100 ,Japanese herb PLUS+ , and Italy in Ocean said that Shiseido is the first company that market their product via professional counter in Department Store. This is a one of the Japanese marketing and management method.

In Malaysia, Shiseido is distributed by Tung Pau, a wholly own subsidiary of Warisan TC Holdings Bhd previously.

Warisan TC Holdings Bhd, a company under Tan Chong Group, which distribute Japan Nissan car in Malaysia. Their connection build up with Japanese during they become distributor of Nissan vehicle enable them to secure a franchise of Shiseido in Malaysia.

With globalization and liberalization of trade. A lot of automobile company take back the distribution right like Honda.

Beauty and cosmetic company Shiseido also doing the same. Shiseido Malaysia Sdn Bhd, a 50-50 joint-venture company between the Shiseido group and Warisan TC Holdings Bhd set up to handle the distribution of Malaysia since April 2005. Thus, now the distribution of Shiseido in Malaysia is operate by Japanese despite Warisan TC Holdings Bhd still half 50% shares.

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Wednesday, November 16, 2005

Estee Lauder largest focus beauty & cosmetic company control by US

Estee Lauder (1907-2004) invented her first product Super Rich All-Purpose Cream at the age of 18. She market her products via conducting party among housewife at the initial stage but her product available for sales in Department store not long after that. She is the first person market her product by giving sample set in the beauty and cosmetic industry.

However, her product unable to affect the dominant position of Helena Rubinstein (HR) and Elizabeth Arden at that point of time, until she launch her first Fragrance, Youth Dew in 1953. Youth Dew fragrance lifted Estee Lauder to become one of the leading brand name in beauty and cosmetic industry in US.

Estee Lauder launch another star product Clinique in 1967. Clinique signify that it is a product that would not cause sensitive reaction from skin.

Like Loreal, Estee Lauder also growth via merger and acquisition. It has acquired a lot of brand over the year. Among them include Stila, Aramis, Prescriptives, Origins, M.A.C., Bobbi Brown, Tommy Hiltiger, La Mer, Donna Karan, Aveda, Jo Malone, Bumble and bumble, kate spade beauty, Darphin, Michael Kors and Rodan + Fields.

Estee Lauder now is the largest focus (not divesified like P&G) beauty & cosmetic company control by American (Loreal control by French)

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Monday, November 14, 2005

Bio-Young enter ladies healthcare market

When I doing my regular window shopping in one of the Jaya Jusco shopping centre. A promotion lady hand me a leaflet.

It is from Bio-Young, a company that selling HGH product via multilevel marketing or direct selling. It is a new product from Bio-Young.

The new healthcare product, Phytogen Plus, target on curing women's period cramps, irregular period and low fertility.

This segment of market in Malaysia is dominant by one company, Keep Good Feel Corporation Sdn Bhd (Formerly known as Fasa Bebas Sdn Bhd).

Its product Lady Gold (picture) once dominant Malaysia's ladies healthcare product and at one point of time call Lady Vigra.

However, such market attracted a lot of competitors and Keep Good Feel Corporation Sdn Bhd has litigation on copyright infrigment with one of it major competitor.

Now, the company has a new competitor in Malaysia.

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Friday, November 11, 2005

How SK-II become market leader from nearly bankrupt

SK-II is a product under a US company call Max
Factor. Thus, before I start talking about SK-II. Lets talk about Max Factor.

Max Factor is a make-up artist, complete his study in Russia and work as make-up apprentice in an opera performing company. Due to his passion on ladies movies star. He started his own retail business.

In 1936, Max Factor has become a leading cosmetic company in US. He build his reputation with cooperation with Hollywood movies star.

Max Factor is a family business as all his 4 sons work for the company. But non of it daughter in law work for the company. Thus, The company is manage and dominance by male even this is a famine business.

Max Factor family later dispose off the company and the new owner listed the company in stock Exchange in 1961. However, the new owner dispose to another company in 1971. He claim than operating a public listed cosmetic company is not fun as much of his time emphasis on profit and growth rather than creative and beauty previously.

A scientist in Japan, in search for a cure for his friend sickness, accidentally found a yeast called saccharomycopsis has successfully cure his friend illness. They name it Pitera. The scientist then sell the recipe formula to Max Factor in Japan.

In 1980, Max Factor launch it first product base on the recipe formula. They call it success Key initially. Only second generation product, they call it SK-II which used until today.

Procter and Gamble (P&G) acquired Max Factor (including SK-II ) in 1991. However, as the company used to sell detergent and pampers or what we call mass market product. This is first time P&G enter into beauty & cosmetic industry. Max Factor making loss of USD30million for continuously 3 years accumulating total loss of USD100million.

A 30 years old brand manager of Olay product in Taiwan's P&G's Olay division, Michelle was send to Japan as SK-II brand manager January 1994. She does not know Japanese language at that point of time.

Michelle was the third batch of brand manager assigned to revive the brand. The company has try numerous method but fail. Thus, an out of the box or breakthrough strategy was needed.

SK-II, despite an unpopular product with merely 5% of the population heard of it at that point of time, have a batch of loyal customer including movies star and royal family. It market through word of mouth.

Michelle, look for a spoke person for SK-II among it loyal customer. They decide to used Momoi Kaori (right picture) eventually. She is 45 years old at that point of time. Michelle also replace the TV advertisement prepared by the advertising company with a black & white advertorial in magazine.

After the launch of the new promotion. Sales start picking up and the division stop bleeding. Thus now the target is to become top mega brand in Japan.

She convinced P&G in Japan to allocate 50billion yen budget for TV advertising expenses. They also provide a hotline on the TV advertisement for customer to call up to request for sample product. From the first day of the launch of TV commercial, they received 100 thousand call. They retrieved the hotline number after 5 days as they only prepare 500 thousand sample sets.

It take 7 days for the yeast to convert to Pitera like brewing alcohol. It become the factory unable to produce enough to meet demand. Whole country women age 35 to 50 in Japan are talking about SK-II.

Michelle get promoted immediately. P&G in Taiwan & Hong Kong also shooting similar TV advertisement using local spoke person. P&G hq in US also consider launching the product in North American.

Later, Michelle launch another TV commercial to target for customer age below 35. She used same spoke person Momoi Kaori describing she start using the product since at the age of 20.

Michelle however, request to transfer to other department after that. P&G transfer her to hair care product Pantene division. She has left P&G now.

Spoke person Momoi Kaori career in entertainment industry pick up again after such incident

P&G acquired Cover Gil in late 1990 and hair care product Wella in 2003.

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Liewcf reply

I have a post regarding Liewcf resignation on 19 September 2005. I ask whether he able to share his knowledge on beauty and cosmetic industry with me as he previously work in this industry.

After nearly one month only I get a response from him. He post a response on 23 October 2005 and his reply are as follow:

I stumble on your blog when I was searching for "liewcf". :)

Though I was working in a cosmetic company, I was only a webmaster there. I did not touch on the company products. I did company website and managed their computers.

As far as I know, the company spend a lot of money on advertisements.

It is surprise that he do not have the industry knowledge. Maybe a webmadter is different from accounts department. Accounts department have to dealing with stock, I have a hard time to understand there is cleanser, toner, moisturizer when I first join the company. Then there is lipstick and lip gloss!?

Accounts Department have to come up with company profile, feasibility study and budget. Thus, have more understand to product and industrial knowledge.

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Monday, November 07, 2005

Etsu beauty contest

JA Biohealth Sdn Bhd, the sole distributor of Etsu product in Malaysia, invite all ladies age 21 and above to participate in a beauty contest.

Winner will become brand ambassador of Etsu and would get RM10,000 cash.

Interested candidate must submit their application form before 30 November 2005 together with 2 recent photo. Application form can be obtain at Watson, Guardian, Sasa and all retailer that market Etsu product. Inquiry at 03-78802210 or check their website.

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From IT to beauty

Jason Bak who left school altogether at 15, started Eisentech Resources in 1997. distributing computer hardware and products. Bak became the sole employer and employee of Eisentech, delivering stocks and doing the company’s accounts all on his own.

Eisentech Resources today is known as a software solutions specialist and is the authorised distributor for Apple, Corel, Microsoft, Network Associates, Symantec, Veritas, Macromedia, Lotus, AutoDesk, Pro/ENGINEER, Altiris and Adobe. From 1999 to 2003, Bak’s company was recognised as the top achiever in sales for the principal brands.

Eisentech Resources, a RM30 million company distributing information technology hardware and software.

Bak was travelling in Japan when a friend introduced him to one Dr Joe Shigemoto, a leading cosmetic surgeon based in Japan. Shigemoto suggested Bak try a new collagen-based beauty product, saying that it was really good. “I didn’t know a thing about beauty products. In fact he gave me some collagen powder [to drink]. Since he was a friend of a friend, I thought I’d give it a chance. I went back to Malaysia and started doing research on it. What was collagen?” Bak eventually found out what collagen was but while doing his research he learnt a little more. The brand of collagen that Shigemoto offered him, Etsu, was a consumable collagen powder that is said to help rehydrate skin, fight visible signs of ageing and improve skin condition. Studying Bak’s youthful (and irritatingly glowing) complexion now, it would be easy to believe the claim.

And so, in December 2004, he established JA BioHealth, a company bestowed sole distributorship by Nakamurado Co Ltd — a trusted and renowned beauty and healthcare product manufacturer with 150 years of history in Japan. JA BioHealth will be responsible for the representation and marketing of the Etsu brand in Malaysia and across Asia Pacific. For now, the company will start off by selling two products at all personal care stores and pharmacies: the Etsu B300 Potion Mask and the Etsu B300 Potion Food.

Excerpt from The Edge

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Wednesday, October 26, 2005

Esthetics only public listed skin care and spa centres in Malaysia

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We see a lot of beauty and skin care saloon and spa centre in Malaysia.
However, among all the group operate in this industry only one company in listed on Bursa Malaysia.

Esthetics International Group Bhd, the only public listed skin care and spa centre in Malaysia, had made a public issue of 23.34 million shares and an offer for sale of 6.66 million shares, at 75 sen for each of the 50 sen par value shares when listing the ompany on the stock exhange few years ago.

The flotation of EIG will raise RM17.5mil. The company plans to use RM2.5mil of the proceeds to establish six new professional skincare centres, RM1mil to refurbish existing outlets, and RM1.5mil for investment in information technology facilities.

The construction of its corporate office and warehouse in Shah Alam will take up another RM2.5mil, and RM2mil will be allocated for additional working capital.

EJG, which is involved in professional skin care and wellness services as well as distribution of skin care and wellness products, secured the first exclusive distributorship for Dermalogica’s range of professional skin care products in Malaysia in 1989.
The contract also allowed it to use the Leonard Drake trademark for its service centres.

Esthetics operates Leonard Drake professional skin care and spa centres, and Belle Lina. Belle Lina was a home-grown concept store which uses the same products as its Leonard Drake stores.

Its executive chairman Lim Yee Soon said the company held exclusive distribution rights for Dermalogica Skin Care (USA) and Eve Taylor Essential Oils (UK) products in eight countries — Malaysia, Brunei, Singapore, Philippines, Vietnam, Indonesia, Hong Kong and Thailand.

AmResearch said the company, which received the authorities’ approval for own franchise (Belle Lina) scheme last year, was likely to kick off the programme early in the second quarter of 2006.

The company expects to have seven franchise centres next year and to increase this to 13 in 2007, and 19 in 2008. It plans to introduce the Belle Lina franchise to Singapore, Hong Kong and Thailand while for Vietnam, Indonesia and the Philippines, master franchisors will be appointed.

Plans were also under way to establish at least three new corporate-owned centres in the KLCC shopping centre, Shah Alam city centre and Lot 10 shopping mall respectively, for RM2mil, it added.

EIG subsidiary EIG Pharma Asia Pacific Sdn Bhd had secured the rights to market and distribute US-based Vitogen Inc's products under EIG’s own brand name in Southeast Asia and Korea.

As at end-March, there are 16 professional skin care centres and two kiosks located in prominent shopping centres. The company also has 300 appointed local dealers, who independently own the skin care centres, according to the research house.

It distributes the US-based Dermalogica range of skincare cosmetics, which contributes 80% of its revenue while the remaining 20% is derived from its own brand of cosmetic products. In its first quarter ended April 30, 2005, EIG’s revenue was RM19 million.

EIG currently exports to Southeast Asia and Hong Kong, with about 26% of revenue derived from exports alone. EIG wants this to increase to 35% by the end of the financial year.

“We do plan to go into China as we have operations in Hong Kong with over 30 staff. While we want to use this to venture into China, we are worried about counterfeits,” said Chan, EIG chief financial officer.

The company recently acquired a RM12 million office and warehouse space in Bukit Raja, Klang to consolidate operations.

Meanwhile, its founder and executive director Melissa M Chen said the “youth obsession” culture, especially among baby boomers, was looking for alternative solutions to combat ageing.

Hence, this is the target market for its recently launched “Radiancy” products which use “healing light” therapy instead of intrusive therapies such as botox.
The company, which launched the Radiancy beauty system in April, had to-date achieved over RM1mil in sales for this beauty equipment, he said.

To broaden the revenue base, the company is likely to venture into the middle-income and mass retail market segments. “We will also be launching our new in-house brand Clinelle, a skincare range with emphasis on botanical extracts to tap the mass market within the next few months,” he said. Clinelle products are already available at major pharmacies such as Guardian, Vital Care and Watsons.

Lim said the widening of its product range through its in-house brands to cater mainly to medium- and low-income segments of the market was a key strategy.

Since 2001, Esthetics had introduced four in-house brands – the Averine range of cosmetics, Efislim range of slimming products, Bioxil for whitening and firming essence and Clinelle cosmeceutical products.

Meanwhile, professional services contribute about 40% to turnover, and the remainder from the sale of products. For the financial year ended Jan 31, the company posted a higher pre-tax profit of RM17.7mil compared with RM16mil a year earlier. Sales also rose to RM80.7mil from RM62.6mil previously.

Esthetics opened its first mobile Dermalogica Consultation Centre (DCC) at the Bukit Raja Shopping Centre in Klang recently.

Lim Yee Soon“We are optimistic about our prospects and target to open 10 more DCCs within the next 12 months,” Lim said, adding that each centre would cost less than RM100,000.
He described these mobile skincare centres as an attempt to make Dermalogica products more accessible to existing and new customers. Currently, Dermalogica is only available at all Leonard Drake, Belle Lina and selected skincare salons nationwide.

Esthetics now has 24 professional skincare centres and two kiosks in prominent shopping centres. The company also has 300 local dealers who independently own skincare centres.

Esthetics also expects to refurbish 12 of its existing Leonard Drake centres at an estimated cost of RM1mil.

On its investment risks, AmResearch said Esthetics' domestic skin care industry was fragmented, with many players in each of the mass market, premium brands and professional skin care segments.

Nevertheless, it added, Esthetics had thrived, and its strong balance sheet showed a net cash of RM32.9mil as at Jan 31.

“Given its planned capital expenditure of RM7mil for the financial year ending 2006, we foresee the group remaining in a net cash position by end-January 2006,” it said.

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