Indonesian cosmetics businesses sitting pretty
Cosmetics is big business, with Indonesian firms finding that traditional approaches to beautifying the face and body are a winner at home and abroad. The Jakarta Post contributor Mehru Jaffer examines the handsome profits to be made from making people fair of face.
JAKARTA (JP): It is a long way from the kitchen to the blue- chip. But that is what the story of Indonesia's growing cosmetic industry is all about, the seeds of which were sown hundreds of years ago in every grandmother's backyard.
Here, armed with little else except for a wide variety of herbs and roots the women spent an entire lifetime observing how the birds and the bees do it -- when it comes to looking beautiful.
And all this collective wisdom that is as old as human life itself has not only helped people to this day to keep healthy, and to remain beautiful, but also made brand names like Mustika Ratu market leaders in the field.
The sale of Mustika Ratu's traditional and natural cosmetic and herbal products has increased over 1,000 percent in recent times, its investment in marketing, promotion, research and development stands 750 percent higher at the turn of the century and the net audited income has jumped 2,300 percent, increasing its share value by 380 percent.
In the coming years the company promises to remain a consumer- driven marketing outfit with greater emphasis on its original concept of producing and sharing its secret that were rumoured to be told by nature only to chosen members of the Javanese royalty. The success story of Mustika Ratu is already a dream come true for founder Mooryati Soedibyo, whose other wish is to see her products on sale around the world.
However, there are difficulties galore when it comes to exporting products today, mainly due to the economic crisis that involves wild fluctuations in exchange rates. Malaysia remains the main destination of Mustika Ratu, but others are Brunei, Singapore, the Philippines, the Middle East, Russia, Taiwan, African countries and India. The company already exports to over 20 countries and its export sales totalled Rp 14.3 billion last year.
Company director Yogesh Dixit said the consumer and retail businesses were both expected to continue flourishing as the two sectors do not involve loans or credits from banks and the price of goods is not too much for consumers.
With an annual growth rate of about 30 percent he predicted bright prospects for the domestic cosmetics industry. The export of Mustika Ratu products has already reached the 20 percent mark and in the next five years he expects sales to double.
The company is also planning to produce cosmetics for consumers in countries with four seasons. The vice president director of Mustika Ratu, Putri K. Wardani, said in September the firm was still at the stage of research and registering patents.
"Our investment is quite large, at least Rp 5 billion to Rp 10 billion for each brand starting from research to promotion, and what's more there will be several brands to be made," she was quoted as saying in Bisnis Indonesia in September.
Only until recently the country was crazy about importing all its cosmetics at exorbitant prices. Today the trend is reversed as Indonesia vies to export its goods not just to neighbouring countries but as far away as the United States. The other advantage Indonesia has is its over 50 percent female population that is a great attraction to foreign investors from Japan, the Netherlands and Germany to set up joint venture companies or to buy local products.
New on the market are European Wrinkle Miracle beauty patches. Together with well-known fashion designer and owner of Brown Salon Poppy Dharsono, marketing agent Karim Badrudin said he cannot keep up with the demand to demonstrate around the country the goodness of the patches, which are made from traditional ingredients but with the latest advances in dermatological science.
Karim, a former realtor, said he knew the potential rewards of the cosmetics business. "But I'm not interested in selling any old product. I like these ones because they are of high quality and made from natural ingredients."
Apart from big players like Mustika Ratu, Martina Berto and Ristra, others with their hands in the pie are Cedefindo, Tancho Indonesia, Damai Sejahtera Mulia and Continental Cosmetic Manufacturer, which try to outdo each other in providing products at competitive prices for the domestic market as well as for export.
Having expanded from the concept of jamu, the company philosophy at Ristra is the "Science of Beauty". Founder Retna IS Tranggono believes that a beautiful skin is just a healthy skin by another name. For this reason it is not enough for Ristra customers to have products to spruce up only the body. There are vitamins and health supplements to compliment the creams and the powders so that health from within will radiate beauty outwards right to the tip of the finger.
"The beauty business is a growing business, even though it was stagnant in 1998 because of the crisis," said PT Ristra Indolab marketing director Kustomo Hadiwinarso.
The company predicts business will be up 10 percent to 15 percent in 2001, especially for middle-up segmentation.
It also sees bright prospects for international sales. "We produce cosmetics of international quality standards, our product technology is made with high-tech and our concept is that what we make can be accepted internationally, especially in Asian (tropical) countries," Kustomo said.
"And we never stop looking for innovations."
Martina Berto founder Martha Tilaar too has spent an entire lifetime trying to put into practice Rupasampat, the ideal concept of harmony between the outer and the inner self. Her objective has been to concentrate on first enhancing health if beauty is to be achieved. She also believes thatjamu is at the root of traditional beauty care and her processing of natural ingredients in the most modern of ways is legendary.
It was actually a chance meeting with a Dutch professor of medicine which encouraged her to concentrate on the natural beauty of Indonesians. There is no need for the tropical beauty to imitate western women, he said. Western cosmetics were specifically made to suit the climate and skin of women in the west and Asian women had spent decades trying to live up to a concept of beauty that was quite alien.
Together they came to the conclusion that despite all the money spent on cosmetics from abroad it just would not work the same way on Asian women. That is when Martha conceived of products to match the Asian skin tones of yellowish to different shades of brown like her own. She said to herself that it is not the color of the skin that matters but the quality of skin.
It was easy to have convinced herself; the difficult part was trying to tell that to Asian customers. Asian societies were crazy about imported cosmetics and their desperate desire to look like women in the West. Then the economic crisis opened their eyes to the fact that all the wealth with the power to do wonders to their well being lay right there at their feet.
In a way the terrible crisis was a godsend for local cosmetics manufacturers who were able to penetrate the upmarket customers within their country, at last. All these years companies like Martina Berto were forced to play second fiddle to international brands like Estee Lauder and Revlon, who sold their own idea of beauty on Asian women with aggressive and extremely attractive advertising campaigns.
When the economic crisis hit the region and prices of imported goods soared by up to 70 percent, buyers naturally turned to home made products. In the bargain they realized what they had been missing all these years as few could quarrel with the quality of the products available to them at home and at a more affordable price.
Immediately Martha diversified into products to cater for different income and age groups in society. While Biokos is for the middle age group, Sari Ayu is for young adults and Belia makes the teenager happy.
In the thick and thin of the economic crisis, Martha launched new products for working women of different strata in society who she found is determined to look good despite the constraints the economic crisis has put on her budget.
Ristra spruced up its beauty consultants to help customers to find out what their requirement was and how they could choose the right product. In 1998 Mustika Ratu launched Biocell to fill the gap left by cosmetics previously imported by those belonging to the upper segment of society and Kenanga for the less affluent.
The company also introduced spa products for both the middle and upper classes and like its foreign competitors indulged in a vigorous promotional campaign on television and in the print media, conducting numerous training programs for beauty consultants stationed at its main outlets. The result is that the Mustika Ratu brand along with Puteri contribute to around 38 percent and 57 percent respectively toward the revenue of the company, totalling the increase in domestic sales by over 63 percent at the end of last year.
Great emphasis is laid on continuing to invest on realising the ultimate potential of every employee. Like Mustika Ratu, the others too continue to develop and improve the quality and learning of its staff through ongoing training programs, seminars and health care facilities for their families, along with spiritual health services.
The conclusion therefore is if last year proved to be so lucrative for the domestic cosmetic market, can this year be far behind?