Indonesian cosmetics businesses sitting pretty

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.

Imported goods

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.

Crisis

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?