Mass market skincare house Nivea plans to open up the duty free and travel retail markets of the Americas and Asia Pacific in 2015 having successfully grown sales in very high double-digits in Europe and the Middle East.

 

Plans are well advanced for a distributor-based model to serve the Americas while a regional affiliate office is expected to be the model for Asia.

 

The Hamburg-based company – owned by Germany’s €6.14bn ($7.93bn) giant Beiersdorf [which also owns luxury skincare brand La Prairie] – saw first half 2014 DF&TR sales rise by +75% in Europe and by +49% in the Middle East. Both regions were growing above internal targets of +30% according to a source at the company.

 

For example, Nivea’s presence at seven doors with Dubai Duty Free is currently generating sales of €2.5m with growth well above the beauty trend at DDF.

 

Nivea puts its performance down to several factors including specially developed assortments for DF&TR such as grab-and-go travel sets to take on board (left) and prominent brand animations (below at Düsseldorf Airport).

 

The 2014 figures are on the back of already strong annual DF&TR results which show that Nivea has grown at an annual rate of +45% from the time the company formally decided to develop a global travel retail (GTR) unit in 2011 until 2013.

 

HAS MASS MARKET BEAUTY FINALLY ARRIVED?

While these rates are, to some extent, expected for a newcomer to DF&TR, they are nevertheless impressive. All the more so given that Nivea – by its very presence – is also putting a fuller emphasis on the mass market beauty segment with prices starting as low as €2.

 

This is below existing accessibly-priced players such as L’Oréal Paris and The Body Shop [both part of L’Oréal Group] – although all three rivals compete in some higher price bands. Competition will therefore stiffen.

 

Global travel retailers have traditionally steered well clear of the mass market segment for fear of cannibalising sales from their much higher margin luxury brands. The push-back has been immense TRBusiness understands.

 

However, Nivea has convinced some key retailers – initially Gebr. Heinemann – that there is a gap in the market for price-accessible beauty. It has done so by bringing in new consumers to the channel – rather than switching existing shoppers to its lower-priced beauty. As a result Nivea GTR – led by Sigmar Werz (left), Director e-Commerce & New Routes to Market – now has listings with seven of the top 10 operators in the Europe and Middle East regions.

 

ASIA & THE AMERICAS

Heinemann’s success in the Sydney concession bid will likely pave the way for Nivea in Australia, but the house is also in advanced talks with a Miami-based DF&TR distributor which Nivea says is “well established” to supply the Americas market.

 

The brand is already very strong in some domestic Latin markets, Brazil in particular, and it describes the region as “key for Nivea with enormous potential”.

 

In Asia – traditionally a skincare-driven region in DF&TR – Nivea expects to roll out with its existing global partners and says it has “confirmed demand” from them. It also hopes to develop with local players such as Lotte, Shilla, King Power, Everrich, Flemingo, China Duty Free and Sunrise Duty Free.

 

Initially the company will use the synergies of existing local offices in Singapore or Hong Kong from where GTR for the region will be coordinated. TRBusiness understands that it is likely that at least one new recruit to GTR will be hired to coordinate the regional TR push, probably from Hong Kong.

 

Werz is looking at a step-by-step approach in these two new regions but he is also determined to maintain high growth rates in DF&TR; which the Beiersdorf board expects to be much better than those from the rest of the company.

 

TRBUSINESS COMMENTS…

Nivea’s decision to steer a global course in GTR from next year will have ramifications for the business when it comes to price. If Nivea continues to convince DF&TR operators that it can woo cost-conscious passengers who are current non-buyers to purchase its products – and therefore make the beauty pie bigger without any cannibalisation – it will make strong headway.

 

While the move might lead to a decrease in overall spend per head at airports, it will tie in nicely with airport operators’ almost universal mantra today to improve services for all passengers, not just those who are considered ‘high value’ or high-spenders. It should also improve penetration levels that retailers have long sought to increase – but with little documented success.

 

Perhaps only a brand as weighty as Nivea – with a stock market listed parent behind it – is in a position to do this. If it succeeds it will bring a more democratised offer to beauty and finally add a missing, but necessary, component to the global channel – mass market products.

 

[Pictured top: The Nivea Haus, situated in one of Hamburg’s busiest locations, promotes the brand’s signature white on a circular blue background logo and houses the full complement of Nivea products as well as some that are trialled before wider release.]