BW Confidential - Issue #12 - November/December 2012 - 95

West Java, to be completed by 2013. Unilever is expanding its factories that manufacture skincare and bath and shower products and L’Oréal is to begin operations at a new factory in Cikarang by the end of the year. Beiersdorf too started production here in 2010. Influx of global players Global companies continue to make major inroads in the Indonesian market. “Multinationals, such as Unilever, Procter & Gamble, Orindo Alam Ayu (Oriflame cosmetics) and L’Oréal, continued to lead in 2011 due to a strong brand image and huge marketing budgets. Furthermore, many Indonesians tend to prefer foreign brands, as they are generally perceived to be of higher quality than offerings from domestic players,” according to a Euromonitor report. Unilever has 36.2 % of the market, P&G claims a 11.3 % share, while L’Oreal Indonesia has 3.9%. Direct seller Oriflame also has a sizable share of the market at 4.1%, up from 3.5% in 2010. “Beauty in Indonesia is growing very fast year on year and we are looking at continued double-digit growth,” says Oriflame vp and head of Asia Pacific Fredrik Widell. However, despite the dominance of foreign players, Indonesian brands have a strong market positioning, particularly in terms of the growing focus on natural cosmetics. Local company Mustika Ratu Tbk Pt, for example, plans to increase its advertising spend by 22% in 2012 in a bid to capture a greater share of this growing market. Mustika Ratu also increased its production last year, as did Indonesian company Martha Tilaar, which has a 2.2% share of the market. “We have to face competition, and one of the strategies to prepare for this is expansion,” says Bryan Tilaar, president director of PT Martina Berto Tbk (MBTO). His company is investing $15.8m to fund a new factory in Cikarang. These local companies are increasingly concerned about the influx of foreign brands, including those from Korea and Japan. As a result, local companies have been vying for more business incentives. “Incentives can be given in the form of promotional subsidies and/or tax breaks for innovative products that improve and strengthen the domestic cosmetics industry amidst global competition,” says

• Beauty sales 2011: Rp29,001.8 bn ($3.06bn), + 13.5% vs 2010 • Premium beauty sales 2011: Rp1,171.2bn ($123m), +15.9% • Premium beauty sales by category: Skincare Rp572bn ($59.83m), +18.4% vs 2010; color cosmetics Rp280.6bn ($29.35m), +15.1% vs 2010; fragrances Rp213.2bn($22.30m) +11.5% vs 2010; haircare Rp70.1bn ($7.33m), +14.2% vs 2010 • No of prestige points-of-sale: More than 300 department stores, of which around 100 are prestige • Main Department Stores: Sogo: 11 stores; Seibu 1 store; Lotus: 4 stores; Debenhams: 2 stores; Metro: 8 stores; Centro: 7 stores; Matahari: 107 stores; Ramayana: 110 stores
Source: Euromonitor, industry sources

Indonesia beauty market

Putri Kuswisnuwardhani, head of the Producers and Associations of Indonesian Cosmetics Organization. Malls continue to mushroom In terms of retail, there has been an increase in mall openings, which house foreign nameplates such as Debenhams, Marks & Spencer and Metro. There are around 100 prestige points-ofsale of the more than 300 department stores. Many more openings are planned. Malaysian retailer Parkson Retail Group plans to invest $15m to open five Parkson stores in Indonesia with the first outlet launching in September 2013 in West Jakarta. Thailand based Central Retail Corporation (CRC) is to enter Indonesia and will open its first Central Department Store in Jakarta 2014 at Grand Indonesia mall. Indonesian company PT Mitra Adiperkasa (MAP) runs Sogo, Seibu, Debenhams and Lotus department stores and has more than 100 major brands, operating 1,108 retail outlets in 39 cities across the country. Sogo Department Store Indonesia general manager merchandising Sherry Sjiamsuri comments: “In total we have more than 40 skincare and color brands and expect new brands to come in. We start with an exclusive arrangement with the brand, build it and grow from there. Overall, we have more skincare than color cosmetics.” There are quite a few changes taking place on the beauty floors in department stores. “In the premium segment, retailers are anticipating consumers’ lifestyle changes and choices due to rising affluence. With more beauty brands coming into the market, retailers have also re-arranged the composition of the category,

making the fragrance area smaller in ratio compared to the cosmetics floor, where loyalty is deemed to be higher,” says Luxasia’s Chong. He adds that given the increased number of stores, retailers will need to bring greater differentiation to their concepts and formats and offer a more unique product mix. “Offering everything everywhere is no longer working for retailers,” remarks Chong. Looking ahead, analysts say that sales are only going to go up as retail space increases. Brands too, are investing more in advertising and marketing activities. All this means continued growth for the market in Indonesia, which according to industry estimates will see an increase of 15 % this year. n

Indonesia top beauty & personal-care players 2011 by market share Company Unilever Indonesia Procter & Gamble Orindo Alam Ayu (Oriflame) L’Oréal Indonesia Lion Wings Mandom Indonesia Sayap Mas Utama Ultra Prima Abadi Martha Tilaar Group Johnson & Johnson Revlon Beiersdorf Indonesia Estée Lauder Cos Inc
Source: Euromonitor

Market share % 36.2 11.3 4.1 3.9 3.4 2.8 2.8 2.6 2.2 2.1 1.0 0.9 0.6 95

November-December 2012 - N°12 - BW Confidential

BW Confidential - Issue #12 - November/December 2012

Table of Contents for the Digital Edition of BW Confidential - Issue #12 - November/December 2012