Henkel Indonesia Turns to Beauty Industry

By Francezka Nangoy on 09:09 pm Jun 11, 2013
Tags: Henkel

Syoss shampoo is among the five retail brands Henkel Indonesia has launched this year in a bid to tap into the country’s growing affluence. (Photo courtesy of Henkel Indonesia)

Syoss shampoo is among the five retail brands Henkel Indonesia has launched this year in a bid to tap into the country’s growing affluence. (Photo courtesy of Henkel Indonesia)

Major manufacturers are used to buying products from Henkel Indonesia, and now the country’s largest adhesive products company is hoping consumers get in the habit too.

The company, which has been operating in Indonesia since 1974, on Tuesday explained its efforts to enter the growing beauty-care products market.

The company earlier this year launched five brands of beauty care products, including shampoo Syoss and hair colorant Freshlight. It is initially targeting middle- and upper-income consumers, but is considering launching more mass-market products in the future.

“Indonesia has a very vast affluent middle-class market,” president director Allan Yong said in Jakarta. “Indonesia is critical in term of growth and continue to plays a key role in Southeast Asia market.”

Henkel’s existing operations in Indonesia have made it the market leader for adhesive products, selling to shoe producers and the packaging and book-binding industries. It is also gaining market share in sales to the automotive parts and construction material industries.

Henkel’s move toward retail products comes amid a doubling in the number of middle-class and affluent consumers in Indonesia to 140 million by 2020, according to a Boston Consulting Group estimate.

International beauty products giant L’Oreal announced recently it was investing 100 million euros ($130 million) to double its production in Indonesia, while retailers Ikea, Uniqlo, and H&M are opening their first stores in the country.

Germany-based Henkel aims to increase its global sales revenue to 20 billion euros by 2016, from 16.5 billion euros last year.

In emerging markets Asia, Eastern Europe, the Middle East, Africa and Latin America, the company hopes to reach 10 billion euros in sales revenue by 2016, up from 7 billion euros in 2012.

By 2016, emerging markets will represent half of Henkel’s global sales, up from its current 43 percent contribution, the company forecast.

Yong declined to disclose existing or targeted sales for Indonesia, but said the company was experiencing “double-digit growth” each year in the country.

Asked whether it planned to open a beauty-care products factory in Indonesia, Yong said the company’s key focus for now was “building market share.” He did not specify which particular sectors the company sought market share growth in.

For adhesive production, Henkel Indonesia already has plants in Tangerang, Banten, and Pasuruan, East Java.

Last year, Yong said, the company increased its production capacity, but he declined to offer more details.

Adhesive products constitute 50 percent of Henkel’s global sales, while 21 percent comes from beauty-care products and the remainder is from laundry and home care products.

Yong said the company in Indonesia would continue to invest in people, technology and — depending on consumer growth — investment to expand its production capacity.

Brands owned by major consumer goods producers Unilever and Procter & Gamble currently hold major stakes in Indonesia’s beauty-care retail sector.