Ulrich Griebel - Schwan STABILO remains the global leader in cosmetic pencils. This is not such an obvious fact, because the current market is totally different from what it was 5 or 10 years ago. Basically, there are more players.
But we started very early to expand our regional base to international sites. We produce where our markets are the most dynamic. It is a well-tested strategy. We currently have six sites abroad. The latest to date, which was founded in 2008 is located in Mexico. It’s a very important market, since it represented just a short time ago the largest Latin American market. It has since been surpassed by Brazil, where we have been producing successfully for some time now.
Our strategy has proved all its efficiency, particularly during the crisis last year. Given that economically speaking, Latin America is on a strong upward slope, the crisis has been much less severe there than in North America or Europe. This is also true for Asia.
Schwan STABILO thus profits from a good situation on the international stage. We certainly feel the effects of crisis, especially in the United States, where even large companies yet well established and stable, specialized in consumer goods and marketing products having nothing to do with the segment of luxury goods, had to cope with a decrease of 7 to 8%.
Schwan STABILO managed to maintain its position. We ended the last fiscal year with over 180 million Euros in turnover. Of course we undoubtedly recorded a 2% decline in comparison with the previous year, but we were also able to consolidate our financial data and financial base through an appropriate liquidity management and we are currently enjoying a more advantageous and safer situation than a year ago. So much for the broad lines.
Our core operations remain unchanged (we are in this respect undoubtedly very regular, persistent and resistant): cosmetic pencils. These include traditional wooden pencils, cosmetic pencils to sharpen with a plastic cap, slim size mechanical pencils and our liquid eyeliners (fluid products) in the form of cosmetic free ink and ink eyeliners. Not forgetting our mascaras, which is a sector with a very positive development in recent years and which is on the brink of becoming an integral part of our core business.
Premium Beauty News - What were the last main industrial investments?
Ulrich Griebel - As I said, we successfully opened a new production site in Mexico last year. A production plant for state-of-the-art plastic injection, and dedicated to new technologies (such as 2K technique), and worth 6 million Euros, was also founded in Weissenburg (Germany).
In addition, we are fully involved in the development of decoration processes. An approach that represents quite a challenge, since “raw” pencils offers little scope for variation. It is therefore especially important to create clear differentiations and to provide added value to cosmetic pencils through innovative designs or visual and haptic effects.
Furthermore, we have heavily invested in the area of liquid products (liquid eyeliners). There is an array of new models (such as “Dip-Pens”), a large number of inks, newly developed shades and a lot more.
Another field of action and a considerable challenge was the one concerning reformulation of cosmetic formulaes in order to satisfy current legislation. I am referring in particular to D5 (Decamethylcyclopentasiloxan). A well-known basic raw material used in large quantities, particularly in cosmetics where it is still authorized, but will probably be banned in some countries, as of next year. In this context, we were able to suggest outline solutions going even beyond the simple substitution of D5. In addition to the first approach consisting in the replacement of D5 by a suitable component, we managed, using D5-free ingredients, to enhance products characteristics.
At the same time, we also solved the issue concerning PVC-free packing materials and are operating on the market with these products. This point is also solved.
If you consider all these compliance issues which also have an effect upon various laws, and they were quite a few of them in the past 2 years we have obtained, indiscriminately, good solutions, we are already active on the market with our products and thanks to them, we will surely win some market shares in 2010.
Premium Beauty News - What were Schwan’s most important launches of the year 2009?
Ulrich Griebel - Actually, 2009 didn’t give us the opportunity for new processes, but it will be much more remembered as a year where many unsolved issues where ended up, such as the D5, I just spoke about, the future of which in the branch was already uncertain for 3 or 4 years, destabilizing the cosmetics industry and regularly generating policy changes. Up to now, there were no good answers, but we addressed many topics of this kind in 2009 in order to devote ourselves now serenely to innovative and promising themes.
Premium Beauty News - Don’t you think that the current economic context might hinder efforts toward sustainability? What objectives your group has set in the environmental area?
Ulrich Griebel - There’s no doubt about that. The start-ups that gradually imposed themselves on the market and more specifically in the segments of organic cosmetics, sustainability and environmental friendliness are certainly still present. But the strong trend that emerged 1 or 2 years ago which was behind the strong interest regarding this topic has currently dropped. In this regard, we notice a back to basics trend.
However, on the other hand, we notice that companies that were already operating in this sector in the past and who have been following these issues for several years, remain active. They continue to grow even in times of crisis, maybe more slowly than before, but they are growing and we assume that in the medium and long term, topics focused on environment will have fully or more easily imposed themselves.
In this segment, Schwan STABILO’s development is proven, but there are no major changes. We have for instance, a wide range of Ecocert certified products, in other words we can now offer our full range of pencils to sharpen as natural cosmetic products and also as products certified according to Ecocert standards, not just with one single texture, but with many more in a various number of categories. At the same time, we are also developing the sectors of mascaras, liquids eyeliners and mechanical pencils.
Premium Beauty News - In your opinion, what trends will strongly impact the cosmetics sector within the next years?
Ulrich Griebel - I think we should make a distinction here between the near future and what may impact the industry far beyond.
What 2010 has in store for us is already clearly visible. Competition in this sector is likely to be tougher than ever. All brands, all manufacturers are struggling market shares.
We notice in some markets that the segment of luxury goods, which was almost spared during all the economic cycles, in recent years, seems this time more impacted.
Moreover, there is no certainty that consumers will return to old traditional consumption patterns once the economic crisis is over. Therefore, there may well be a chance that the retail sector generates gaps within segments, resulting in a significant increase in pressure on distribution channels as well as a much stronger pressure applied by distribution channels themselves. Between providers and brands, we are witnessing an unrestrained price war. Undoubtedly, this struggle, is currently ruling the whole industry!
Premium Beauty News - What message would you like to pass on to the whole beauty industry at the end of 2009?
Ulrich Griebel - To be quite honest, my message is quite clear. Price competition, battles to win market shares through product discounting are, in my view, conceivable, but in the medium and long term, the all-important issue will be to know how to attract male and female consumers in stores.
Here again, it seems clear that consumers of both sexes will only enter stores if they are sure to find captivating, exciting and thrilling products. If they are just less expensive, then we will witness, in the short or medium term, a withholding of purchases and a buyers’ strike. Customers will no longer buy a product simply because it’s cheaper or more convenient, regardless of the brand.
Industry must pick up the thread of innovation to fill again with wonder new consumers of both sexes. Price war can only be an interlude.
Premium Beauty News - As a conclusion, what would you expect for Schwan STABILO Cosmetics in the year 2010?
Ulrich Griebel - We expect a stabilization next year. Changes will definitely take place. Changes between some segments, changes in supply chains, changes in customer relations, but all this will stabilize itself in 2010. The landscape will probably be somewhat different in some places and I think we will then reach a new base enabling us to move forward in the direction of promising key themes focusing on products concepts, customer orientation and innovation.
Interview by Dr. Kerstin Lötzerich-Bernhard (December 2009)