Beiersdorf says it will have to ‘fight hard’ to achieve objectives

By Simon Pitman

- Last updated on GMT

Related tags: Developed country, Marketing, Beiersdorf

With its main markets in developed countries still struggling under the strain of the economic downturn, Beiersdorf CFO Bernhard Duetmann says the business is not out of the doldrums yet.

“I don’t think we will see growth in our markets…next year,”​ Duetmann is quoted as saying in an interview with news agency Reuters, adding “I’m not that euphoric.”

Beiersdorf has had big ambitions to increase the strength of its Nivea brand, one of the world’s best recognised names for personal care, with a particularly strong representation in the men’s grooming, hair care and make-up categories worldwide.

Aiming to increase global market share

Nivea’s ambition has been to increase its global market share to 5.5 percent by 2010, building on a share of 4.9 per cent in 2008.

However, despite significant success extending the brand into developing markets, its mainstay developed markets have continued to remain subdued, which means that both sales and profitability are likely to fall in 2009.

All this has led to an extremely competitive situation in the developed markets for personal care, culminating in a marked trend towards discounting in an effort to win over price sensitive consumers.

Pricing still crucial

Although Beiersdorf says it has avoided a price war, it has been discounting and giving promotions on its products in the lower price range, a category where price sensitivity has proved crucial.

However, on the upside, Duetmann did point out that the domestic market in Germany, which remains its biggest market, has been not as badly hit as other European markets, which has helped to prop up the results.

Likewise, where Beiersdorf is witnessing falling sales, so too are its main competitors. The company reported sales growth of 7.5 per cent in 2008, reaching €5.97bn.

Markets will return to growth eventually

Looking at the longer-term, the CFO believes that the company’s global markets will eventually return to previous levels, helped in part by continued aggressive marketing and a comprehensive re-branding for the Nivea name.

Although Duetmann said in the interview that it would not make good business sense to acquire smaller brands to sit in the business portfolio next to the Nivea brands, he did indicate that the company would contemplate further acquisitions at Eucerin, its derma cosmetics division.

“We’ve got the money and we’re looking,”​ he said.

Related topics: Business & Financial

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