What Nivea did next: the world’s largest skincare brand targets travel retail

Sigmar Werz: “There is interest and potential for the Nivea brand in the Americas and in Asia. Now we have to make it happen. Step by step.”

It is the world’s largest skincare brand. A market leader in 46 countries. The leading brand globally for suncare, hand & body care and men’s skincare. And it has decided to get serious about travel retail. Welcome to the world of Nivea.

Beiersdorf’s biggest brand is turning its attention to the travel retail channel. The iconic blue Nivea Creme tin has come a long way since its debut incarnation in 1911 – 120 million pieces are now sold annually – but it has much further to go. Beiersdorf has diversified its original hero product into an extensive collection that helped to deliver group sales of €6.14 billion (+7%) in 2013 – 52% of which was generated in emerging markets.

As revealed earlier this month via The Moodie Report’s Twitter feed, Nivea is now committed to opening up the travel retail channel in the Americas and Asia Pacific, having made successful inroads into travel retail in Europe and the Middle East. To facilitate this, in 2013 the brand’s travel retail function was transferred from Basel, Switzerland to Beiersdorf’s global HQ in Hamburg, in order to optimise group support and synergies.

“Nivea is a global brand domestically, and we want to be a global brand in travel retail,” notes Beiersdorf Director E-Commerce & New Routes to Market Sigmar Werz. “There is interest and potential for the brand in the Americas and in Asia. Now we have to make it happen. Step by step.”

Americas travel retail is a logical fit for Nivea, Werz insists, given the brand’s strength in the Latin American domestic market. “We consider this to be a region with enormous potential,” he underlines. “And we are already doing business elsewhere in travel retail with the key global players.”

Nivea already supplies Paraguay-based border retailer Shopping China, but plans to handle the broader Americas market via an established distributor. Significantly, Nivea’s skincare and suncare portfolio is not available on the US domestic market, which will effectively make such items in-demand travel retail exclusives in the region.

Earlier this month The Moodie Report visited Beiersdorf’s Hamburg headquarters (top) – and the flagship domestic Nivea Haus (above)

Werz is equally excited about prospects in Asia Pacific (where a regional affiliate is the preferred model in this instance). “We have done our research, and are confident that Nivea can be a relevant brand for this region,” he explains. “Until now, we are missing a massive part of the market, where the brand has huge opportunities, based on its domestic presence and high awareness levels. Asia Pacific is the top region in travel retail with a 37% share, forecast to rise to 45% by 2025. So we need to be there.”

Such key openings will not, however, herald a decrease in focus for Europe and the Middle East – regions which generated travel retail sales up +75% and +49% respectively, for first-half year-to-date June. In Dubai Duty Free alone, where the brand has seven doors, it is forecasting sales of US$2.5 million for full-year 2014.

Mass appeal
Despite Nivea’s success to date, establishing a significant masstige presence in a channel dominated by high-end brands – with margins to match – is a big ask. Travel’s retail’s endemic premiumisation drive continues apace, with retailers keen to avoid any possible cannibalisation of their upscale portfolio.

Werz, however, remains unfazed by entrenched industry perceptions about the status quo, and insists the winds of change have already begun to blow.

“Travellers are changing,” he states. “Travel is becoming much more democratic. But there is not a lot for the vast majority to buy – and these customers want to buy and participate. Yet so many retailers do not target this passenger group. We represent a price point that has not yet been well exploited in travel retail. We know we can increase footfall and, crucially, penetration – very important where concession fees are linked to percentages per passenger.”

In beauty terms, other notable masstige participants include L’Oréal Paris, The Body Shop, Revlon, Bourjois, L’Occitane and OPI. Nonetheless, Werz believes that Nivea is in a unique position within the channel, given its global cross-category domestic strength, history and heritage.

“We can work as an anchor brand for this [masstige] segment,” he declares. “As a brand we attract women, men, families and all age and income groups around the world. We are known and trusted; we can add value and surprise people. We can satisfy the growing need for less expensive, quality products in this channel. We are the perfect answer.”

To emphasise his point, Werz references confectionery, initially a fledgling category in travel retail, now a channel cornerstone that incorporates a wide selection of powerhouse brands at mass, mid and premium price points.

Beiersdorf has worked hard to create an extensive and accessible travel retail product offer, which incorporates value savings, miniatures and a range of exclusive sets

“Nivea could be the Toblerone of beauty!” he enthuses. “I see ourselves on the same sort of path. We are building our offer around our recognised, flagship products, which are complemented by innovations in terms of new items, differentiated packaging, offers, exclusives, multi-packs and animations. If confectionery can offer price points for everybody – and flourish – why not beauty too?”

Werz underlines: “We are not telling retailers to stop selling premium and luxury products. We are just suggesting they add certain key brands to the mix, which will drive incremental growth and increase their baskets.”

Werz firmly dismisses concerns about cannibalisation. “It doesn’t happen,” he states. “Some retailers will take more effort and energy to convince than others, but it is an ongoing priority to change that mindset.”

He continues: “We have proved via test phases, in airports such as Frankfurt and Hamburg, that Nivea does not cannibalise. Instead we attract new customers who previously haven’t bought anything because it’s just been too expensive for them.”

He laughs: “A loyal consumer of a high-end skincare brand is not going to suddenly switch to Nivea Creme instead. But that consumer might not want to spend another €50 on a sunscreen, or a basic deodorant, which is where we come in as an extra, but not replacement, purchase.”

That said, with certain price-points as low as €3, is there enough serious money to be made for all concerned? Werz delivers an unequivocal yes. “When we are correctly presented with the right assortment, plus the right amount of activities, we move significant volumes, which is beneficial for everybody.”

Nivea has updated its iconic Creme product with a limited-edition travel retail exclusive Zodiac collection; the brand’s Lip Butter range will be extended with new flavours next year

Staying close and connected
Delivering the right product assortment to the right market is a key priority for Nivea. Staying close to its consumers is a key tenet of Beiersdorf’s Blue Agenda, launched in 2012, which sets out – simply and concisely – how the company plans to meet its future challenges.

“We want to maintain our number one status,” explains Werz. “We work hard to understand the needs of our consumers, and the needs of the markets. We are not the biggest cosmetics company, but we have focus and commitment; we are quick and efficient; lean and flexible. There is a company-wide ‘why not?’ spirit.”

Nivea’s commitment to innovation is underlined by inventions such as In-Shower, and the new Q10plus Serum Pearls – the first such serum to be offered in the masstige sector

He continues: “We combine leading brands, big innovations and word-class advertising. Furthermore, we create trends – not just respond to them”¦so it’s important for us to understand who is buying our products and what their needs are.”

To illustrate Beiersdorf’s responsiveness, Werz cites the example of Nivea Sensual Musk, a body lotion created specifically for the Middle Eastern market.

“Consumers in this region love perfumed products, and like the smell of musk in almost everything,” he explains. “So we listened to our feedback, and created Nivea Sensual Musk. After the launch our body care sales in the region increased +53%. It’s good to listen to your consumers,” he smiles.

There certainly seems to be an enviable bond between Beiersdorf and fans of the famous blue tin. Nivea has been voted the most trusted skincare brand in Europe 15 times, and has a global brand awareness of 93% (as a benchmark Coca-Cola has 97%). It boasts over 500 million consumers worldwide, across 200 countries.

“Our aim is to gain market share in all countries, in key categories,” notes Werz. “We are already the world’s number one skincare brand, with a 5.2% market share [according to Euromonitor, which integrates travel retail data]. That is something we are keen to communicate within the channel. So many travel retailers allocate huge space to brands which are not even in the global top ten.”

Traditional advertising, allied to extensive digital activity, helps maintain Nivea’s unique connection with consumers, Werz maintains. “It is important to get, and also stay, connected,” he underlines. “For Nivea alone we have 73 Facebook pages; our YouTube videos have been viewed 100 million times; and there are 100,000 tweets every week.

“We have an active web presence in over 90 countries around the world. The way to advertise product and share innovations is changing very fast and we think this communication channel will become even more important in the near future.”

As will travel retail. Nivea is committed to extending its global presence, both by opening new accounts and accelerating growth in existing regions. The brand will continue to differentiate its assortment, and continue to innovate, in terms of new product development per se, and new presentations, activities and exclusives.

“Travel retail is full of opportunities,” Werz concludes. “We think we have found the right formula, and to continue our progress we just need to do more of what we are doing already.

“Masstige doesn’t have much history [in travel retail] – but Nivea is convinced it’s got a great future.”

Promoting the product Since its entry into travel retail proper, Nivea has worked hard to fine-tune its product offer, and optimise its fixtures and merchandising options. For the latter, the brand now offers a range of tailored solutions, which include compact cash point area displays, free-standing units, gondolas and back wall installations. “We offer three different displays for cash points,” explains Werz. “These have proved to be excellent showcases for our Lip Butters, which are selling incredibly well. Their price point [around €3] makes them an irresistible impulse purchase”¦We will add two new flavours next year.” Nivea offers a range of tailored merchandising solutions for travel retail Nivea has also enjoyed significant success with its ‘buy two, get one free’ activities. “We offer this on suncare, with our deos, our Lip Butters and our 625ml body lotion,” notes Werz. “Originally even we didn’t expect that consumers would want to carry three big bottles of body lotion but on one of the leading ferry companies, for example, it’s proved to be a very successful promotion.” Innovative and unusual gwps, such as bath baskets and beach tennis sets, are also proving popular. “For 2015 we have created a new Nivea Skyline bag gwp, which travellers can get with a qualifying spend of €8,” Werz reveals. The bag is personalised according to location (the featured cities are Hamburg, Frankfurt, Oslo, Copenhagen, Munich, Vienna, Barcelona and Madrid), which adds a sought-after souvenir/Sense of Place element to the offer. Next year Nivea will also offer its personalised Nivea Creme tin activity, which has already featured at Düsseldorf Airport. This animation allows travellers who have purchased €10 of Nivea products to obtain a tin of Nivea Creme decorated with their own photograph and a brief message. The personalisation process takes just a couple of minutes to complete. Christmas sets (above) and new airline exclusives are in the pipline In addition, 2015 will see the travel retail debut of Nivea’s Skin Analysing promotion. Trained Beauty Advisors will offer passengers a quick skin mapping service via a portable, hand-held machine. The results are then displayed on a tablet, which highlights the recommended products. Travellers who participate will receive a money-off voucher redeemable against any Nivea in-store purchase. Nivea’s travel retail assortment is extensive, and incorporates all the brand’s key categories. “We offer a mix of best-sellers, travel retail exclusives and novelties,” Werz explains. “This is the right mix for our consumers, who want to see what is new and different, but also Nivea Creme and Nivea Creme Soft, which are part of our heritage.” Novelties such as In-Shower, which took seven years to deliver, feature strongly, as does Nivea’s extensive deodorant portfolio. “Our Dry Impact Roll-On is a massive best-seller, and Invisible Black & White is another huge success,” notes Werz. “We invented this category, just as we invented the first In-Shower Lotion.” That drive to innovate is underpinned by Beiersdorf’s commitment to R&D, a function which employs almost one million people. In 2013 the company invested more than €150 million in R&D, with development centres in China and Mexico, as well as the Hamburg HQ. Every year it carries out more than 1,300 studies featuring around 40,000 participants. Within facial care, in November Nivea will extend its flagship anti-ageing Q10 range with the new Q10plus Serum Pearls. “Q10 is our anti-ageing icon,” confirms Werz. “Every two seconds a Q10 product is sold somewhere in the world. This will be the first such serum offered in the masstige sector.” Mini sizes, limited editions and exclusives also feature strongly in Nivea’s assortment. Among the highlights for 2014 is a limited-edition travel retail exclusive Zodiac Nivea Creme mini collection. The brand’s Travel Bags for men and women (pre-filled LAGs bags) are enduring best-sellers. “These contain all the basics, and we monitor them regularly in order to update the content when necessary,” explains Werz. “At just €12 we think they are a great item.” A Suncare to Go set, priced at €15, will be added very soon. Christmas sets and new airline exclusives are in the pipeline. A dedicated assortment for Asian travellers is also under consideration. “We have exciting innovations planned for 2015,” concludes Werz. “This will include extensions to our Cellular line, a suncare relaunch – and a key new three-sku introduction in facial skincare which we will unveil in Q1 2015.”