Bare Essentials: Maker of Nivea To Shed Its Pricier Products
Profit losses have forced Germany’s Beiersdorf to scale back. The company will stick with its classic core products – including its iconic Nivea hand cream – but plans to dump some of its more expensive items. Everything over 20 euros must go.
In the face of falling turnover and profits, the Hamburg-based Beiersdorf company that produces Nivea and other brands is divesting itself of all product ranges except for its core classic and other inexpensive labels. Every fifth product in the company's assortment, from body lotion to shampoo to deodorant, will be axed. On top of that, Beiersdorf has sold Juvena in a move away from cosmetics altogether.
"Tightening up the assortment reduces the complexity of the business and puts the focus on quality," said CEO Thomas-Bernd Quaas, under whose leadership Beiersdorf markedly increased the number of market niches it filled. By stepping away from that policy, the company hopes sales of the core body care products will pick up again.
Beiersdorf is also moving away from higher price categories: creams with a sales price of over 10 euros will be an exception, and any item costing over 20 euros will no longer be sold.
In Germany, company turnover shrank by a good 4% between January and the end of September. In the rest of Europe, it shrank by about 2% - except for in the UK and Austria. After the sale of Tesa, a successful daughter company in China, sales fell in China and the company showed a loss. However, in the United States and Latin America, business was strong with increases of 5% and 16% respectively.
Overall, reduced turnover impacted profits: trading results (before interest and taxes) in the first nine months of 2011 decreased by 11% to 491 million euros. After taxes, Beiersdorf earned around 336 million euros, or 5% less.
In April 2012, Stefan Heidenreich will replace Quaas as Beiersdorf CEO.
Read the full story in German by Birger Nicolai
Photo - rykerstribe
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