Consumer Trends Align to Accelerate Growth of Thai Natural Skincare Producer

Aug. 25, 2012 - PRLog -- For Thailand headquartered premium skincare and anti aging products manufacturer Royal Siam Natural Health and Beauty, every day exposes new opportunities as the company struggles to keep up with the pace of development and consumer demand.

Commencing trading just 18 months ago, the business strategy was developed during 2010, with veteran Asia Pacific business leader David Christensen, at that time a Vice President with American Express, initially providing strategic advice to the principals.

“Initially I started looking into the opportunity as a favor to a friend who asked me to provide some advice to the team around the realities of startup businesses. But it didn’t take long for me to see there was a clear opportunity; when the products I tested lived up to expectations it became even more interesting, and eventually that led me to become an investor and now heading up the business.” Says Mr Christensen.

With a background that includes multinational advertising agencies as well as a decade of strategic management consulting across the Asia Pacific region, he explains the reasons for the original attraction to the concept. “The core brand proposition was driven from the use of a range of skincare, hair care and related products made from 100% pure, natural herbal ingredients that were part of the heritage of Thai Traditional Medicine. This branch of medicine is an astonishingly rich source of information that has been painstakingly built up over more than 800 years, but is little known outside Thailand. Many of these products have been in common daily use for generations, and many Thai women have since said things like ‘oh, this is just like my mother and grandmother would use every night and morning to keep their skin soft and young looking, and from early childhood I did the same, every day until the time I left home.

“Immediately, it was obvious here was a ready-made and highly credible brand proposition and point of differentiation. There’s a swing back towards natural/organic ingredients in personal care lines; there’s more respect for traditional wisdom than there used to be; there’s no doubt that Thai women often exhibit flawless skin and a youthful appearance the envy of many.

“Then there was a further quite important point that is easily overlooked, which is by faithfully reproducing the traditional formulas and production techniques (which is all by hand), we are selling products that have been used for decades – sometimes centuries – so we are dealing with known products, shown to have been effective over a long period.

“We further developed our positioning to accommodate the limitations that are often present with 100% natural products – it goes with the territory that shelf life can be more limited, the product may not flow freely a low temperatures and so on – so many people are willing to accept a small level of artificial ingredients as long as it makes a product more usable. The team also had a number of very high end products in development that would bring in some of the most cutting edge anti aging compounds, so that gave us the very unique position of having all of the Thai, tradition and natural elements but adding hi-tech ingredients chosen from some of the best ingredient manufacturers around the world.”

The result of this is Royal Siam developing one range of products that is 100% natural and very traditional (called “Faithful to Tradition”), a range of everyday use products based on nature but with some artificial ingredients to improve the product usability (“Powered by Nature”), and an ultra premium anti aging range dubbed “Ultra Cosmeceuticals”. A further range, Breakout! Anti Acne, completes the product structure.

Mr Christensen goes on to explain that Royal Siam chose to concentrate on retail and direct selling strategies in Thailand, but for the international market has invested heavily in online distribution. “Our objective is to appoint market level licensees but that will take time, and in the interim we need to be busy both building our brand reputation but also generating sales.”

Market response has been significantly different to the original expectations. Most significantly there has been a dramatic and unexpectedly large consumer trend in favor of online purchasing – as well as the appeal of Royal Siam’s product line – in the two years since consumer response to the concept was first tested

“Firstly, we now have viable mass-market payment solutions with the likes of PayPal and others stepping forward with simple and reliable solutions. Secondly there has been a quiet but successful assembly of a global door to door courier system shared by the Post Offices of each country, and finally a change has occurred very recently where people are now willing to buy online rather than just use the internet to gather information.

“So the first thing to have exceeded our expectations is the level of online shopping. Our experience is consistent with industry data indicating the Personal Care category has the highest level of online sales of any product category, with the latest global figures indicating between 20-25% of the category (which is estimated to be over $90 billion pa by 2014) is transacted online. Adoption is growing at twice the rate of the category as a whole (which still exceeds 10% pa). Who knows where this will plateau, but right now there is no sign of the growth rate slowing.”

He cites a recent Nielsen study of online shopping habits which discovered more than 90% of people who have previously made an internet shopping purchase have purchased from the personal care category.

“We are also seeing a very clear and rapid crystallizing of consumer attitudes in favor of natural products, and unexpectedly there seems to be a lot of cynicism among consumers about the true level of commitment towards ‘green’ issues by established multinational manufacturers.”

The result for Royal Siam is described by Mr Christensen as like ‘the perfect storm in reverse’, where consumer resonance has been stronger than anticipated in almost every aspect.

“I would certainly not claim this was completely intentional,” says Mr Christensen, although our positioning and consumer propositions were well considered. But what we could never have predicted is how well out timing has aligned with big attitudinal changes in the market, and how much stronger the trends toward online purchasing adoption, natural products, traditional positioning and premium anti aging products should have so well aligned with our chosen core strengths as a business.”

Royal Siam is this coming week launching its first external capital raising exercise since being formed and is very pleased with the story they will be able to tell to potential investors. “We seem to have so far been right place/right time with our consumer propositions,” says Mr Christensen, “and we are keeping our fingers crossed that over the next few weeks as we speak with potential investors our good fortune of being in the right place with the right proposition at the right time will continue”


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