Oriflame: A Swedish makeover

It was after a gap of five years that Robert AF Jochnick, 56, co-founder and chairman of the Swedish direct selling cosmetics company Oriflame, was visiting India last week. Set up with his brother in 1967, Oriflame is a euro 670.7 million company today with operations in 55 countries. The Stockholm-based Jochnick, who loves hiking and skiing, spoke to Aparna Krishnakumar on Oriflame's challenges and plans in India. Excerpts from the interview:

Your comments on the Indian cosmetics market.

Things are beginning to look good out here. Ten years ago, when we first came to India, everybody talked about the great Indian middle class, which wasn't that big. Numbers thrown up then, were an illusion.

Today, the middle class is actually growing and has the same expectations from cosmetics manufacturers as it has from other companies. Oriflame's target group is this middle class and we are happy that this group has broadened our selling base.

What challenges do you face in India now?

The last 10 years have been a learning experience. India is a big challenge for us. We have invested around $20 million in infrastructure, manufacturing unit and training. In the last five years, we have begun to reap the benefits of our groundwork and look forward for greater rewards in the long run.

Your concept hinges on the direct selling model. Does it work in India?

India is a tough marketplace and we also had to refine our business concepts for this market. We have not been making money from our Indian operations but we have fared better than our competitors despite the availability of both homegrown and other international brands.

Our commitment to India is long-term and I'm confident that India will exceed our expectations. The direct selling model will work the best in India as people are on the lookout for alternative ways to earn a comfortable living.

How does the direct selling model fare worldwide?

We are recognised among the top 10 direct selling companies in the world. In the cosmetics category, we are market leaders in 30 countries of the 55 that we are present in. In countries like Russia and Poland, we are the leading brand.

In many countries of Eastern Europe, we were the first company to introduce the concept of a market economy; women in these areas were surprised that one could earn an income from selling cosmetics.

We have five manufacturing facilities in India, Russia, Warsaw, Switzerland and Dublin which amply demonstrates the success of our products as well our business model. But emerging markets like India and China is where we will get our big results as people are trying to earn more.

How do you position yourself in India?

We position ourselves as a natural Swedish brand offering a range of skincare and beauty products for the mid-market segment that is brand-conscious and believes in value-for-money. India is one of our global supply sources.

Here we offer 400 products out of our global line of 1,000. We have developed the skin whitening range specially for the Indian market. Nearly 30 per cent of our sales comes from this segment alone. Our manufacturing base in Noida makes products, which are on a par with the best in the world.

We have an aggressive marketing plan for India. We are investing in more products, bigger infrastructure and would make it a rewarding experience for anyone who wishes to be part of the Oriflame family.

What trends is one likely to see in the cosmetics market?

There will always be a mix of natural and scientific products in the market. However, cosmetics are getting to be pharmaceutical in nature.

Product claims are becoming more important; so every cosmetics product has to result in something better for the user. But a company has to stay true to its roots and adapt to the market demands at the same time.

What does your wife think of the Oriflame products?

Lilian has to use them or else she doesn't get the money for shopping. On a serious note though, she has been one of Oriflame's most proactive consumers who has given us valuable feedback on any new product that we have introduced.