During the 2009-2013 period, Farmec’s revenue has grown by over 50%, to EUR31 million last year.
“We were helped by the crisis and by Romanians’ being ever more price aware and shifting to cheaper cosmetics. Our products are 30%-40% cheaper than rivals’, so that we had a portfolio adjusted to current conditions right from the start”.
On the cosmetics market, Farmec, with brands such as Farmec, Gerovital or Aslavital, is battling foreign giants such as P&G, Unilever, L’Oreal or Beiersdorf (Nivea).
In recent years, Romanians have switched to cheaper products. Unlike other categories, where retailers’ private labels have been gaining ground, in the case of cosmetics brands are still important.
Farmec revenue rose by 14% to EUR31 million last year mainly based on the domestic market as exports hold a small weight. “Exports increased by 30% last year, but given the small value of sales abroad, the advance was supported by the domestic market”.
The company targets a similar export increase this year, but everything depends on opportunities, finding new markets and new partners on the markets Farmec is already present on.
“Several months ago we got an order from Japan and started to produce a private label for a company”.
In Romania, Farmec produces in a private label system for Carrefour, Metro Cash&Carry and Rewe Group, according to Turdean.
At present, the Cluj plant produces at 70% of its capacity. “The figure has been flat in recent years. Though we raise production, we retool the plant each year, so that we remain at the 70% level”.
In 2013, the company invested EUR600,000 to retool the plant and modernize the distribution system, while another EUR360,000 were spent to open a presentation store and a cosmetics unit in Cluj. “We’re considering opening a store in Bucharest, this year, but we must seek a space and decide whether we want a street-front location or in a mall”.
For 2014, Farmec Cluj has budgeted investments of at least a similar value as in 2013.
The company also has a marketing and promotion budget of at least 10% of revenue, namely EUR3 million.
“We have our own distribution force and our own car fleet. Farmec products are present in over 11,000 stores”.
Farmec holds cosmetics and personal care products (80% of the total business) and cleaning products (20%) in its portfolio. “The cleaning products under Nufar and Triumf brands weighed 5% in total revenue five years ago and now account for 20%”.
Five years ago, cleaning item production was spun off, but has now been brought inside the plant and Turdean says there is growth potential on this segment.
He’s budgeted growth of at least 10% for Farmec business this year, with the increase to come from both lines.
(English version by Catalina Apostoiu)