Household chemicals manufacturer Synergetic, part of Baring Vostok’s portfolio, enters a new market. The company launches the production of shampoos, shower gels, balms with a capacity of up to 5 thousand tons of products per year and expects that the segment will form 30% of its revenue. There is not a single player in this category with a 20% share, but Synergetic will have to compete with already well-known manufacturers, experts say.
Household chemicals manufacturer Synergetic is entering the cosmetics market, company founder Alexei Zyuzin told Kommersant on the sidelines of the St. Petersburg Economic Forum. We are talking about shampoo, shower gel, balm, cream, etc. About 150 million rubles have been invested in the production with a capacity of up to 5 thousand tons of products per year, the production is planned to start this summer. By the end of the year, Synergetic cosmetics should appear in the largest federal networks and on online platforms, says Mr. Zyuzin. According to him, in two or three years, these products can take up to 30% of the company’s total revenue. In addition, Synergetic plans to expand into the hygiene segment, he added.
Synergetic produces environmentally friendly laundry, cleaning and dishwashing products under its own brand. The headquarters is located in Nizhny Novgorod. In 2020, Synergetic raised investments from Baring Vostok. According to the Cyprus registry, the fund structure owns 19% of the parent Planet Synergetic Ltd. Alexey Zyuzin owns 32.4%, 36.45% belongs to Pyotr Manevich, the rest belongs to Alexey Shatov and Alexey Konovalov. In 2020, Synergetic LLC’s revenue grew by 42.7% to RUB 3.2 billion, net profit – by 89.5% to RUB 580.7 million.
The Synergetic website already has shower gels for 249 rubles. per bottle 380 ml excluding discounts. This roughly corresponds to the prices of the brands Natura Siberica, Organic Shop, Palmolive. Natalia Rakoch, founder of the Brand Guru Bureau agency, says that Synergetic’s sales on the market will depend not only on the ratio of quality and price, but also on positioning and differentiation from competitors. According to her, the segment of hair and body care is the largest in the category with a turnover of about 100 billion rubles. per year, but also the most competitive.
At Ozon, up to 70% of turnover in the Beauty category is accounted for by cosmetics for care, and this market is still highly fragmented: there is no player here who occupied at least 20%, says a site representative. A new player will need to find attributes that can distinguish the product from the mass of others on the market, confirms the marketing director of the Unilever cosmetics category (brands Ax, Rexona, Timotei, Dove, etc.) in Russia, Belarus and Ukraine Yekaterina Skasyrskaya. According to NielsenIQ, in 2020, sales of hair care products decreased by 7.5%, and for the body – by 7.8%.
According to a representative of Azbuka Vkusa, Synergetic products may have potential when positioned as natural and organic cosmetics. This segment is not very competitive, but manufacturers and consumers are already paying attention to it, they say online. Pyotr Bobrovsky, Executive Director of the Association of Manufacturers of Perfumery, Cosmetics, Household Chemicals and Hygiene Products, adds that the bet on naturalness can only work in the mass market, and to enter a more expensive segment, proven efficiency, more expensive raw materials and packaging, significant costs for marketing.
Synergetic is not the only company that has decided to enter the cosmetic market lately. Thus, the producer of mineral water “Arkhyz” planned to launch goods for beauty and health, and one of the largest Russian players in the market of snacks and confectionery KDV – gels, liquid soaps, shampoos, creams, etc. The entire Russian cosmetics market is estimated at 650-700 RUB bln per year, and more than 50% is accounted for by imports, explained the interest in Tiltech Capital.