Dr Scheller set to focus on Russian market

By Simon Pitman

- Last updated on GMT

Related tags Russia

German cosmetics player Dr. Scheller says it wants to use its
takeover by rival company Kalina as a route into the fast-growing
market in Russia.

Russia-based Kalina acquired Dr. Scheller in the first quarter of last year, in a move that has helped turn around the once ailing company in the space of less than a year.

Now that the company has bounced back it is eyeing a market that continues to display some of the strongest growth rates in the massive European industry.

Medium-sized Dr. Scheller says it is unable to compete with the larger players on the saturated Western European and domestic market, so it will turn to Russia as a means of leveraging its sales by tapping into Kalina's existing marketing, distribution and manufacturing machinery.

Kalina is the largest supplier in the Russian market for the skin care, oral care and hair care categories and has a distribution network that touches on 23,000 outlets throughout the country. In recent years it has achieved sales growth that has topped 30 per cent.

Dr. Scheller currently estimates that it achieves around 30 per cent of its total turnover outside of Germany, and is hoping that the focus on the Russian market will help to increase this figure to at least 40 per within the next two years.

The Russian market for cosmetics is currently growing at well into double figures, and that growth is expected to continue well into the future if economic stability is sustained.

Currently the market for cosmetics in Russia is estimated to be valued at $6.2 billion and Euromonitor estimates that the value could grow by 60 per cent in the next 5 years.

Meanwhile Dr. Scheller is hoping that it can increase its share in the stagnant German market by upping the pressure on direct rival Reckitt-Benckiser and Henkel.

The company also mentioned to German press that it is hoping its efforts in both the Russian and German markets should help push its single-digit growth in turnover towards the double figure mark during the course of 2006.

Most recently Dr. Scheller announced a 9.3 per cent jump in sales for the third quarter, while sales for the nine month period rose from €58.2 million for the period January to September 2004, to reach €63.6 million in 2005.

During the course of 2005 the company has concentrated on the expansion of its Manhattan brand, making additions to both its colour cosmetic range and its sink care ranges for both men and women.

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