Kyungae CHOE: Pierre Fabre China witnessed rapid growth

In the new year, Kyungae CHOE set a growth target of 20% for Pierre Fabre China's business.

This is Kyungae CHOE's fourth Christmas in China. In her 28-year career in fast moving consumer goods field, China is the second foreign country she has worked in, apart from Paris where she worked as the Asia marketing director of L'Oréal headquarters in 2000. Since 2018, she has led the Pierre Fabre China team through digital innovation, online consumption transformation and operation in the stressful time during the pandemic. With Kyungae CHOE’s leadership, Pierre Fabre China team has achieved considerable performance growth. CHOE was invited to an exclusive interview by Cosmetic Business Online (CBO).

Well established and from France, Pierre Fabre is 2nd largest independent French pharmaceutical group and the world’s 2nd largest dermo-cosmetics laboratory. At present, China has become the largest overseas market of Pierre Fabre Group. Avene, as a leader in the group, entered the Chinese market 17 years ago and has become a leading brand of dermatological skin care products. Brands like Rene Furterer and Klorane have gained a sound market reputation in the market segment.

After a year of recurrence of the pandemic and tightening cosmetics regulations, beauty brands are bound to usher in a critical watershed in 2022. How to successfully maintain and further expand their brand positions has become an urgent issue for every brand operator.

△Kyungae CHOE, Managing Director of Pierre Fabre Dermo-Cosmetique China

01

Avene’s Glory and New Direction

According to Euromonitor, the market size of dermatological skin care products reached RMB18.93 billion in 2020 in China, with a CAGR of 25.2% in 2015-2020. Among them, three foreign brands, Vichy, Avene and LaRochePosay, enjoy a market share of over 60% in this sector, and this first-mover advantage is still very obvious.

"By combining the pharmaceutical background with dermatological cosmetics, Avene is the first international brand that introduced the concept of efficacy-based skin care into China and achieved success." As the first one entering China among brands under Pierre Fabre, Avene has innovatively opened up the "dermatological skin care" category in reliance upon the group's strong pharmaceutical background, and quickly established a leading position in the Chinese market, opening up a new prospect for Pierre Fabre in the Chinese market. Kyungae CHOE stressed that the group is innovation-led , pays great attention to product safety and adds no industrial-grade preservatives to Avene products.

According to publicly available data, during 2021 Double 11 festival , Avene rose 7 places in the rankings on Tmall, and the overall GMV rose 25%, far higher than the 10% growth rate of the skin care market. Among them, Avene Eau Thermale Spray, affectionately known as "big spray" by Chinese consumers, grew 59% YoY, and lotion and cream grew 55% YoY. This is a really conspicuous record.

Avene, as a foreign brand foreseeing the online consumer market prospect very early on, moved into Tmall as early as 2015 and achieved rapid growth with the rise of China's e-commerce channels. Before the pandemic, Avene's online sales accounted for 40% of its total sales. Due to the change in consumers' shopping habits during the COVID-19 pandemic in 2020, Avene has been more active in the digitalization process of all segments.In 2021 60% of Avene’s performance came from turnover from online platforms, including Tmall flagship store and WeChat applet, and this number is expected to further increase.

"For multinational companies like Pierre Fabre and long-established brands like Avene, the pain of transformation is very obvious in the environment of the drastic changes due to the pandemic and market competition. In offline channels we have 400 department stores and nearly 4,000 Watson stores, which are still important for brand demonstration and consumer experience. We have accelerated the digital upgrading of offline channels", said CHOE.

As an import foreign brand that has been in the Chinese market for 17 years , Avene still faces challenges.

Today, the field of dermatological skin care in China faces unprecedented competition. While international giants have entered the Chinese market one after another and introduced many new brands, China local brands with strong backgrounds have begun to communicate and interact in a way that better understands Chinese consumers. All these pose constant new challenges to Avene.

It is also worth noting that Avene Eau Thermale Spray, as a hit product, has played an important role in both consumer awareness and proportion in brand sales. In Kyungae CHOE's view, it is an important target and direction of the brand to increase the promotion of other categories, such as sunscreen and face cream in the future.

02

Examine the Meaning of Traffic

and Adhere to Long-term Value

Market uncertainty continued in 2021. With the peaking of online traffic dividend, everyone is re-examining the relationship between brands and traffic. How to shift from chasing short-term success of online traffic to building long-term brand value has become an important topic for the industry to discuss. New channels are always emerging. There is never a right answer to talk about channels without brand assets. A brand with real product power is a prerequisite for everything.

"We don't know what will happen in the future market, but we think the form of live-streaming will continue to exist in the market." CHOE toldCBO reporters that for brands, the current online sales of goods by web celebrities, especially the live-streaming by leading streamers, is more of a way for brand communication and interaction with consumers.

At the same time, CHOE is optimistic about the form of live-streaming, because watching live-streaming has become widely accepted by the public. It can not only meet the needs of consumers for convenient shopping, but also meet the needs of consumers for product experience and further education. CHOE believes that, in the next step, brands should not only have active and in-depth cooperation with leading streamers, but also develop brands’own live-streaming ability. They should not only sell products to consumers through discount promotion, but more importantly, reflect the value of the brands and products in this ecosystem.

According to publicly available data, during 2021 Double 11 Festival, Rene Furterer, a high-end washing and care brand under Pierre Fabre Group, recorded sales of more than RMB72,000,000 on Tmall, up 162% YoY; its products of washing and care category recorded YoY sales growth of 332%, ranking number 1 in the 6 major Tmall lists. It also ranked the number 1 in terms of self-live-streaming penetration rate in the category, thanks to the diligent efforts of the entire team.

According to CHOE, Pierre Fabre had in-depth cooperation with Lily&Beauty, a well-known online retail service provider in China, to  screen 24 million people with anti-hair loss,and then lock in the customer base with strong exposure in advance of Double 11. They accurately completed the match of people, goods and venue, and carried out full-link operation of the main hot-sale products, namely Rene Furterer Triphasic  shampoo and Triphasic anti-hair loss essence. Pierre Fabre  also used big data for penetration inside and outside websites and expanded exposures through Douyin and Xiaohongshu. The search volume inside websites during Double 11 rose 80% and self-live-streaming sales totaled RMB14.8 million, up 332% YoY.

"Rene Furterer is expected to become Pierre Fabre's second Avene in China," said Choe. She values the huge business opportunities in China's high-end shampoo and hair care market. Currently, 85% of Rene Furterer's sales comes from e-commerce platforms such as Tmall. Thanks to the big data empowerment from Lily&Beauty, brands such as Avene, Rene Furterer and Klorane are maintaining efficient communication with consumers through refined online operations.

Currently 56.5% of Pierre Fabre China's sales come from brand members. These members have a high customer stickiness to the brand and products and most of them are white-collar female workers or young mothers living in first- and second-tier cities. They prefer safer and more reliable skin solutions. Pierre Fabre's vision is to introduce more professional skin care concepts and safe and effective products to more young consumers.

△ Kyungae CHOE, Managing Director of Pierre Fabre Dermo-Cosmetique China

(left) and Liu Ying, Chief Executive Editor of CBO (right)

03

China to Lead the World within 2 Years through Enhanced Local R&D

The Standard for the Evaluation of Efficacy Claims of Cosmetics will be formally implemented in 2022. At that time, all cosmetics registered in China will be subject to efficacy claims evaluation, marking the official opening of the era of efficacy claims evaluation in the cosmetic industry. The new regulations will become the cornerstone of the sustainable and healthy development of the cosmetic industry, and the "Sword of Damocles" will be hanging over the violators.

"All cosmetic companies will face the challenge of the new regulations!" CHOE stressed that the implementation of the new regulations means that the efficacy claims of imported cosmetics must be re-sorted and reviewed in accordance with the new regulations. It is, however, a good opportunity for companies with "hard-core" pharmaceutical strength and background like Pierre Fabre. CHOE pointed out that some brands have imitated Pierre Fabre's efficacyclaims, but in the era when efficacy is subject to scientific verification, the strength of scientific research in professional fields will become an effective competitive barrier for brands.

In order to better localize research and development for Chinese consumers, and further enlarge and implement the group's advantages in scientific research and efficacy, Pierre Fabre has worked with Peking University First Hospital and other institutions with professional dermatology backgrounds to start customized research in the Chinese market.

At the same time, Pierre Fabre sponsored the establishment of a special fund to prevent and treat adverse reactions of targeted anti-tumor drugs and promote multidisciplinary cooperation. It is reported that the special fund is jointly sponsored by Huashan Hospital affiliated with Fudan University, Tumor Hospital affiliated with Fudan University and Shanghai Cancer Prevention and Anti-cancer Development Foundation. The multidisciplinary cooperation aims to improve the medical quality and living quality of cancer patients and enable cancer patients to have a better life.

"The concept of skin care has matured rapidly among Chinese consumers, and I think this is attributable to social media." CHOE noted that ingredients and formulas have become a hot topic of discussion and research among many consumers online. Moreover, this new generation of consumers who grew up with the internet seeks clean ingredients, and green  and environmentally-friendly products more than ever before.

The advent of the Gen-Z consumer group and the emergence of new consumer trends have given Pierre Fabre, recognized as professional, more confidence to chase the trend of the times and achieve breakthrough growth. CHOE said that she expects a growth of more than 20% in 2022. According to this growth momentum, she firmly believes that Pierre Fabre's sales in the Chinese market will surpass that in the French  local market within two years, and at that time the Chinese market will become the Pierre Fabre Group’s largest market in the world.