Inoherb banks on TCM to give it the winning edge
Shanghai company hopes rebranding will help to expand its skin care presence abroad
“I think when we were on top, we were just too busy heading forward and ignorant of the potential roadblocks,” says CEO Yan Ming, looking back at the company’s struggles over the past few years.
By rebranding the brand as a “unique player that not only makes TCM-themed skin care products, but also proves them to be scientifically effective”, Yan expects Inoherb to regain double-digit growth in 2018 and become one of the top three players in five years.
“It is not only about including certain types of herbs, but also about the proportion used and the recipes. With our expertise and partnership with the Shanghai University of Traditional Chinese Medicine, we want to bring TCM-themed skin care products to a new level, where the effect can be seen, felt and evaluated,” says Yan, who left the company in 2014 to become an investor in the beauty industry and returned to Inoherb last year.
Around 30 new products are expected to be launched in 2018. The idea of incorporating Chinese herbs or TCM-inspired therapies into beauty products has been one of the most popular trends in both the East and the West over the past few years.
In 2015, US cosmetics giant Bobbi Brown launched a serum foundation formulated with cordyceps mushroom extracts, which are believed to have anti-aging properties. The 30-milliliter liquid camouflage, sold at $68, has since been one of the bestselling products of the brand.
South Korean premium skin care brand Sulwhasoo has developed most of its products with ingredients from Chinese herbs. According to the parent company of the brand, Amorepacific Group, it had sales of more than $6.1 billion in China in 2016, up by 18.3 percent year-on-year, with strong performance both on e-commerce platforms and more than 100 sales points in department stores in the country.
“The rise of domestic brands and skin care treatments taking inspiration from TCM is a result of bilateral efforts,” says Dong Shufen, secretarygeneral of the China Association of Fragrance Flavor and Cosmetics Industries.
“On the one hand, companies are investing more in innovation and research and development in competition with their Western counterparts; on the other hand, consumers are no longer obsessed with anything that is tagged with foreign labels and are more confident in their own culture,” she adds.
The association says the country’s skincare and cosmetics industry has grown from 170 billion yuan in 2011 to more than 300 billion yuan in 2017. The market share of domestic brands has risen from 12.8 percent in 2012 to 17.6 percent in 2016.
“The jump in share is particularly significant considering the market is getting crowded, as more and more foreign players are tapping into the world’s fastest-growing and secondlargest market (after the US),” says Dong.
But Eastern remedies haven’t been a guarantee of commercial success.
Late in 2012, Estee Lauder Cos announced that it was testing a new skin care brand called Osiao, which features a specialized formula containing Chinese plants such as ginseng. The brand was scheduled to be introduced on the Chinese mainland within 18 months after trial sales in Hong Kong. But the brand, which sells a bottle of facial serum for $211, has yet to debut in mainland markets.
Similarly, Procter & Gamble Co in 2013 launched its first hybrid Eastmeets-West beauty line, Oriental Therapy, to consolidate its leading position in China. But the line disappeared from the market within a year of its launch.