Beiersdorf (eBook)

Introduction

Beiersdorf is an exceptional company. It helps people feel good in the morning. All over the world, many millions of people start their day with Beiersdorf skin-care products. The global NIVEA brand is world-famous, yet the company that has been producing it for considerably longer than a hundred years is relatively unknown. Depending on the country they grew up in, many consumers believe NIVEA is an Italian, French, American, or Swiss brand. This is part of its success. Besides NIVEA, Beiersdorf produces a large number of other articles that are used by millions of people every day. Often it is only the brand names that are familiar. Brand awareness is also the most important factor, alongside quality and availability in the shops, because these are the reasons consumers all over the world choose to buy Beiersdorf brands again and again.

The firm’s origins stretch back to the year 1882, when pharmacist Paul Beiersdorf was granted a process patent to produce medicinal plasters, and started a business that initially focused exclusively on making and selling plasters. Oscar Troplowitz, who bought the small Hamburg-based firm with its handful of staff from Paul Beiersdorf in 1890, continued with the production of plasters. Above all, however, he brought out new body care products and made the brands Leukoplast and Pebeco – the top-selling toothpaste in the USA around 1910 – world-famous. Troplowitz was also behind the NIVEA (1911) and Labello (1909) brands. His focus on branded products and cosmetics continues to define the company to this day, with cosmetics limited to skincare and body care. There have been hardly any „decorative“ cosmetics from Beiersdorf. In addition to plasters and cosmetics, Beiersdorf gradually developed its adhesives technology business under the „tesa“ brand name, based on self-adhesive plasters and tesafilm, which was introduced in 1936. Even before the First World War, more than 500 men and women were involved in developing and producing, marketing and distributing Beiersdorf products. In 1950, around 1,500 people worked for Beiersdorf and by 1972, the group employed more than 10,000 men and women. Today, in August 2018, Beiersdorf products are available worldwide thanks to around 19,000 group employees, subsidiaries in 69 countries, and partners all over the world. Beiersdorf shares are among the most valuable on the German market.

The focus of this book is on the Beiersdorf company. It recounts the journey from a small pharmacy in Hamburg to a global corporation producing well-known brands – a story closely connected to the economic and social changes that took place from the end of the 19th century and the historical political upheavals in Germany.

Only a few German manufacturers of consumer goods have managed to create a global brand like NIVEA and maintain their position on the market for such a long time. Even Beiersdorf’s long-term success was not self-evident. On the contrary – the company’s existence came under threat on several occasions. During the First World War, Beiersdorf lost the Pebeco business in the USA, which accounted for nearly half of its revenues. Shortly afterwards, in 1918, Oscar Troplowitz, the company’s owner and strategic mastermind, died. After his death, Beiersdorf was restructured as a stock corporation under the leadership of Willy Jacobsohn (1922–1933), with the help of the Warburg bank. Since then, the executive board members – especially the chairmen – and in some cases the chairmen of the supervisory board and major shareholders of Beiersdorf A G have set the direction and have often taken difficult decisions which, in retrospect, were sometimes farsighted and sometimes unfortunate. In 1933, under the Nazi dictatorship, the company’s ‘Jewish’ executives and the ‘Jewish’ Warburg bank withdrew from Beiersdorf to save the company. Jacobsohn continued to run Beiersdorf’s foreign firms from the Netherlands until 1938, while in Germany, Carl Claussen (chairman of the executive board 1933–1954) and Hans E. B. Kruse (chairman of the supervisory board 1934–1967) steered the company through national socialism and the war with commercial success. After the Second World War, however, Beiersdorf lost its foreign trademark rights for the second time and had to rebuild its international business step by step. It was not until 1997, having acquired the trademark rights for Poland, that Beiersdorf once again owned the global rights to the NIVEA trademark.

Beiersdorf can look back on an eventful history, which is told in this book up to the beginning of the year 2004. Shortly before this, the Tchibo holding company (now maxingvest, and a major Beiersdorf shareholder since 1974) became a majority shareholder of Beiersdorf by taking over a block of shares from Allianz A G. The deal ended a long period of uncertainty, during which many Beiersdorf employees feared the company would be taken over by an international competitor, since Allianz A G (a major shareholder since 1938) had announced in 2001 that it intended to sell its Beiersdorf shares. No one on the Beiersdorf executive board was against a foreign major shareholder, but they did not want to see the NIVEA brand taken over and the others sold off to the highest bidder.

This thrilling episode concludes our story. If we look for the conditions and reasons for Beiersdorf’s long-term success, it is not easy to find a simple answer. Beiersdorf was active in four separate business sections with different economic cycles: cosmetics; plasters and bandages; adhesive tapes and adhesive technology for households and industry; and pharmaceuticals (Beiersdorf produced heart and cold remedies and other medicines for around sixty years). As a result, until the end of the 1980s, the dominant view was that the different divisions supported each other and gave the company stability. They helped the company survive economic crises and structural changes within the industry. However, economic conditions and external factors tend to highlight challenges and opportunities, rather than explaining success. In the following, I outline starting points for possible explanations and invite readers to draw their own conclusions as they read the book.

Looking back, it appears that Beiersdorf had the right products at the right time. Oscar Troplowitz captured the spirit of the times when he brought out Leukoplast, the first self-adhesive plaster that could be kept on hand at home. It was used for injuries and found a wide range of applications in households. Troplowitz introduced one of the first toothpastes in a tube and developed Pebeco into a popular brand. Conditions for these products were good at the beginning of the 20th century: Many employees were now earning enough that they no longer needed to live from hand to mouth and were increasingly able to afford body care and hygiene products. In addition, more and more people were living in the towns and cities, where there were shops and where they could be targeted through advertising. NIVEA Creme was another ingenious product: Before the First World War, there were no other skin creams that could be found in every pharmacy or drugstore and that always had the same fragrance. It was initially sold at what were high prices for the time and bought by an „upmarket clientele“ and perhaps also as a gift.

Later, when competition increased, many customers were already familiar with Beiersdorf products and associated them with positive experiences. In the case of NIVEA, the masterstroke was positioning it as an everyday cream for the whole family in the mid-1920s. This was when the blue container was introduced, which is a characteristic aspect of the brand to this day. Above all, the company ensured that NIVEA has been a feature of many people’s lives since childhood.

Beiersdorf also pursued a farsighted pricing policy. Taking NIVEA Creme as an example, when disposable incomes were still low, the company primarily targeted customers in the upper middle classes and sold the cream as a luxury item in tiny tins and tubes. Advertising positioned the brand accordingly. As income rose, instead of increasing prices to achieve high profit margins in the luxury segment, Beiersdorf kept prices stable and increased its spending on advertising – the potential customer base was growing and a product that had previously been too expensive for many people was becoming an affordable „luxury“ and then an everyday product that one would not want to miss. Beiersdorf focused on mass consumption and grew in line with the market. A similar positioning was successfully established abroad. In the 1920s, Beiersdorf was among the first companies on this market in many European countries. It was not a particularly big business to start with, but when in Italy, for instance, purchasing power rose in the decades after the Second World War, NIVEA was present as a high-quality product and increasing numbers of people wanted to treat themselves to a little daily luxury. Similar processes took place later in other parts of the world.

Beiersdorf kept developing new brands. Those that were successful were the ones that opened up a new market, rather than being me-too products. The introduction of Hansaplast plasters (1922), tesa adhesive film (1936), and 8×4 deo soap and deo spray in the 1950s are excellent examples of the development of new markets. At that time, there were hardly any branded deodorant products in Germany. However, the process described for NIVEA of continually expanding the markets and „percolating“ through to ever-wider customer circles was not easy for other...