Natio Is a Health and Beauty Products

Natio is a health and beauty products maker from Australia, and the company is seeking to expand its business. It has targeted countries in Southeast Asia for expansion as a result of the proximity of the region to Australia and the size of the market. This paper will explore the possibility of Natio entering one of the largest markets in the region -- the Philippines.

The cosmetics industry is a relatively lucrative industry, with competition split among hundreds of competitors. Many such competitors operate worldwide, but there are strong regional players in Asia as well. Consumers tend to be relatively brand loyal. The largest cosmetics industry in Asia is in Japan, worth 10 billion yen a year (Lloyd, 2004). Cosmetics are marketed in department stores, in drug stores/chemists and in standalone stores as well. The market globally is worth an estimated $170 billion USD, and the market in the Philippines is worth an estimated $2 billion per year, with an average growth rate of 7.7% (Personal Care, 2010). This makes the country one of the fastest-growing markets in Asia, despite a relatively high rate of poverty. Imports account for around $150 million of the market, as most cosmetics consumed in the Philippines are domestic (Austrade, 2010).

Natio was a family business for four generations, with a beauty care range launched in 1993. The company focuses on "plant-based, simple and gentle beauty treatments" and is one of the fastest-growing beauty brands in Australia (Natio.com.au, 2010). The company markets products in the skincare, colour, sun/hair/body, spa, wellness and male segments of the market (Ibid). The 1993 launch of beauty care has begun a journey for Natio, which has become a prominent Australian producer, guided by Max and Vivienne Ross, who were responsible for the 1993 relaunch. At present, the company sells its products only in Australia and New Zealand (Ibid).

The Philippine market is an attractive one for Natio. The Philippines accounts for 1.17% of the global market, but is one of the fastest-growing markets. Filipino women prefer simple, easy cosmetics of the type that Natio makes. In addition, they prefer total health and wellness. This benefits Natio because the company markets a fairly broad line of products, including skincare, spa and wellness. The Philippine market is concentrated among the nation's middle class and wealthy. This population is typically urban, and the country's urban populations are concentrated in a handful of key cities. For example, the metropolitan area of Manila/Quezon City has around 16 million people, some 18% of the nation's population (Manongdo, 2010). It is believed that Manila holds an even greater share of the country's wealth. As such, Natio could conceivably enter the Philippines in the Manila market only.

The Philippines is a large country by population, with a relatively low per capita GDP for the region at $3,300, ranked just 162nd in the world (CIA World Factbook, 2010). The country has a high population growth rate of 1.957% and the current population is estimated to be nearly 100 million (Ibid). The country's population is increasingly urban, with city-dwellers accounting for 65% of the total population. Around one-third of Filipinos lives below the poverty line. The economy is slow-growing at just 1% in 2009, but the cosmetics market grows at a much quicker pace.

Most cosmetics sold in the Philippines are produced locally, and it is these local firms that form the bulk of the competition. Many major international names are also found in the Philippines, particularly in Manila's many shopping malls. The industry is relatively diffused, with dozens of major competitors. This type of industry typically allows for new entrants to gain market share easily. Skin care is the number one product in the Filipino cosmetics industry, and this market is dominated by local firms. Splash Corporation is the largest domestic producer, accounting for 32.5% of the whitening market and the company dominates the liquid beauty product category with its Maxipeel brand. United Laboratories is another strong domestic competitor and the usual international competitors (Proctor & Gamble, Unilever, Johnson & Johnson) are strong in many products as well (Personal Care, 2010). The industry is characterized as being more innovative than most in the region, despite relatively low sales for Southeast Asia (Ibid).