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More Henkel Corporate Reporting 2015
Singles’ Day, which is held each year on November 11 in China, has become the world’s largest online retail day with sales of more than 13 billion euros and over 500,000 packages shipped. From the left: Adele Zhang, Tony Wan, Mark Gu and Thea Lang from the Henkel Beauty Care team in Shanghai discuss our product and promotion strategy for the 2015 Singles’ Day.
With a focused strategy in place, Beauty Care has achieved a breakthrough in the e-commerce domain with an impressive quota of online sales catering to the highly mobile lifestyle of the world’s largest e-commerce markets.
Digital initiatives and a strong focus on online sales are key success factors in positioning Schwarzkopf as the number one hair care brand on Tmall, Alibaba's business-to-consumer platform.
Thanks to a strategic e-commerce partnership, consumers in China have easy access to our international brands at home and on-the-go.
In order to strengthen our market and category positions around the world, we continued to invest in our leading brands and technologies to meet local or regional needs. We expanded our R&D capabilities and enhanced our manufacturing setup – in particular in emerging markets. Digital initiatives also played an increasingly important role in driving our business success in many markets. Targeted acquisitions across all business units helped to further strengthen and complement our positions in selected markets and categories or add specific technological expertise. Our successful development in a volatile business environment is testament to the strength and commitment of our teams in both emerging and mature markets.
In 2015, emerging markets continued to be the main growth driver for Henkel with an organic sales growth of 5.9 percent. The share of sales generated in emerging markets was 43 percent.
With a population of over 1.3 billion, China is not only the world’s leading emerging country, but also the largest eCommerce market. While we saw the impact of the economic slowdown in our industrial business, our Beauty Care business continued to deliver double-digit organic sales growth, also driven by strong online sales.
To further expand our leading position in the Chinese hair cosmetics market, our Beauty Care business unit launched an advanced strategic partnership with Alibaba, China’s largest online commerce company. In 2015, Beauty Care generated around 30 percent of its sales in China through eCommerce, which is double the amount from the previous year. This also exceeds the high growth rates in the Chinese eCommerce market. Driven by tailored eInnovations and a dedicated, passionate team of local experts, Schwarzkopf now is the number one hair care brand on Tmall, Alibaba’s business-to-consumer platform.
Our Laundry & Home Care business unit has created global impact for its brands with over 6.5 billion qualitative ad impressions from digital campaigns in 2015. We have gained over 30 percent growth in reach on social media platforms and are constantly exploring new marketing technologies. We have also made significant progress in eCommerce in emerging markets: For example, over 30 percent of our revenue in South Korea is generated through digital channels, and we are constantly expanding this share. The strategic focus of our brands such as Persil, Bref and Somat is to utilize these digital trends. We are constantly improving marketing efficiency, exploring new communication channels and focusing on engaging video content. We have partnered with digital start-ups in order to stay up-to-date on trends and ensure business model innovation. In 2016, we plan to further increase our investment in digital marketing by a high double-digit percentage.
In our Adhesive Technologies business unit, we continued to invest in modern multi-technology production sites, especially in emerging markets. In India, the second-largest emerging market globally, we began construction of a new adhesives production facility. When completed in early 2017, the 20,000 square meter plant will be the largest of its kind in India with a potential output of around 80,000 metric tons per year. In Mumbai, we inaugurated the Henkel Flexible Packaging Academy, the first of its kind in the India, Middle East and Africa region. This academy offers certified training programs for professionals in the flexible packaging industry in association with the Indian Institute of Packaging. In addition, we opened new adhesives production facilities in Russia and in Bosnia and Herzegovina. We also began construction of a new plant in Georgia.
Working closely with customers like Morey, an electronics manufacturing services partner in the United States, enables Henkel to provide tailor-made solutions around the world. Morey employee Kevin Hussey explains to Hailey Kamen from Henkel how he tracks the application of Loctite GC 10 on circuit boards.
Henkel has been working together with Morey for over three decades in a partnership that extends beyond a conventional customer-supplier relationship. Morey collaborates with Henkel’s development teams to validate product performance, participates with our sales and tech service personnel in weekly technology sessions, and involves Henkel in new product development initiatives on a regular basis. Here Henkel employee Brian Betti (left) in discussion with Chris Murphy from Morey.
Due to its temperature stability, Loctite GC 10 can be left on the stencil for longer periods of time without drying out, reducing waste. Here Kevin Hussey and Hailey Kamen check the performance of Loctite GC 10.
Henkel holds leading positions in many mature markets around the world. In 2015, we achieved organic sales growth of 0.7 percent in these markets. This was driven in particular by positive development in North America.
Our Laundry & Home Care business unit has continuously strengthened its leading position in its mature markets – from Western Europe to the USA – and expanded into new markets in Australia and New Zealand. In 2015, we acquired Colgate-Palmolive’s entire range of laundry detergent and pre-wash brands in Australia and New Zealand. This acquisition makes the Laundry Care business one of the leading players in the detergents category in those countries. In Western Europe, the integration of Spotless Group, which was acquired in 2014, has created new growth potential in highly profitable categories, complementing our existing Laundry & Home Care portfolio. In the USA, we successfully launched our flagship detergent brand Persil ProClean.
Further leveraging country and category opportunities, our Beauty Care business unit complemented its strong performance in the USA, the largest hair market worldwide, with the successful launch of our top brand Schwarzkopf in the retail market. Introduced in parallel across all hair categories, the brand and products have been recognized with multiple industry and consumer awards. In Europe, Beauty Care invested in the expansion of its production facility for shampoos and shower gels in Germany. This advanced, high-throughput facility serves all Western European markets as well as selected markets in Eastern Europe.
Based on the strong positions of its different business areas, Adhesive Technologies was able to leverage its innovation competence and introduce state-of-the-art technologies globally. With the first-ever temperature-stable solder paste Loctite GC 10, for example, we offer customers in the electronics industry process improvements and cost reductions by providing them with a solution to logistical and storage challenges. The product cuts energy consumption and reduces waste by eliminating the need for refrigerated transport and storage. Loctite GC 10 has been a catalyst for expanding partnerships with our customers, such as with the US-based electronics manufacturing service partner Morey Corporation. The company recently selected Henkel as its primary solder paste and adhesives partner.