Bob Seidl, president and chief executive officer of H2O Plus, has visited Tokyo twice since June to meet with Pola Orbis, the new owners of the Chicago-based skin care brand he has overseen for six years.
This story first appeared in the September 2, 2011 issue of WWD. Subscribe Today.
Located in the tallest building in the upscale fashion hub of Ginza, Seidl said working with the fourth-largest beauty company in Japan is refreshing, from its young senior management team (most are in their 40s), to its hands off management style to its synergistic quest to grow both brands.
“They are entrusting us to run our business and execute our strategy,” said Seidl. “We have begun a series of synergistic things, such as research and development, and they run a series of manufacturing facilities and distributors in Japan. We are already engaged in international expansion for both Pola and H2O Plus. About 96 percent of Pola’s $2 billion sales are in Japan and by 2020 the company aims to accelerate growth in global markets with consolidated sales of $3 billion, an operating margin of between 13 and 15 percent and overseas sales that comprise 20 percent of overall sales.”
Considered the “Avon of Japan,” with direct-to-consumer sales distribution through a sales organization of 130,000 women and nearly 500 retail stores they own and operate, Pola’s vision is to take some of its higher-end luxury skin care products and get them into department stores and boutiques, with the help of H20 Plus’ built-in distribution blueprint.
But now the focus is on H20 Plus. A global brand relaunch is slated for March 2012 with a full conversion date planned for that June. Previewing this month is a glimpse at new packaging on two of the brand’s nine ranges, Aqualibrium Bio Boost Systems (a daily line for normal skin) and Marine Calm (for sensitive skin). Each family addresses specific skin care needs and offers a cleanser; several also offer a serum. A new logo will make its debut on all products with the March relaunch. Other families within H20 Plus include Sea Results (antiaging), Oasis (oil free), Sea Pure (natural antiaging), Sea Clear (oily skin), Anti-Acne, Waterwhite Advance (clarifying and brightening) and Aquafirm+ (firming). Star products include Face Oasis Hydrating Treatment, Aquafirm + Intensive Lift Serum, Waterwhite Advanced Brightening Essence and Sea Results Line Resolution Cream SPF 30.
H20 Plus is priced higher in international markets compared to the U.S., where it has an entry price point in prestige beauty in the $30 range. Internationally, H20 Plus selects its channel of distribution based on the region, for example in Russia the brand is carried in perfumeries, in China it is in high-end department stores and in Thailand it is in its own stores.
Seidl and Bill Colli, senior vice president of sales and marketing, started rebranding H20 Plus two years ago by first claiming a marine science skin care positioning. They conducted six months of research in North America and Asia (where H20 Plus is a dominant player) and worked with LEK Consulting to identify and define their consumer, who averages 31 years old. Newer customers are even younger, aged between 18 and 30 years old. They also tapped Ozz for brand positioning and platform development to clarify its marine science positioning. From there H20 Plus worked with New York-based Pearlfisher to work on “communicative vernacular” such as tone of voice, logo, packaging and visuals.
Seidl snapped at Wall Street naysayers who have commented that H20 Plus was financially underperforming and needed to sell to a partner.
“In these difficult times, you couldn’t sell a troubled business. They paid a premium,” he said, adding that H20 Plus will end 2011 with sales gains of 20 percent, up to more than $120 million. Gains are attributed to both organic growth in North America and to increased international expansion.
In regard to expansion, the company is planning a February 2012 opening of a new flagship in Istanbul. In the U.S., where it operates eight stores, updates are planned for next year, from new merchandising displays to ripping up tiled floors. In September, the brand is expanding into Korea; in October it will open nine company-owned stores in São Paulo, bringing 2011’s expansion of the brand into eight additional countries. By 2012, H20 Plus will be available in 31 countries. Its percentage of business in the U.S. is 55 percent with 45 percent comprised of international stores. In three years, Seidl looks to boost international sales to 60 percent.
Orbis has operated as a private company for more than 80 years. It became public in December 2010 and ranks fourth in size in Japan after Shiseido, Kao and Kanebo.