Translated from Russian
How does the manufacturer of Sanitelle gel manage to earn well, gearing one product only?
Gayk Simonyan, Bentus Laboratories Director General, hopes that soon Sanitelle revenue will equal to revenue of his cotton business, carried on over ten years. Sanitelle is ethyl alcohol-based instant hand sanitizer. Bentus was the first sanitizer-selling company within the Russian Federation. “I keep wondering by this all-purpose product” – the manufacturer is twiddling with bottle of pink-coloured gel, Sanitelle for woman. There is army Sanitelle in camouflage bottle as well as gels for cashkeepers and medical workers.
Gayk Simonyan was inspired to start sanitizer business by his cousin Rouben, who left for the USA and established his own consulting company there. Owned by Gayk, the company Bentus Synthesis, which was delivering cotton waste materials to paper and gun powder manufacturers, including Goznak and Ministry of Defense of the Russian Federation, felt great. However, Rouben persuaded him in advantages of Bentus diversification.
The cousins spent three days to find the idea. First of all they made a list of relatively new products and services, ongoing in the foreign markets, but missing in Russia. Not to squander the energies, the cousins were choosing just the products, which they ever used. Finally the list included, approximately, 10 items. The sanitizers, antiseptic hand gels, came through to the final. The first Purell sanitizer has been produced in the USA in the late 1990. Ever since the American market of antiseptic gels increased to $180-190 million turnover; among them Purell takes, approximately, 40%. The Simonians decided to repeat this brand success, even to a lesser extent.
There were not any domestic antiseptic agents in Russia at all, but anybody can use these products anywhere – children and adults, at home and at work. In 2004 the cousins together with Gayk’s partner, Michael Egiazaryan, formed Bentus Laboratories Company. They entrusted a chemist from Moscow RDI to formulate the gel. During testing every fifth of 600 respondents informed that they would buy the product at the stated price (50ml for 50 Roubles). Within the capital city 20% of willing persons implied several millions of prospective consumers. The partners took final decision to invest in production.
They spent several millions of USD to start Sanitelle production (Bentus does not specify more precisely). The manufacturing facilities in the north-east of Moscow were rented and equipped; the production process was begun in September 2005. The promotional campaign, including three TV-channels, stickers in the underground and passing-out free samples, - cost, approximately, 100,000$. According to Rouben Simonian they managed to break through “the wall of inapprehension” of new product at the retail networks’ end. Nevertheless Bentus had to pay approximately 100,000$ of incoming bonuses to cover the till sales zones (the choice locations at supermarkets and pharmacies).
Expectations of Simonian cousins regarding demand were materialized. In 2007 Sanitelle retail sales exceeded three times the previous year revenue. 10% of Bentus Laboratories Company shares were bought by the investment company Rye, Man & Gor Securities. The outside funds allowed to start Sanitelle expansion in regions. By 2009, when Venture Fund of VTB Group became a new co-owner of Bentus, the gel was sold in about 20,000 retail outlets throughout Russia.
Bentus Laboratories Company worked up the retail with three versions of the product only. Much more varieties of the gel were invented for so-called professional users. “We tried to cover all the areas where you may need hand antiseptic” - says Gayk Simonyan. The first Sanitelle presentations he made in the MCHS (the Emergency Situations Ministry) and the Sberbank. The Shoigu Department started to buy gel for rescue squads. Why Sberbank? Specially for the cashiers the company has invented a hand sanitizer for cash processing. It is still a wonderment to Simonyan how quickly he was able to make a contract with the largest bank in the country. Another customer was the Moscow Metro.
At the same time Bentus Laboratories started popularizing the gel among the medical workers, participating in “Epidemiologist Days” at the hospitals and specialized exhibitions, congresses and conferences. The Company cooperated with the Russian Red Cross and was entitled to print its logo on Sanitelle labels for participating in the giveaway programs. The prestige of this organization served its purpose. Gayk Simonyan is pride to declare that more than 60% of Moscow medical establishments buy Sanitelle. The regional hospitals are the next.
Half of company revenue results from the professional sector. According to SPARK information, the revenue of Bentus Laboratories Limited in 2008 made 82 million of Roubles. Gayk Simonyan assures that it is higher, but does not specify the numbers – it’s a commercial secret. His cousin believes that Sanitelle covers 80% of Russian retail market of hand antiseptics. The rivals suppose this statement to be true.
Sanitelle is almost everywhere” – comments on Tatiana Borodkina, Rusmedico Executive Director, from 2003 producing antiseptic protection gel, named “Eksalet”. Secret of success? Borodkina points on relatively heavy spending for brand building.
To some extent Bentus is playing the marketing game. All types of Sanitelle differ by percentage of alcohol, enriching ingredients and packing. As explained by business rivals it is the profitable production as margin equals to 100% to the production costs. This high level of reinunerativeness enables to make large investments in the sales promotion.
The owners of Bentus Laboratories expand the assortment continually. They plan to launch new brand advertising campaign at the federal level. Bentus is willing to keep the most segment of skin antiseptics market.
For now the company has good luck as there are any more powerful rivals. There are some Russian brands, placing manufacturing orders abroad - network of pharmacies “36.6” took after them and at the end of 2009 started selling gels under its own trade mark. The owner of Purell brand, Johnson & Johnson Corporation, have not yet introduced product in the Russian market. The supply of its medical antiseptics Microshield has begun in the Russian Federation as soon as March this year.
Simonian cousins understand that the aggravation of competition is unavoidable. Rouben says: “We believe to have built enough barriers for new players to evaluate the ability of cooperation with us first”.
Link to the original article: http://www.forbes.ru/svoi-biznes/marketing/53010-odin-dlya-vseh