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Sovremennaya torgovlya

9, 2011

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Translated from Russian

It may seem that all of the segments of this market are already occupied. Those who were unable to find a niche during the dangerous 1990s successfully occupied their market groove during the stable 2000s. If not the native companies, they were came from the abroad. The competition is building up in certain areas. However, there are still quite new markets which are being played by one strong participant. Today one of the owners of Bentus Laboratories LLC Mr. Rouben Simonian discusses the history of the development of one of these markets a market for sanitizing agents with the readers of Contemporary Trade and looks at it through the history of the market leader.

The market segment for domestic skin sanitizers is quite small in Russia as compared to the size of its market for cosmetic and pharmaceutical products. However, this segment is developing rapidly. Certain estimates show that Bentus Laboratories currently occupies between 80% and 90% of the total market of domestic skin antiseptic products sanitizers. In spite of the rapid development of our competitors in the area of skin antiseptic products we securely retain our leading positions.

Therefore the development of our company reflects the development of the market segment for domestic sanitizers in Russia as a whole.

THE WAY IT STARTED

In 2003 we together with our partners decided to start our business and manufacture the product which was quite new to Russias market for cosmetics and pharmaceuticals we decided to start producing a line of skin antiseptic products marketed under the trademark Sanitelle.

We should admit that our decision to produce antiseptics was not immediate. We have spent certain time and effort to generate the idea. Initially we have made a list of the goods and services which were successfully marketed in the western markets but which were not available in Russia. In order to improve the selection process we have defined about 10 products which we used personally. As a result the antiseptic hand gel was our final selection.

In contrast the first sanitizer Purell appeared in the American market in the 1990s. Since then the total volume of gel retail market grew up to 80 million per year (2003); the share of Purell sales was approximately 40% out of the total number of sales. We had to admit the success of the product and we have decided to repeat the successful results within Russias market. At the moment no domestic hand sanitizers were marketed in the Russian Federation, however the rage of perspective buyers was quite large. Both kids and adults at home or at work could use the gel. Therefore in 2003 we officially established Bentus Laboratories. Then we have hired chemical technicians to create the product. As the result the scientists have obtained a novelty product of the highest quality. Ethyl alcohol was the main component of the antiseptic gel.

MARKETING COMMUNICATIONS

Since the product was quite new to the Russian market we have conducted quantitative and qualitative marketing studies to estimate the demand for our product. We have carefully studied the target customers and their main characteristics. As per the size of a large metropolitan area 20% of the early product adepts translated to several million of potential customers. The results of the market studies have revealed the unsatisfied demand for the advanced products for personal hand hygiene. It was the main convincing point which made us invest into the production of hand sanitizers.

The philosophy behind our project is the following: numerous studies and scientific data prove hand hygiene to be the most important measure taken to limit the expansion of various diseases surrounding the human being. However, people do not always have the opportunity to wash their hands. Moreover, the statistical data reveals that in 50% of the cases when a person must wash his or her hands no water or soap is available. Waterless sanitizers with ethyl alcohol in small bottles are the best solution to this problem, since they are always available at hand and they are designed to be used in any situation. Ethyl alcohol being the main component of the sanitizers is a natural antiseptic; it rapidly eliminates the pathogenic microorganisms and it evaporates quickly. Moreover, ethyl alcohol exhibits excellent bactericidal activity against most gram-positive, gram-negative and tuberculosis bacteria; it is also quite effective against certain types of fungi and a large number of viruses including the flu virus, hepatitis B virus and certain other types of viruses. Special functional additives, for instance, vitamin E and aloe vera extract, deliver a moisturizing effect, refresh and protect the cells from the damaging impact of free radicals.

THE LAUNCH AND THE PROMOTION

Our company spent several millions of dollars to launch Sanitelle. Simultaneously we were working on equipping the manufacturing site and the laboratory. It took us a lot of time and effort to obtain the license for the manufacturing of non-edible product which requires the use of ethyl alcohol. As far as the safety is concerned this type of manufacturing activity is classified under the first category of difficulty. We remain under constant supervision for our adherence to the legal and safety rules and regulations.

As a result we have spent close to 10% of the capital investment for the research, close to 20% of the capital investment for organizing the production process and close to 5% were spent for the approval documents. The rest, approximately 2/3 of the initial cost of the project, was spent for marketing and operating expenses. In the summer of 2005 we launched the production of six SKU of the product which included two various product types and came in different volumes. Starting in September 2005 we have started our retail supplies. We had to pay a large volume of entrance bonuses in order to have our product placed within the checkpoint zones of the supermarkets. The retail rules classify the checkpoint zone to be the best area to sell our kind of product.

In 2005-2006 we have initiated the first stage of an integrated marketing communications programme in Moscow using a large range of media tools including TV, print publications, and BTL. The second stage started in 2007: radio, BTL, indoor, PR, print publications. As a result in 2007 the retail sales of Sanitelle were three times as large as revenues of the previous year. By 2009 the gel was sold at approximately 20 thousand point-of-sales all over the Russian Federation in supermarkets, in drug-stores, at gas-stations; in most cases the gel was positioned in the checkpoint zone. Our aggregated effort resulted in the trademark Sanitelle to be associated with the whole category of antiseptic products and to be distinguished among the competitor products.

Up to this day we have produced more than 50 types of products for retail sales. We have developed a large number of modifications for the professional segment. The consumers of the professional market segment include the leading medical institutions, banks, corporations, food and pharmaceutical manufacturing sites, the subway, public catering facilities, state institutions, etc.

MARKET PROBLEMS AND PROSPECTS

One of the main problems inhibiting the development of this market segment is low awareness about the need for hand hygiene which is the main measure for preventing infectious diseases as well as the low awareness about the contemporary means of personal hand hygiene. However, numerous studies published in most reputable journals prove the effectiveness of hand sanitizers containing ethyl alcohol. For example, the results of one study in the USA demonstrate that the use of antiseptic hand gels reduced the student absence from school as a result of being sick by 50.6%. The study included elementary school students from 5 schools, and the duration of the study was 3 months. The results of the studies conducted by the Medical Department of the Harvard University show, that the frequency and the distribution of gastro-intestinal diseases in those families who use antiseptic hand gel with ethyl alcohol was 59% lower than in those families who did not use antiseptic gel.

Similar results were obtained in the professional sphere as well. The employees of medical institutions do not observe proper hand hygiene with skin antiseptics. However, the active implementation and the use of skin antiseptics lead to the significant reduction of intra-hospital contamination. Our company spends significant effort to arrange various educations events. We collaborate with Russian Red Cross and with the world leader of barrier protection (gloves) Ansell Healthcare. Bentus Laboratories and Ansell Healthcare have established the alliance and have joined their effort to conduct educational activities on the territory of the Russian Federation promoting modern hand hygiene and protection means being one of the most effective measures taken against intra-hospital contamination (IHC). According to the agreement the members of the Alliance develop educational materials and implement the processes which help healthcare employees better understand and use advanced means of hand hygiene and protection in their everyday practice. Certain manufacturers try to compete with us and offer cheaper products based on isopropyl alcohol. However, the buyers need to understand that isopropyl alcohol is poisonous and it lacks the effectiveness against certain virus categories. Moreover, the use of isopropyl alcohol may lead to the development of skin allergic reactions.

However, Russian market for sanitizers is very promising and we see further objectives.

Obviously the situation may change if the position of our competitors improves, however, I believe that Bentus Laboratories will retain its position and make it even more solid on the market.

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