IN THE NEWS

Godiva Inc.: Trail-blazing in a saturated cosmetics industry
by Michael David C. Tan, Writer;
Enterprise Magazine

(This article about Godiva's global product success has been culled from "Enterprise" magazine with issue date on September 8, 2005. To view the article in its online form, click here).

In 1996, chemical trading firm Chemworld Marketing Corp. encountered difficulties selling licorice extract to local manufacturers of skin care products despite clinical studies promoting it as the best natural ingredient that can be used in skin-whitening products. Its owner, Fred C. Reyes, was not discouraged and instead took that business slump as an entrepreneurial opportunity.      

�I took that frustration with the personal care market by developing our own line of skin care products using licorice extract as the major ingredient,� says Reyes, recalling the birth of Godiva, Inc. To date, Chemworld Marketing Corp. serves as major source of chemical ingredients for Godiva.

The Godiva Natural Skin Care line became so successful in the market that, eventually, some of the industry�s major players also started using licorice for some of their own products. It was a real pay-off for the company that was started with less than a million pesos, though is now valued �much, much, much more,� Reyes says. More importantly, though, it established Godiva as a major player in the cosmetics industry.

However, Godiva, which got its name from an old English word meaning �gift of God,� was not spared from the usual birth pains. When it was just starting, major distributors rejected carrying its products because they were considered a risky proposition. �An unknown brand with a high price tag is difficult to sell,� Reyes notes.

When Mercury Drug and SM (major drugstore and mall in the Philippines -- Ed.) were approached, the former approved the products after six months, and the latter initially only on a trial basis. �Eventually, the sales increased, and all the outlets were made available to us,� Reyes says. Godiva is now sold from CSI Pangasinan in the north, to Gaisano General Santos City in the south (Philippines).

Running the business remains hard, Reyes admits, especially when �facing the big MNCs that have unlimited budgets for advertising. What we do is just focus on a certain target market, and all our resources go to that target market.�

While niche marketing seems to be working, Reyes believes that Godiva�s edge is in product development. In 2001, for example, an African-American customer e-mailed the company to ask for a product to help lighten the color of her lips. The company obliged, coming up with a whitening lip-gloss, a one-of-a-kind product in the world that makes lips and nipples pinkish, initially only for her. However, after word of mouth promoted the product, it became a regular product for the international market.

After a while, local queries also started to flood in, as Filipinos wanted to use the product to whiten their lips, which were stained from smoking, and the nipples, especially of women who just gave birth. The product is now Godiva�s bestseller.

To further boost sales, Godiva has penetrated the international market via the Internet. In 2001, the company developed an online catalogue to help market its products in the Philippines. However, all the inquiries received were from overseas. �We saw this as an opportunity, so we converted our catalogue into an online store,� Reyes says.

Since 2001, the international market has accounted for 20% of Godiva�s sales. A further 5% growth is targeted for this year, as distributors are established in various countries in Asia, North America, and Europe.

Now, aside from the skin-whitening products that established the Godiva name, the company has added such products as sun care protection (in the form of sunblock with jellyfish protection, also one of a kind and the only imported product in Godiva�s lines). It also established Godiva Skin Station in SM Fairview, a center for its products and services. Godiva now has over 300 employees, from only six when it started.

This is a far cry from its struggling start in 1996, which, although a booming year, was easily overshadowed by the Asian financial crisis in 1997. �It was a very trying period,� Reyes says. �But we proved the adage that women will spend more especially during times of crisis � and we never run out of crises!�  

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