Schwan-Stabilo: Record sales thanks to a broad positioning

Munich At Schwan-Stabilo, the highlighter got lipstick through the crisis. The cosmetics division of the family company lost market share noticeably during the pandemic and slipped into the red due to a lack of innovation. But the business with the pens and the outdoor division have caught on.

“That gave us the time and energy to develop new cosmetic products,” said Schwan Stabilo boss Sebastian Schwanhäußer in an interview with the Handelsblatt. The company once again benefited from the broad positioning.

In the 2021/22 financial year (June 30), Schwan-Stabilo was able to increase sales by 20 percent to EUR 745.3 million, primarily thanks to strong growth in the cosmetics sector. The overall growth has thus accelerated significantly: In the previous year, revenues had increased by two percent – after three years of slight declines in sales.

Schwan-Stabilo has been producing pens for more than 160 years and cosmetics since the 1920s. In the noughties of this millennium, the decision was made to secure the business with another mainstay. In 2007, after a long review, the decision was made to go into the outdoor segment and bought the backpack specialist Deuter. Brands such as Ortovox, Maier Sports and Gonso later came into the portfolio.

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The decision turned out to be right. The outdoor trend intensified during the pandemic, as long-distance travel became impossible in many cases. Highlighters and pens for home office equipment were in high demand.

Sustainability is also a megatrend in cosmetics

This gave the group scope for the cosmetics division. This was the big problem child for years. This had structural, but also home-made causes. On the one hand, the predominantly female clientele has been using less cosmetics for a long time. But Schwanhäußer openly admits: “We had neglected our core business a bit and weren’t innovative enough.”

We had somewhat neglected our core business and weren’t innovative enough. Sebastian Schwanhäußer, head of Schwan Stabilo

New, more sustainable products have been developed, says Schwanhäußer. Many cosmetics now contain fewer pollutants and microplastics. However, the effect must be just as good as with conventional products: “We test a lot with consumers.”

Sustainability is also a major topic in the cosmetics industry. According to a study by the strategy consultancy Simon-Kucher, 58 percent of consumers attach importance to cosmetics and care products. However, only a third of customers are willing to pay more for sustainability.

Schwan-Stabilo is now trying to follow global trends more closely. The social media are evaluated, said Tomás Espinosa, CEO of Schwan Cosmetics. In addition, regional characteristics would be taken more into account.

Schwan-Stabilo, which supplies established brands, was able to regain market share. In the 2020/21 financial year, cosmetics sales rose by 37 percent to a good 312 million euros. The group thus developed better than the market. The cosmetics industry in Germany had to accept a drop in sales last year. According to industry estimates, the global market is likely to have grown by around ten percent.

Outdoor pushes sales development

Despite the growth in the cosmetics division and in the group as a whole, Schwanhäußer does not want any euphoria to arise. The further development of the consumer climate is difficult to assess: “Consumers are cautious.” In Germany, around 70 percent of retailers expect a worse Christmas business. “The high inflation and the bad consumer mood” are not good omens, said Stefan Genth, general manager of the German trade association.

In addition, the material prices have also risen significantly for the cosmetics manufacturers. “The cost pressure is extreme. We haven’t seen that in 20 years,” Javier González, co-founder of German makeup market leader Cosnova, told Handelsblatt.

In the event of another crisis, Schwan-Stabilo has to rely on its broad base again. Positive: The outdoor division increased sales last year from 186 to 217 million euros. However, business is not getting any easier. The recently booming bicycle industry, for example, is now complaining about a reluctance to buy. The first suppliers lowered their prices.

Cost control against rising commodity prices

The Stabilo pen division increased sales in 2021/22 only moderately by three percent to almost 216 million euros. “Thus, the growth course of the last few years continued despite price increases for raw materials, supply chain problems and the noticeable reluctance to consume, especially in Europe,” said Stabilo CEO Horst Brinkmann.

Stabilo highlighter

The pen business gave the Schwan-Stabilo family business the freedom to whip the cosmetics division into shape.

(Photo: Schwan Stabilo)

In Asia, the division has grown in double-digit percentages. The digital orientation also helped here. The group has developed pens for the Apple app Procreate. In recent years, highlighters in particular have been a great success, and Stabilo brought them onto the market with additional colors.

Competitor Faber-Castell, which also relies on pens and cosmetics, had recently grown strongly. Sales increased by more than 15 percent to EUR 523 million in the 2021/22 financial year. “The order books are well filled,” said CEO Stefan Leitz.

However, there are many challenges such as the tight supply chains. “More than ever before, massively rising costs for raw materials, logistics and energy supply require careful planning, clear cost control and close cooperation within the group from Faber-Castell.”

Schwan-Stabilo expects moderate sales growth of five to ten percent in the current year. It doesn’t have to be much more, says Schwanhäußer. “The most important thing is to keep the group fit for the future.”

More: Reluctance to buy in the bicycle industry – Rose lowers prices

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