Power Siberica: Andrey Trubnikov has captured the market for cheap cosmetics

Power Siberica: Andrey Trubnikov has captured the market for cheap cosmetics

“Look, our new “Egg shampoo”, — Andriy Trubnikov removes from the shelf a bottle, on which Golden letters written: “the Secrets of the best health resorts of the USSR”. Behind the “Egg shampoo” flaunt liquid soap “Standard” and balm “Bath”. On a nearby shelf — a similar series, but exploiting the secrets of the best Soviet resorts of Crimea. In retail, “Soviet” range should cost less than 100 roubles “Well, what in the USSR in the mascara you had to spit? People still miss you!” insists Trubnikov. The owner of the company “First solution” knows what he’s talking about. At the time he invented a affordable brand of cosmetics for hair and body “Recipes grandmother agafi”. Then gradually “raise the degree” by teaching the Russians to Natura Siberica and more expensive Organic Shop — they both are marketed as organic products, but more affordable than imported.

Turn “First solution” in the direction of cosmetics a La the USSR — entirely the result of the crisis. At the very Trubnikova for 2014-2015 had other plans: in the fall of 2014, the company brought to market cosmetics Fresh Spa for the price of 1 thousand rubles in retail and to promote it at the same time has opened in Moscow its own Spa with a minimum price of the procedure 3,3 thousand rbl. (one hour massage). But the line “went very well,” frowns Trubnikov (a setback he blamed on the packaging), and Spa brings in a monthly loss of $30-40 thousand

Due to the devaluation of the cost of all cosmetics has almost doubled (foreign ingredients in it not less than 70%), the price on the shelf had to be lifted by 40-50% — as a result of the sale Natura Siberica sank more than a third in real terms.

To help became cheap brand “Recipes grandmother agafi” with a retail price of 100 rubles of Sale “agafi” fell in the previous two years by 10-15% annually, and in 2014 went up (in 2014 and 2015 sales added by 20%). “Played,” including new packaging for scrubs and shampoos — the so-called doy-pack (a plastic pack with plastic lid — in like this for sale, for example, mayonnaise) 100 ml New packaging, according to a brand Manager “agafi” Daria and Ashitkovo, cheaper cosmetics at least 20%.

Despite the fact that revenues of two major companies Trubnikova — “First decision” and “Natura Siberica” — in 2014 grew by almost 30%, to 7.6 billion rubles, the profit decreased slightly by 1% to 466.7 million roubles (the data “SPARK-Interfax”).

In 2015 Trubnikov urgently switched to cheaper products: expanded range of “agafi” in doy-packs, adding new types of shampoos and conditioners and increasing their volume to 500 ml, has launched a line of “Secrets of the best resorts” and “crisis hit” — the two-liter package of tools that can be used 18 ways: as a shampoo, shower gel, means for washing the curtains and cleaning crystal, etc. (at retail costs less than 100 RUB). In 2015, the revenue was to be raised by 20% to more than 9 billion rubles. “We are planning to flood the market with cheap products, says Trubnikov. — What else is there to do in a crisis?”

“Grandmother” sells

In the crisis of 1998 Andrey Trubnikov went bankrupt: his then business on the import of alcohol could not resist a jump in the dollar. To pay off debts, he sold the apartment and all the money was going to trade in live chickens. Time talked wife by proposing a more mundane idea is to make a cheap tool for washing dishes. Trubnikov listened, bought the formula of the gel and together with a partner, Russified Syrian Youssef, Hamed VATTA, founded the company “Fratti HB”. Four years quite successfully they were selling detergent for dishes “Fairy”. In 2002 Trubnikov, who invested at the start of $5 thousand, sold his share for $200 thousand and started the company “First solution”. In it, he now owns 60%, the rest — ex-wife Irina Trubnikov and son.

The next year Andrey Trubnikov was thinking on a new product and came up with a fictional character Siberian travnitsa the Same Agafya Ermakova, “grandmother Agafya”. Under the brand “Recipes grandmother agafi” in 2003, the entrepreneur began to produce shampoos, which retail cost of about RUR 6 ($0.2 in the then exchange rate) — almost twice cheaper than the competition. Apart from the price of the shampoo surprisingly liked the customers that had a face — about a third of the label, as now, was a portrait Agafya. The competition, says Trubnikov, in this segment, the product was impersonal: for example, shampoo “Russian grass” competition with the “Joke” broke down and left the market. Soon, “grandma Agafia” appeared on the shelves in “the Auchan”, and the product range expanded shower gels, body creams and remedies for the bath. What were the sales volumes, says Trubnikov.

In 2008 Trubnikov decided to produce organic cosmetics. Then she was very unpopular, and the market prospects unclear. So there was the next hit — shampoos, creams and shower gels Natura Siberica. It was registered a separate legal entity — LLC “Natura Siberica” (40% owned by Irina Trubnikov and she is the co-owner and other ulicah group).

Now many Russian brands are trying to “play organic”: most Russians like the theme of wild herbs and ancient recipes, so companies like to use this as a marketing ploy, said a member of the Board Russian perfumery-cosmetic Association Anna Dycheva-Smirnov. But Natura Siberica is the first and, according to Trubnikova, the only Russian “organic”, certified according to international standards, although, strictly speaking, is not more than 10-15% of the products, he says. Nevertheless at this time the price up to 200 rubles was higher than the average for the Russian mass cosmetics brands, said the General Director of “Natura Siberica” Igor Gorelov.

Natura Siberica showed good sales, and inspired by Trubnikov started to create and bring to market new lines one after the other: in 2010, Organic Shop, Planeta Organica, and, in 2012, Organic People, in 2014 — Natura Kamchatka (some of them created a separate legal entity such as LLC “planet Organic”).

Founder of “First decision” Andrey Trubnikov Photo: Yuriy Chichkov for

Share in revenue and average price for the main brands of “First decision”

Natura Siberica

Share in revenue of the company: 50%

The average price on the shelf in retail: 400 rubles.

“Recipes grandmother agafi”

Share in revenue of the company: 30%

The average price on the shelf in retail: 130 rubles.

Planeta Organica

The share in the company’s revenues: 10%

The average price on the shelf in retail: 245 RUB.

Revenue grew from 1.2 billion rubles in 2010 to 5.9 billion in 2013 in the amount of the “First decision” and “Natura Siberica” (the data “SPARK-Interfax”). Production expanded from a few lines to four leased factories in the suburbs, one of which do all the packing for cosmetic (own plant the group is not).

Since 2013 Trubnikov began acquiring land for organic farms: now have a “First decision” has 22 hectares of land in the Republic of Khakassia, 5 ha in Estonia, the land on Sakhalin and Kamchatka. This entrepreneur spent about $650 thousand For the first two grow a simple set of 13 herbs (chamomile, calendula, marjoram), which later make extracts for cosmetics. Farm in Sakhalin and Kamchatka are waiting for certification of land for suitability for organic farming.

To make it quick

Now at the start of a new line of cosmetics from “the First decision” takes about four months. “In the segment of up to 1 thousand rbl. “the First decision” there are brands for consumers with almost any motivation, — says the managing partner of branding Agency Depot WPF, Anna Lukanina. — You want “your own, native, natural”? Please “Recipes grandmother agafi”. Want “its”, but poprilichnee? Here’s Natura Siberica. Don’t believe in Siberian herbs? Here is “Secrets of Kamchatka”! Want a delicious “foreign”? Also have Organic Shop”.

The number of positions in the range of “First decision” exceeds the largest international manufacturers about 10 times: 3 thousand names against 300-400, figuring Nikolay Semenov, commercial Director of the Petersburg network drogerie “smile of the rainbow”. But with the variety of “First decision” went too far, Lukanin considers: the range is already so huge that “start losing interest”.

“People love the new products, the cosmetics market is the market of new products”, — parries Trubnikov. Especially if these new ones — about the same substance, but under different labels. “Most of the standard formulas — all are here in this collection”, — Trubnikov shows a rather thin book. Investment in a new product — from $10 thousand to $20 thousand mostly go for the design.

“Domestic firms is a big problem: completely unattractive packaging that is impossible not what to love, but even notice on the shelf”, — said Alsu razakova, the chief editor of the specialized magazine Les Nouvelles Esthetiques. Trubnikov packaging is extremely picky, likes to say that the product with good design you can sell more. He works mainly with English and French designers, and in one of the office rooms had a mini Museum packaging: travel buys all that interested in his appearance — from alcohol to more exotic oils. Do not hesitate and copy competitors. For example, by showing a set of five different funds — from body scrub to the hand cream in small black jars, says: “This is an idea we borrowed from Lush. Only at them it costs 800 roubles, and at us it will be called the Organic Kitchen and will cost 49 rubles for one jar”. The look of Lush really is — due to the black colour.

Good design and standard formula “the First decision” is limited not always. For example, “agafi of Soap for hair and body” that is similar in consistency to the black jelly, the company has developed a few months, and at the time of its release nothing similar on the market was not, says Dycheva-Smirnov. But now in the “Auchan” there are already at least two products-clone from competing manufacturers.

But the biggest successes Trubnikova from the point of view of sales volumes remain brand “Recipes grandmother agafi” and Natura Siberica. In total, they bring the company not less than 80% of revenue, and most readily take to themselves the largest retailers Magnit, X5 Retail Group, Detsky Mir, “Girlfriend” etc.

To push foreigners

Russian cosmetics market falls for the second year in a row. In the first half of 2015, sales decreased in real terms by 2.8%. However, due to the devaluation in the money market increased by 11.7%, according to Nielsen data. Retailers add to the range of cheaper brands and getting rid of the most expensive import.

“The consumer starts to prefer cheaper analogues of the Russian manufacture”, — said Maria Kurnosova, Director for external communications “Ashana”. To please the consumer, “Auchan” put on the shelf of new line “the First decision” — Planeta Organica and children’s series Natura Siberica.

“Russian producers are increasing their share [of the market], pushing of transnational” — confirms the words of Kurnosov Nikolay Semenov.

The speed with which Andrey Trubnikov launches new cheap products appears to be working. The number of new products “First decision” at times ahead of major international manufacturers, Semenov says: “If Sсhwarzkopf produces roughly 10-15 new shampoo, “the First decision” — 30-45″. However, in large networks, in his opinion, are not all innovations of the Russian company: “many of the innovations we refuse: our price segment or a similar product already on the shelves, duplicate makes no sense”.

Marble and crystal glass

In 2010 Andrey Trubnikov opened its first own shop — Organic Shop, spending approximately $200 million In Organic Shop was sold and production of the “First solution”, and “extras” organic makeup for other suppliers — at a ratio of about 70 to 30%. Two years Trubnikov opened its first mono-brand store Natura Siberica. Now he has a shop on Tverskaya.

Although the sales of “Recipes grandmother agafi” Natura Siberica Trubnikov and required large networks (35-50% cosmetics sold through Auchan and other major retailers), much more prospects he sees in own retail. Now it accounts for about 10% of sales (the rest are sold through distributors). “Own retail is a very big power, if you can fill novelties”, — said Trubnikov. “For example, [sales] in the “Auchan” we receive 12% markups on some products — 3%, at times more. Its retail is 100% markup to us,” he says. In November 2015 own retail brought 22 million rubles of net profit, and the “Auchan” — a total of 4 million rubles, says the entrepreneur.

Now Trubnikova six mono-brand stores Natura Siberica (three of them in Moscow, including one — on Tverskaya) and 16 multi-brand Organic Shop (nine of them in Moscow). This is not a typical move for the Russian manufacturers: own retail is, for example, the “New Dawn”, but multi-brand stores to Trubnikova no one opened. However, while Trubnikov in Moscow lags behind foreign competitors: The Body Shop in Moscow — 26 shops, Lush — 26, L’occitane — 65.

“Most of our turnover given shops Trubnikova”, — says Igor Rodin, Director of the company “Organics”, the American distributor of organic cosmetics. In addition to this Organic Shop cosmetics sold in Wildberries and “Green crossroads”, but the volume there is “significantly less,” says Rodin. According to him, the network Trubnikova does not require contributions to marketing and payments for the entrance, and the margin is less than the average retail market: 50% vs. 80-110%. Trubnikov explains that someone else’s “organic” takes only “for background”: “We’re like “Auchan”.

On the interior of its Organic Shop Trubnikov, according to him, does not skimp. “We are trying now to make the shops more chic: marble, natural floors, chandeliers for €25 thousand,” — he bends his fingers. The cost of the interiors is offset by the margin on its own products: for example, oblepihovoe and honey scrub Natura Siberica, which is in the “Auchan” 129 rubles, Organic Shop will cost almost 5 times more expensive — 587 rubles For the rest of the products the gap is smaller but also impressive: hand cream “Seabuckthorn” — 80 roubles against 258 RUB the shampoo Natura Siberica — 180 RUB against 339 RUB.

“Auchan” in General, we spoil the market with their prices, they work with minimal markups — mad Trubnikov. Only through them I receive a volume discount on raw, caps. Sometimes I feel like a mediator between the producer of caps and “Auchan”. With a sigh, he adds: “In crisis we will pull only their own retail”.

For 2016 Trubnikov was going to increase its network by almost three times: to open a further 40 stores in Moscow — part of the premises format street retail has been removed, he says. For this purpose he even plans to take out a loan of $3-4 million, although earlier the borrowing of funds not used. Sales of cosmetics through its own retail Trubnikov plans to increase three-fold without reducing the volume of supply in the “Auchan”.

The representative of L’occitane for two weeks did not have time to answer the question about the development plans, the representative of the “Monex Trading”, developing the format of The Body Shop in Russia, declined to comment.

Own stores yet bring Andrei Trubnikov only 10% of its revenue Photo: Ekaterina Kuzmina/

To Paris via Estonia

More recently a fifth of the revenue of the company “First solution” was received in Ukraine, selling cosmetics in the usual “Auchan” and other major networks.

In 2014 in shops of Ukraine there have been numerous flash mobs: the participants brought to the stores posters “Russian kills” and “Russian bought — a war paid for”.

“There were a few decrees, and the purchasers demanded that on the shelf was specified country of origin of goods, — says Alexey Doroshenko, Director of the Ukrainian Association of retailers. — As a result of the drop in sales of Russian goods amounted to from 25 to 40% in monetary terms, and the network gradually withdrew these products from the range”. This wave of products “First decision” refused to purchase Ukrainian “Auchan” and most of the other networks.

Including to return to the market of Ukraine, Trubnikov rented premises in Estonia, near Tallinn, and has invested €5 million into the production line. There he is now producing cosmetics Estonica Natura — Siberica analogue for Ukraine and Estonia, where, says Trubnikov, to Siberia viewed with suspicion. Ukraine has started to buy Estonian line, but on previous volumes Trubnikov and counting, hoping to send there in the coming years, at least 10%. To compensate for the loss in the neighbouring countries and at the same time to balance the instability in the Russian market, Trubnikov wants to make more money in Europe. The makeup of the Estonian factory is already sold in Europe: in November, it was sold at €1 million.

The “First solution” has its own stores Natura Siberica in Hong Kong, Japan and Denmark, in January should open a store in Barcelona. The brand is sold through distributors in the Netherlands, Spain, Canada, the Czech Republic and more than 30 countries. Three of best-selling product Natura Siberica abroad — Daurian body butter, sea buckthorn scrub the scalp and black soap-detox.

Own shops are on the verge of profitability and perform more of an image problem, admits Trubnikov. Foreign sales bring in about 15% of revenue.

Soon the share of exports is expected to grow even expects the businessman. The whole month of December 2015 showcase French Department store Monoprix on the Champs Elysees was decorated cosmetics Natura Siberica, polar bears and bunches of Rowan. “For a window with a penny we do not have”, — says development Director of international projects Alicia Zelenkova.

The Monoprix chain, where goods are sold from food to clothing, includes 209 stores in France. The range of products network “the First decision” came in the fall of 2015. Then the line Natura Siberica took English stores: a chain of organic products Whole Foods (the world’s largest seller of organic products; in Britain it has nine shops) and the famous Harrods is one of the largest and most expensive Department stores in London.

To get into Whole Foods, it took a year of negotiations and the search distributor. “We could go to a provider who is already working with Whole Foods, and then quickly made it to the shelves, says Zelenkova. But, on the other hand, we understood that this distributor for many brands and it makes no sense to invest in us. So we looked for a young company, which was interested to develop their portfolio”. The names of the distributor and the terms of cooperation Zelenkova not disclose.

The beginning of sales in Monoprix unexpectedly helped the French press, Zelenkova recalls: the week in one of the magazines published an article stylist Christophe Robin, in which he spoke about the benefits of the scrub to the scalp. Buyers started to look for this product, but Monoprix was only scrub Natura Siberica. “He just flew off the shelves,” says Zelenkova.

But Trubnikov is not so happy: “I was at Harrods, where the consultant tells us that this is a Russian cosmetics, and people go: you do not want to take. It was necessary to immediately instruct the seller to say that the makeup of the Siberian”.

Dumplings and spiritual songs

“Here we found men in Patagonia, the old believers, they in 1917, fled from the October revolution to China, and from there to Uruguay, and then to Patagonia. They have there a whole village, women in headscarves gather these wild plants. Here I want to do a cosmetic — recipes of the old believers”, — says Andrey Trubnikov. About the not yet implemented projects he generally talks much more readily than the rest.

In 2016 in Moscow should open the first monobrand store of beauty “Recipes grandmother agafi”. With it, Trubnikov wants to add to the popularity of the dumplings, which is going to release under the same brand. “Then we’ll go through all these dumplings restaurant — continues Trubnikov. — I gave the phone [of restaurateur Arkady] Novikov, now with him I want a restaurant to do, but he really doesn’t know it yet”. In addition to the restaurant plans Trubnikova a travel Agency with tours of Siberia, Spa in London, shop Natura Siberica in Cannes.

At the reception in the office of the “First solutions” are products of three new lines: the “Star secrets”, Natura Siberica, designed by the fashion designer Alena Akhmadulina, and sets Organic Kitchen.

Andrey Trubnikov suddenly pulls out a nondescript black package white bottle, on which in large black font printed “Edifying songs for every day” and nothing more. “That shampoo want to release, says Trubnikov. — There’s some honesty there, you will not be deceived: no Siberian travnic and ancient recipes, useful shampoo for every day. But I the employee it will not allow it”.