Skin care brand Dabao plans to give itself a face-lift

Skin care brand Dabao is trying to give itself a face-lift with the launch of a high-end firming serum, the brand announced recently in Shanghai.

Retailing at 119 yuan ($17), the serum is more than 10 times of the price of the brand's signature red-capped moisturizer, an all-time best-seller in the industry that is as iconic for millions of Chinese households as Nivea's blue tin in Europe.

The launch, to be followed by more in the coming months, is a part of the Beijing-originated brand's latest strategy to attract younger, more premium customers, in an attempt to better connect with the millennial generation.

"Our goal is to see sales value double by 2020, reaching 5 billion yuan," said Zhang Liyun, vice-director of marketing of Johnson & Johnson China, which acquired the brand in 2008 at the cost of 2.3 billion yuan.

In 2017, the brand consolidated sales of 2 billion yuan, with half coming from a less-than-two-dollar moisturizer - more commonly known as SOD cream, named after an enzyme contained in the product. More than 160 million bottles of the moisturizer were sold last year.

To achieve the goal, however, the company hopes that the brand's men's skin care line, introduced in 2016, and a high-end line led by the new serum could take an equal share in driving growth.

"The SOD cream is such a household product that it enjoys popularity in China among those aged 15 to 65, in first to fifth-tier cities and with both men and women. I think it's fair to say it has over the decades been a name card of Chinese beauty, and in today's context, we believe the nation, especially the younger generation, craves a more refined type of beauty that a bottle of moisturizer can no longer satisfy," said Zhang.

Introduced in 1987, SOD cream was made by Beijing Sanlu Factory, a State-owned enterprise, the majority of whose employees suffered from disabilities. Marketed as an affordable skin care product, its price remains the same today as when it was first launched.

Dabao is also one of the few Chinese homegrown brands acquired by international conglomerates that still has a substantial market share.

Domestic brands accounted for less than one-fifth of China's skin care market in 2017, up from 4.4 percent in 2011, according to research findings from the Shenzhen-based Qianzhan Industry Research Institute.

Despite their small market share, domestic brands in general have outperformed their foreign counterparts in recent years, and are likely to continue to enjoy a faster growth rate, according to Qianzhan.

It is estimated that the combined sales value of domestic brands will exceed 98 billion yuan on a compound annual growth rate of 12.98 percent.

According to Qianzhan, China's overall skin care market will grow by 4.88 percent year-on-year, reaching 187.1 billion yuan by 2018, making it the world's second-largest market after the United States.