Shanghai Jahwa:Shanghai Jahwa -Access China ConferenceHighlights

2017 was a transitional year for Jahwa. Their business structuring mainly focusedon brand building, new product launch and channel restructure.

    Brand equity. Its focus in 2017 was on Liushen ( for 1H17) and Herborist (for2H). It appointed brand endorsers Mr Hua Chenyu for Liushen and Ms Liu Tao forHerborist which helped refresh the brand image and increased brand awarenesseffectively. It also invested more on digital advertising to cater for new consumerbehavior trend. In 2018, it plans to allocate more budget to other potential brands,including GF, HomeAegis and others.

    Product upgrade. It launched a new series which was positioned in premiumsegment (RMB600-1000) in 4Q17 for Herborist and it has been well received.

    According to Jahwa, ASP hike is the major driver for Herborist’s growth in 2017.

    To recap, the brand recorded double digit growth in 9M17 in department storechannel. In 2018, Herborist will launch high end colour cosmetics products. It willalso upgrade its basic series to attract the younger generation. For other brands,premiumization also remains as the key growth driver, e.g. Liushen. It will diversifythe flavours of Liushen and add more fragrance elements to de-emphasize itsseasonality.

    Channel restructuring. Its channel restructuring in 2017 mainly focused onecommerce. Firstly, it transferred its Tmall supermarket and JD supermarketchannel from wholesales to direct-run in the middle of the year. Secondly, it triedto use ecommerce service provider to operate its Tmall flagship stores in 4Q17,which is the No.1 online channel for the company. This transition will be fully inplace in 2018. This business model adjustment is expected to optimize its onlinechannel in longer term. It might create some short-term hiccups like slower salesgrowth yoy but better profitability should be expected.

    Excluding D&A, it targets to reduce its opex as % of sales to below 50% in longrun, from 60% of current level.

    It reiterated its RMB10bn sales target in three-five years, including RMB3bn fromHerborist, RMB2bn from Liushen and Tommee Tippee respectively, RMB1bn,RMB0.5bn from Maxam and Giving respectively and RMB0.3bn for HomeAegis,Mr Yu and VIVE.