The six local brands leading the Pakistani skincare industry

For a very long time, Pakistanis were skeptical about local skincare products. The fear was that the companies producing them were not using the right ingredients or formulas, and the creams, soaps, and scrubs available could end up doing more harm than good. 

Because of this, the only alternative that they had was either expensive imported skincare products, or what we call desi totkas using ingredients found in the kitchen or in the garden. For any kid with acne in the 90s and early 2000s, picking aloe leaves and extracting the gel from them is a familiar experience.  

But times have changed, and with them, so has Pakistan’s skincare industry. People have started trusting local products because of better marketing, but also because they have no other choice. The totkas are not always quick fixes and imported products are expensive, and import substitution has been taking place since 2018, when the rupee first started devaluing massively and imports were discouraged through tariffs.

This change in dynamic set the stage for the skincare industry to take flight in Pakistan. However, to survive in this industry, one needs to have safe products that are effective and actually work. That seems to have happened, which means that while the sector was given a push through macroeconomic conditions, local entrepreneurs responded well and delivered. 

The success of this industry can be measured by the mere fact that CoNatural was able to raise $825,000 during the pandemic earlier this month. Considering the potential in the industry, Profit spoke to six leading skincare brands in the country to understand their business model and the industry’s dynamics.

Most of the brands were surprised when Profit reached out instead of Paperazzi, our sister fashion and lifestyle publication. That, however, is something that needs to change. While this industry may find itself featured more frequently in the lifestyle and fashion pages, the fact remains that they are an industry, and a profitable one. 

Not only that, all six of the brands we spoke to were able to breakeven and make profits within their first year of being operational – an unusual but impressive feat. Profit looks at the stories behind Pakistan’s six leading skincare brands. 

Saeed Ghani

To be fair, Saeed Ghani is technically not a startup in the modern sense of the word. Established in 1888, Saeed Ghani products are more skewed towards hikmat when it comes to beauty. The products are primarily natural. Essentially, these are the very kitchen totkas that we are familiar with, but packaged and with the official thumbs up of a generational naturopath.  

“I think it will not be fair to call us pioneers in skincare, instead, we should be considered pioneers in the natural skincare industry. We are one of the first brands, if not the first, which actively started promoting and selling skincare products with the concept of natural ingredients,” says Abdur Rehman of Saeed Ghani’s marketing team. He reminds us of a time when people lacked awareness and used home-based totkas or products on their skin.

“We want to promote a healthier lifestyle and harness the benefits of natural, raw, materials instead of using artificial elements or chemicals. Our skin products are primarily made of plant derived ingredients along with some naturally occurring ingredients,” he says. “Our first herbal product was Ubtan, after which we gradually introduced more such products into our product line.”

As per the Pakistan Demographic and Health Survey 2017-2018 produced by the National Institute of Population Studies, 2.7-3 million individuals get married in a year in Pakistan. Ubtan, is a widely used product in weddings in Pakistan, primarily in Sindh and Punjab. The market for Ubtan and Ubtan related products is basically everyone getting married in Pakistan. For a pack of Ubtan that retails for Rs. 200 per 100 grams, a gross estimate of the market for Ubtan alone is worth Rs 540 million.

“The brand, however, has continuously evolved with time and now has a vast range of products in the skincare and hair care categories catering to different needs of the customers.” The product line in recent days is no longer restricted to only natural products, as per Abdur Rehman. Their most popular products, however, are still the natural ones, including Rose Water, Aloe Vera Gel, Ubtan Product line, Mehndi Range, and Mughziat Oil, Neem Soap, and Sandal soap.

In the past the products were only sold through Saeed Ghani retail stores. However, now the business sells online and at supermarkets. “The decision to stock at supermarkets was made to reach a wider audience and make it more convenient for customers to purchase Saeed Ghani’s products by ensuring their availability in the market.”

For Saeed Ghani, their most effective marketing tool has been word of mouth. “This may come as a surprise but Saeed Ghani’s growth as a brand has solely resulted from strong word of mouth resulting from positive experiences of our customers,” he says. “The brand has never done any large scale marketing campaigns as such. We have, however, participated in public events, exhibitions, and free sampling on a small scale.”

Shopping at Saeed Ghani often means a free sample of their newer products. This results in consumers returning if they liked the product. “We are a customer oriented company and our focus has always been and always will be our customers.” As per Abdur Rehman, this is how they have managed to amass a strong and loyal customer base.

Despite this, Saeed Ghani, has realized it needs to update to stay relevant. “The brand is evolving and has recently started to shift its focus towards digital marketing. We have taken this decision keeping in mind the changing market and the need for more interaction with consumers.”

CoNatural

CoNatural is an organic beauty product manufacturing business based out of Lahore. Founded by two sisters, Myra Qureshi and Reema Taseer, CoNatural has been able to grow to the extent that they were able to raise $825,000 in a Pre Series A round during a pandemic.

The round included participation from local venture capital firm Karavan, and angel investors from the Middle East and China. It is also one of the largest Pre- Series A investments raised by a female-founded startup in Pakistan. According to confidential investment documents, the business is currently valued at $4.9 million, which is at nearly six times its current annual revenue. 

As of now the brand takes around 3000 orders in a month, and spends approximately $1350 on their monthly marketing. The brand is able to make a terminal revenue of $40 million. Moreover, the document states that CoNatural has been able to earn approximately $40,000 during the fiscal year 2020 made from $264,000 worth of sales. This is a 15.15% net profit margin.

Myra Qureshi, Founder of CoNatural, however, feels that their success can be tied to the reason they started CoNatural. Their inspiration was simple – to be the pioneers in creating truly natural organic beauty products. “What we saw is that local products were all either by FMCGs or whitening creams. We wanted to make good and effective natural products for Asian skin that go with our belief in beauty beyond color,” says Qureshi.

“Four to five years ago, skincare products in Pakistan were marketed to show that a whitening cream could get you a better job, married, or promoted. We wanted to change the paradigm of fairness based advertising whilst encouraging women-led business. At the same time, we wanted to create employment for women and give them a safe environment. Moreover, organic and herbal products are less polluting to the environment. And as responsible citizens, we should have that kind of commitment.”

According to Qureshi, having the right story, inspiration and standing up for the right cause helped them penetrate the market, despite skincare and hair care products being difficult to sell. “Most women are careful about what they put on their skin. 10 years ago, people wanted imported products that either had the label made in the USA or made in France on them,” she says. “This, however, became negligible over time. With the advent of media, particularly social media, the general public figured out that the products sent to Pakistan were near expiry or damaged.”

Qureshi adds that a rise in nationalism and support for local products also helped give their business the push they needed. Packaging, however, is an important element to selling stuff globally. Local brands are now realizing that. “Our products are beautiful in nature and are prettily packaged.”

“We never thought we would be another Saeed Ghani. We have our own brand identity. We make a range of products for skin care and hair care. Anyone that makes a moisturizer is a competitor of ours. Anyone that produces anything that is in our product range is a competitor.” However, she adds that no other skincare manufacturer in Pakistan is of the same size and scale as there’s.

“We have worked on 150 products out of which we have 50 products ourselves. We launched two mists, and two face washes in the past 2 months. We plan to launch 10-12 products in 2021. We’re very heavy on innovation and trends.”

“We also produce white labeled products. In totality, we aim to make our product range consist of 70-75 products over the next few years. No one manufactures, white labels, exports, and retails at our size.”

The business manufactures products itself which results in a significant slash in costs. As a result, CoNatural is able to enjoy high gross margins.  The products are not only found online on their website and third party websites, but are retailing at major supermarkets  across the country in addition to their own stores in Lahore.

CoNatural had a contract with Khaadi till Dec 2019 from which it expected Rs 40,000,000 revenue until June 2020 across 17 Khaadi stores. In addition, the sisters have managed to sign a contract with Nishat Hotels worth $42,500.

The sisters are also looking into expanding abroad. They have already set foot in the UK market, and sell products through Amazon in the UAE, and use Opal Natural as a distributor in the UK. The online UK revenue stream has been able to earn the company $3000 a month.

“A lot is invested in digital marketing, BTL, and ATL activities. We also take part in trade shows, expos, advertisements in magazines, make use of influencers, and through product placement and billboards at places we retail.” The document estimates $30,000 were spent on marketing in 2019 and resulted in a $625,000 return across all their channels. This means a return of more than 19 times on all marketing channels. The document also states that CoNatural has signed an agreement with Creative Omega Group for the production of CBD based products.

“As far as hemp is concerned, it is very interesting but has to be legalized properly. We have made a lot of innovative moves, but there is a lot to figure out in terms of regulation. Regulators need to understand that this can be a viable business line with potential locally and internationally. The laws around hemp are quite vague but we’re interested to see how we can leverage this for the future.”

BnB Derma

Having been established more than a decade ago, BnB Derma is a brand that has managed to surpass Neutrogena sales in Pakistan. BnB can be bought online, at Imtiaz, Times Medico, Naheed Supermarket, and Carrefour, amongst various other significant retail shops. The business produces for their own brand and white labels for other brands too.

BnB develops its products after consulting with dermatologists and classifies itself as a dermaceutical too. “Our biggest edge is that we have partnered with dermatologists,” says Inam Jamil, CEO of BnB Derma. “Since a lot of our products are over the counter products, it creates a sense of satisfaction for the customer when buying it. A lot of the current skin and cosmetic companies are selling products without results which often leads to unhappy customers.”

BnB Derma currently has a range of 40 products sold under their brand name and their revenue figures are approximately Rs 60-70 million a year. As per sources, BnB derma has been able to witness sales worth Rs 150-200 thousand a day during the pandemic.

In addition to selling in retail, the brand caters to 600-700 salons across the country. “We make custom products for salons according to their needs. Since the increase of import duties, the price of imported skin care products have gone through the roof making it impossible for clients to afford.”

“The rise of import duties can be taken as the best opportunity to capture the market. New skincare brands are coming up and providing substitutes to previously imported products. As much as totkas are known to be a form of remedy, we need to go beyond and capture this market.”

Moreover, much like CoNatural, BnB Derma has been working with major fashion retail stores to help them come up with their own skin care line. They believe that white labeling products has helped them grow over the years and have made them a trustable name.

“We are doing their skin care line top to bottom, from production to packaging. We also produce skin care products for other skin care brands that do not have their own manufacturing capabilities.” The production is done in their factory in Nooriabad, warehousing and some production in Korangi Karachi.

The brand, however, aims at being affordable in order to reach a greater share of the market. While it does rely on imported ingredients for its production, it has been trying to find local alternatives such as sourcing Shea butter from Balochistan, which is usually imported from Africa.

“The fact that the product is mass can be gauged by the fact that a friend of mine said that his househelp recognized the product in his bathroom and said that they used the same. We feel that the product being used by all income classes due to its effectiveness and price point is what makes us widely accessible.”

The brand prides itself on being used by all income classes, being prescribed by dermatologists and being sold over the counter. In order to penetrate into the market more effectively, the brand uses pamphlets in regional languages in order to educate consumers about the products and how to use it in addition to the benefits.

In addition to this, they are often endorsed by bloggers and celebrity dermatologists. The pricing point makes the products accessible to all income groups making BnB derma a local high volume selling brand.

Primary

Nida Faisal is a lawyer by profession but wanted to create a brand that would help people through what she learnt on her skincare journey. “Pakistani women had very few options when it comes to skincare. In 2018, I decided to import from China and sell products here. But that business model completely failed before it even began, considering the exchange rate and import protectionism.”

“I had to rethink the business model and then I decided on producing locally but sourcing my raw material from abroad.” As far as totkas are concerned, Faisal feels that a greater number of people have become open to the idea of packaged skincare as opposed to ingredients you’d find in your kitchen.

“People get defensive if you tell them that using lemon on your skin is bad for you. Lemon, if applied to your face, is damaging and yet people are comfortable using it. I recall that when I showed my product to a relative before its launch, he told me to remove the world “acid” from it. What people fail to realize is that lemons have a Ph. level of 2, which is highly acidic. The acids such as hyaluronic, salicylic acid and Niacinamide, are not as acidic and are actually beneficial, even though they have the word Acid in their name.” Primary outsources the production and after working on the formulation with formulators and dermatologists. Why? Well, as Faisal points out, “I’m a lawyer, not a chemist!”

“What started off by sending out just 15 PR packages to bloggers has resulted in a growth. But one needs to understand that bloggers might bring followers, but you have to build your own credibility through quality products and that is what results in sales.”

In order to engage with consumers and potential consumers, the Primary makes informative posts on Instagram and engages with consumers in the form of challenges. It is also interesting to note that Primary is a woman run business with no male employees.

Ilynn

After serving in the army as a Doctor, Colonel (r) Ishrat Abuzar studied dermatology and cosmetology. She was not satisfied with the products available in the market, and did not want to prescribe them to her patients. So instead of giving them expensive imported products, she would try making formulas and blends with the help and consultation of international cosmetologists and dermatologists at home that would work for her clients. These did not cost a lot, and were effective and safe. As a result, Shahzar took this as an opportunity and started Ilynn along with his wife.

“We do not have a business background,” said Ilahi, an Economics and PolSci grad from LUMS who is a managing Partner at Ilynn. However, unlike CoNatural, BnB, and The Primary, Ilynn designs their products in Pakistan but outsources the production to Thailand and Vietnam. The products are then packaged in China and exported to Pakistan. While every other business called importing products expensive in this day and age, Ilynn says that they are able to do so considering their pricing point. The products are priced slightly higher.

“We are lucky to have great suppliers that get us the right ingredients. They allow us low MOQs, which suits us better than local production. In addition, local producers just weren’t able to produce our formulas the way we wanted them. We saw that the product wouldn’t remain the same in three months.”

Another reason Ilynn chose to produce abroad was due to the weak intellectual property laws in Pakistan. “There’s always a fear of the producer leaking your formula to a competitor or setting up shop themselves and emerging as a competitor.”

For Ilynn, they feel that the middle class boom has been able to help the industry grow. “With an internet penetration rate of approximately 30%, we want to strengthen our position online and ride this wave. Currently we have a 13-14 % return customer rate.”

The brand currently sells only online and on their own platform. “By selling directly to consumers through our website and social media, we do not have to share margins. Retailers can’t bite into our margins nor do we have to worry about selling in bulk to them and waiting for credit payments. Moreover, at a supermarket or retail store, products would have to compete with FMCG products too. The online space is feasible for smaller brands to compete with large ones.”

Ilynn, is the youngest of all the brands surveyed. It came into inception in September 2019 and managed to break even in its fourth month. The brand had 7000 unique customers on its website within eight months and managed to realize maximum profits during the lockdown.

The products are marketed online and the brand occasionally sends PR packages to bloggers. An interesting anecdote shared by Ilahi is the fact that Saba Faisal, a leading actress in Pakistan, reached out to Ilynn in their fourth month of business. She received a PR package earlier and loved the products after using it. She got her daughter to record a video of her testimonial, which she also allowed Ilynn to use free of charge. This celebrity endorsement helped push up sales.

That is why Ilahi feels that they will try to engage more celebrities in the future as influencers. In addition to this, Ilynn offers advice on a skincare regimen based on a quiz on their website. This helps consumer’s feel at ease when buying a product.

“Our consumer base is spread all over Pakistan, including rural areas. In fact our first order was from Chichawatni, something we didn’t really expect. The rural population is often underserved because they do not have access to supermarkets. They often buy in bulk online.”

Ilahi also claims that they have kept their product range limited on purpose. He says that the products are to be used in various combinations to deal with specific problems. A smaller product range, according to him, helps them increase sales and revenues.

Le Pur

Le Pur is an artisanal brand that not only emerged as a brand, but also as a community. To create better awareness for her products, Rukhsana Ibad, the founder of Le Pur, explains that she created a Facebook group where consumers could come and discuss skin care issues and where she would often address the members and explain her products.

“I worked very hard right from the beginning to educate people. I often did live sessions and would inform followers about ingredients and how they are sourced from abroad. It took nearly two years of struggle, just like any other business would.”

When designing her products, Ibad thought that the elite class would be consumers, however, it was the middle class that were responsive. “The middle class trusted local products sooner while the elite were stuck with their complex about imported products.”

However, she does feel that luxury brands are not for the masses, and nor does she believe she has any competitors locally. This is because most products are made in labs or through machinery. Ibad is proud of the fact that her kitchen is where she makes all her products and that they are handmade.

“The products are only sold online, however in order to build trust and get consumers to try the products, we have trial packs on sale which allows consumers to try smaller amounts of the product before deciding to buy the full size.”

What is interesting is that Ibad was able to secure funding for her business after formally beginning in 2018. After winning the Chronocup, Ibad received investment. However, she soon returned the money because she did not want external influence dictating how she was to run her business. According to her, she no longer needs external funds because the business has been profitable from the get go, and can grow organically based on its own reserves.

What does all this mean?

What may have started as a means to overcome the impact of currency devaluation has resulted in a local industry flourishing in Pakistan. The skincare segment here is a profitable business. After all, why wouldn’t it be profitable in a country where people consider skincare the equivalent of whitening? What’s also interesting is that a number of these businesses are founded by women!

Another interesting concept to take in is the fact that the industry places a strong emphasis on herbal and organic products. This may be due to the transitioning from desi totkas. In addition, while in the past brands sucommed to the wishes of the public and created whitening products at the expense of ruining consumers skins, brands are now reluctant to move towards whitening.

As per Ahsan Ali, Category head of Health and Beuty at Daraz, all brands on Daraz at PSQC approved. He adds that the sales of beauty products, primarily organic and herbal products have gone up 2x compared to last years. He adds the 41% of the products within the skin care/ bath & body range are herbal and organic products, out of them 78% cover sales.

*Profit reached out to WB by Hemani (a close competitor of Saeed Ghani) and The Body Shop but did not get any response.