How Winona Became China’s Top-Ranking Sensitive Skincare Brand
On March 25, Botanee Group (贝泰妮), parent company of top Chinese skincare brand Winona (薇诺娜), filed an IPO in Shenzhen. When it first opened, the stock price rose 272%. In total, it valued at 70 trillion RMB, becoming the TOP1 Chinese beauty company to hold A stock.
Most people have never heard of the parent company Botanee and simply refer to the company as Winona because the Winona brand contributed over 99% of the company’s revenue in 2018 and 2019. On the Double 11 in 2020, Winona’s Tmall flagship store achieved 720M RMB in sales and became the only Chinese brand to enter the TOP 10 Tmall beauty ranking board.
People often compare Winona to Perfect Diary, but in fact, they are comparing Botanee with Perfect Diary’s parent company Yatsen Global. In terms of development pace, Winona is far away from Perfect Diary. Winona used 12 years to go from 0 to 2 trillion RMB in sales while Perfect Diary only used 5 years to achieve 5 billion RMB in sales. But in terms of profits, Winona is way ahead. Its retained profits in 2020 was 500M RMB, while Perfect Diary had a 2.7 billion RMB loss.
Winona’s Background
Unlike many of the new Chinese brands we mentioned in our previous articles or videos, Winona was not founded in recent years. It was created in 2008 by a pharmaceutical company in Yunnan Province (云南). In 2011, due to the brand’s poor performance, the company sold the brand to its current parent company Botanee.
China’s Sensitive Skincare Market is Huge
In China, there is high demand for skincare products targeting sensitive skin. According to a domestic skin disease report (中国皮肤性病学杂志), over 35% of females have sensitive skin and the number has reached over 200M.
Other than these people that really have skin problems, there is a huge group of people thinking they have sensitive skin (although it hasn’t been verified by a medical professional). These people have acne issues and sometimes have breakouts. They love to seek solutions on social media instead of going to hospitals. They have skin anxiety.
This opens up a whole additional market to digitally-savvy sensitive skincare brands as online channels will be the most effective way to reach consumers and the line between sensitive skin and other skin problems is blurred, which means they have chances to reach a larger target audience.
Winona’s main competitors are international brands such as La Roche-Posay, Bioderma, Vichy, Freeplus and Curél which also target sensitive skin skincare. Facing international brands instead of Chinese brands could be a potential benefit as Chinese companies can often be faster to launch online campaigns and tap into new online platforms.
How Winona Conquered China’s Sensitive Skincare Market
1. Medical Background Adds Authenticity To The Brand
The founder of Winona, Guo Zhenyu (郭振宇) has related medical background. To leverage this, Winona’s promotion is rooted in doctor recommendations. The company has been published in over 100 journals, both domestic and international publications. In China, there are around 8,000 hospitals that have dermatology departments and Winona has worked with over 3,000 of them, among which, it covered 80% of top three hospitals (三甲医院). (In China, we rank hospitals based on the area that they cover and the level of their service. “Top three” hospitals are the best.)
With professional recommendation from doctors, consumers believe in the quality of Winona’s products. Winona started from dermatology patients and then expanded its consumer base to the general public.
The brand continues this professional and authentic messaging when promoting its products online. No matter if it is on Zhihu, Weibo, Xiaohongshu or related medical websites, there are doctors and pharmacists telling people to use Winona’s products. The brand also invites doctors to be guests in its livestreams.
Another interesting advantage is that, compared with international brands such as Avène and La Roche-Posay, the core ingredients of Winona products are things that Chinese consumers are more familiar with, and most of them are herbal.
2. Package Sizes Create an Illusion of a Better Deal
Winona’s products are often packed in small bottles with a lower price. Take the example of its hero product: anti-sensitive extreme moisturizing cream. It has a 15g package, which costs 88 RMB. Let’s set the capacity apart, 88 RMB sounds a good deal. But if you do a little bit of math and calculate how much for a gram, which is 5.86 RMB, it’s equal to other international brands such as Avène and Vichy.
The repurchase rate of Winona in 2019 was nearly 30% and in its private traffic pool, the number reached over 40%. An investor told 36Kr that the average repurchase rate for international skincare brands is 20% so Winona’s is significantly higher.
3. Strong Ecommerce Strategy
From our previous description, you may already notice that the brand not only values offline promotion, but also ecommerce. It is fair to say that Winona grew from 0 to 1 because of its partnerships with hospitals, but it grew from 1 to 100, because of its ecommerce strategies.
The Winona Tmall flagship store was registered in 2011 and was officially launched in 2012. Since then, Winona’s e-commerce revenue has been steadily increasing. During 2019 and the first half year of 2020, its online sales contributed 76.7% and 83.2% of its revenue.
Besides developing its Tmall store, Winona is also working a lot on its social media marketing. In 2017, its expense on social media marketing was only 6.28M RMB and in 2019, the number rose to nearly 70M RMB, which was 10 times. The brand also has a dedicated department for it, which has around 50 employees.
Winona has held live streams with famous streamers Austin Li and Viya. It also has a presence or has worked with influencers on Douyin, Xiaohongshu, Bilibili and Weibo. It mainly focuses on Douyin, followed by Xiaohongshu, and its Weibo is used for announcements of big events and campaigns.
Developing a Plan B
One of the benefits of targeting sensitive skin is that brands don’t need to be constantly launching new products. They can keep thriving with a few core products. Traditional beauty brands, on the other hand, must constantly put out new products to grow sales.
Yet at some point, the growth of hero products will stagnate.
After maintaining a 55% growth for two years, Winona slowed down in the first half year of 2020 with the growth rate of 32.5%. As we mentioned before, the brand accounts for 99% of Botanee’s total revenue. Therefore it is important and urgent for the company to find create another hero product for Winona.
On March 22, Winona’s Official WeChat Account published a post saying it is launching an anti-aging serum. Together with its sunscreen, these two products may become Winona’s next “it” products.
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