The FINANCIAL — In 1995, when Company founders started importing perfume to Georgia, many people around him were sceptical, saying “It’s impossible…”. After 15 years, with thousands of world class brands supplied to Georgians, Ici Paris has transformed itself in to a popular and superior brand.
Gigauri, managing partner of the leading Georgian perfume company in Georgia, said that it was started business with approximately 4-5,000 USD. He says that trying to found a business with the same amount today is unrealistic. “It would be impossible to do the same thing today, as presently we have a capitalist society already, with a strong performing market,” he said.
Gigauri always knew that the perfume business would remain stable even against the background of different economical changes. However, the recent economical downturn proved that the Lipstick Effect is a real phenomenon.
“When during a crisis people aren’t able to buy very expensive and valuable things, like for example cars and houses, they do continue to buy cheaper products in order to satisfy their shopping urges. For me, as a person present in the perfume business, what has always been important is the constant stability of this business compared with other businesses. Perfume is considered next to the products of prime consumption by its stability.”
Peace and stability are the main challenges for Ici Paris. The mass construction processes on going inside the country makes Gigauri optimistic that Georgia is not far from total emergence from the global recession.
“The main challenges in 2010 will be a return to sales that we had in the first part of 2008,” Gigauri said.
“We can recall the example of the USA in the ‘30s, which totally recovered from the depression with the help of internal investments. Construction processes within a country supported its emergence from a recession. We can see all these processes in Georgia. Positive movements are visible here..
“Beauty care has lots of directions that need to be assimilated in Georgia,” he declared.
Q. What was the affect of the global recession on the perfume business in Georgia and worldwide?
A. 2009 was a prolongation of the recession starting in 2008. Accordingly it was another difficult year for the perfume business and total economy. After the serious effects of the August war and global recession we saw some positive signs of stabilization but they were still not of the final recovery.
The global recession had a negative effect on the perfume business in Georgia and in the whole world. Customers started optimizing their expenses and that reduced our profit. Still the influence on the fragrance market was not as impressive as it was on other businesses, like consumer electronics or clothes. As we know the motto of the perfume business is Lipstick Effect, which encouraged the salvation of our segment.
Q. What are the main advantages of your company that help you to attract customers?
A. Our devoted work in the marketing and branding direction is the main determiner of our success. Our portfolio is diversified, it occupies more than 100 brands and each of these brands asks for huge work. The main advantage of our company is firstly the factor of Ici Paris, which has already become a brand and the products we offer. So, these two components are complimenting each other. It is important to use these advantages correctly and according to our results we are handling them successfully.
Our daily work includes care of customer’s stimulation with different campaigns, discounts, prize-draws, and improvement of our work staff.
In order to gain popularity and customer loyalty the most important issue is the quality of our products, diversification of portfolio, diversification of prices, and charity.. All these aspects result in customer loyalty to our brand.
Q. What is your estimation towards further development of the perfume business in Georgia?
A. I think that the perfume business is growing and has huge potential in Georgia. If we look at the Georgian regions, for example Kakheti and Kartli, we will see that they are not assimilated. You cannot find even one brand store there. The regions of the western part are more assimilated. We have three stores in the western part of Georgia: Kutaisi, Batumi and Poti. Still, we think that these cities have additional potential for development. As for the Kakheti region, the infrastructure has developed much in that region recently, especially in Sighnaghi. This factor supports us in thinking of further development of our business. Besides this I think that according to the possibilities, we could still open one more branch in Tbilisi. I am very optimistic about further development of our business in the case of adding branches and increasing realization. The most important issue is to keep stability within the country.
Tbilisi might have its advantages and solvency capacity is higher but I expect a tendency of development of the regions. Tbilisi however will always be the country’s business hub.
Q. How has the competition changed among your rivals since the beginning of the economical downturn?
A. Competition complicated during the recession. Usually maintaining competition includes running marketing activities that are directly connected with expenses. Accordingly during the recession companies started reducing their budgets and became less active in order to keep competitiveness. Even our company did not permit itself to spend as much on our advertising activities as we could have allowed say, two or three years ago.
Q. Which year would you underline as being the most successful for your company regarding the highest volume of sales?
A. Ici Paris had the highest volume in sales in 2008. Despite the August war that sharply changed our business the first part was so active that it was higher than 2007 and even 2006, in comparison with the appropriate months.
Q. How do you plan to develop your company in 2010? What will be the main innovations?
A. We have very ambitious plans to develop a parapharmaceutical cosmetic line. Perfume and decorative cosmetics are not only the interest of Ici Paris. Ici Paris will include all the directions of beauty. It will include skin treatment and dermato cosmetics, which is a more dynamically developing segment. We will implement a detailed elaboration of the make-up sphere. In this case we will use the ICI PARIS beauty academy of which educates professionals in this direction. We will also open hair treating centres in Georgia. So, there is lot to work on. I think that aesthetics and beauty incorporates lots of directions that need to be assimilated and implemented in Georgia. Ici Paris has 15 years of experience representing this sphere and we will maximally use our resources in order to develop treatment lines.
Q. What will the main challenges for your company be in 2010?
A. The main challenge for us will be returning and exceeding the volume of benefit which we had in the first part of 2008. Presently the recession is in the stage of its ending. We are seeing positive signs and accordingly are hopeful about 2010. Our plans to exceed the numbers of benefits of 2008 this year will be a guarantee of our further development.
Q. How has the paying ability of your customers changed during the past two years?
A. The recession certainly changed the paying ability of our customers. The economical downturn made them consider even 10-15 GEL worth saving and so tried to control expenses as much as possible. It was a natural step for them. Customers switched to cheaper priced products. This tendency was continuing until the beginning of 2010. For several months we saw some positive tendencies. Still we cannot make advanced prognoses. I think that it is too early yet. We need at a minimum quarter results to make accurate prognoses.
Q. What is the total number of realized fragrances in 2009? And which brands can you underline as the most popular ones?
A. In 2009 we sold 170,456 perfumes. 113,016 were for females and 56,971 for males and mixed – 469.
The most popular fragrances are divided according to the segment. From the selective segment the most popular brands were: Chanel – Coco Mademoiselle,. For men the most popular was also Chanel – Allure Home Sport. And from the lower prices fragrances the most popular was the line of Ulric De Varens.
Q. Which new brands you will offer Georgian customers in 2010?
A. A few days ago we received world famous brands of perfume: Chloe and Marc Jacobs. These are very popular brands all around the world. We will soon offer Cartier and some brands for hair treating as well. Another brand will be Kriolan, a professional brand that is actively used among visagists of movie and theatre actors and actresses. This brand will allow Georgians to have stage make-up, similar to Hollywood actors and actresses and gain maximal visual effect. We will implement this brand under the brand of the Ici Paris beauty academy.
Q. Which new brands did you offer in 2009?
A. In 2009 we offered Sisley to our customers. This is a legendary group, which incorporates fragrances, cosmetics and products for skin care. We can say that this brand has no competitor and demand for it is large.
Our main criteria when choosing a brand is its popularity and quality. It should be in an active phase of development.
Q. What are the perfume tendencies in Europe? Please name the most popular fragrances in Paris.
A. Presently the most popular brands in Paris are also Chloe and Marc Jacobs. Lola by Marc Jacobs is unique with its perfect design. Chole, by Chloe is also unique and refined. Another important brand which will be offered to our customers is Parisienne, by Yves Saint Laurent. The demand is also high for Light Blue by Dolce & Gabbana.
Q. What is your personal opinion about perfume? Name your favourite brand.
A. I think that perfume plays an important role in the daily lives of people. I prefer perfume with floral aromas, including sweet notes. It is difficult for me to distinguish one concrete brand. Actually, I choose fragrances frequently. Fortunately, I can permit myself to that luxury.
Q. When will Georgia emerge from the global recession do you think?
A. I think Georgia has already started emerging from the global recession. I cannot say if the recession is over or not as the affects were multiple. But we are seeing positive signs. The banking sector has resumed crediting, and started reducing interest rates. The construction business is also re-activating. Only tourism remains. If tourism gets into such an active phase as it was before the August war then the final emergence from the recession will ne near. The only thing that frightens me is internal instability. Peace and stability are most important for us.