In pursuit of a healthy profit

Despite the stricken state of the local market, natural food supplements were robust enough to consistently grow last year. Lucia Costea, managing partner at Secom, told Business Review that the company had increased its revenues by 75 percent in 2009 and developed its distribution network with collaborators such as Sensiblu, Plafar and HelpNet pharmaceutical chains. This year it is planning to expand its medical representatives team, up turnover by 67 percent and double its market share.

Dana Ciuraru

The crisis wasn’t a big setback for natural food supplements seller Secom, as last year the 100 percent Romanian-owned company reported a turnover increase of 75 percent, to EUR 3 million. Lucia Costea, managing partner at Secom, told Business Review that “cautious” was the best way to describe the firm’s strategy during these times of turmoil.

She is referring to prudent decisions when investing and keeping costs at an affordable level, as in Costea’s opinion 2009 was a year when the local market slumped and edged out many companies that couldn’t support quality standards for the their products or much needed investments.

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According to Secom’s managing partner, last year also had positive effects on shoppers’ purchasing behavior. “Last year’s customer was a more sophisticated one, who allocated much more time to analyzing and comparing products’ quality and prices,” says Costea.

But 2009 wasn’t all milk and honey for Secom’s management. “We also had to deal with some difficulties in recovering debt, but we finally found solutions to these issues. Our major concern is that clients still put price at the top of their buying criteria. Towards the end of the year we saw that things were changing – but not with the speed we would hope for. People are starting to take decisions based more on quality and less on price,” adds Costea.

Another significant issue Secom had to deal with last year was the frequent changes in the exchange rate, with the knock-on effect on product prices.

“Also, payment terms changed and there were cases when we decided to sell only with down payments. In April last year we increased prices by 5 percent while others registered a 7 percent cut. For this year, our plan is not to change the prices although the majority of our suppliers have already changed them,” says the Secom managing partner.

Green, the color of the future

The natural food supplements market is a dynamic one, with some 80 to 100 players, and as such Secom’s strategy for this year will be a more aggressive one.

The company representative tells Business Review that the firm will keep investing in advertising and in developing its distribution network.

“Our sales strategy is based on two distribution channels: pharmacies, which provide 70 percent of our turnover, and distributors, which account for the remaining 30 percent. This year we will focus on consolidating and expanding these channels, with the Plafar and HelpNet pharmacies chains starting this month. Also, since February this year our products are also on sale in Sensiblu pharmacies,” says Costea.

According to her, Secom will probably start the construction of a new headquarters in 2010 and begin a local campaign to increase awareness of the benefits of natural food supplements.

The company also plans to increase its number of medical representatives in order to cover the entire country, from its current 75 percent coverage. “The increase in the number of medical representatives is a significant investment for us. While at the end of last year we had five such employees, now we have a team of 12 specialists, one area sales manager and one medical director,” says Costea.

Secom’s managing partner also reveals that the company plans to reach a 67 percent sales increase and to double its market share. But traditional distribution channels remain the favorite, while the online segment is just at the beginning.

“People aren’t yet ready to buy natural food supplements online, as they still need the advice of a specialist, which is why I believe that online sales will have to wait another two or three years to reach a satisfactory level of development,” adds Secom’s managing partner.

It is clear that the Romanian market hasn’t reached the level of development that importers are aiming for and as such there is still room for future development.