Beiersdorf AG

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Beiersdorf AG

Unnastrasse 48
D-20245 Hamburg
Germany
(49) (40) 49 09 0
Fax: (49) (40) 49 09 34 34
Web site: http://www.beiersdorf.com

Public Company
Incorporated: 1882 as P. Beiersdorf & Co.
Employees: 16,447
Sales: DM 6.28 billion (1997)
Stock Exchanges: Frankfurt
NAIC: 32562 Toilet Preparation Manufacturing; 325412 Pharmaceutical Preparation Manufacturing; 339113 Adhesive Tape, Medical, Manufacturing; 322222 Adhesive Tape (Except Medical)

Beiersdorf AG is an international company based in Hamburg, Germany, that develops, manufactures and distributes products in the areas of skin care, wound dressings, and sticking tapes. Beiersdorf reported international sales of over DM 6.2 billion in 1997, up over DM 500 million from its 1996 results. Cosmetic and personal care products accounted for 54.4 percent of the company’s sales that year, led by its famous Nivea line of skincare products. The Medical Division, producer of Hansaplast and Curad bandages and Eucerin medicinal creams and salves, accounted for 23.4 percent of sales, while the tesa division, producer of a broad variety of tesa tapes and adhesive products, made up 22.1 percent of 1997 sales. Although concentrated in Germany and Europe, Beiersdorf was active in over 100 markets around the world.

Origins in the 1880s

The roots of Beiersdorf AG lie in the pharmacy that Paul C. Beiersdorf opened in Hamburg in the fall of 1880. After a while Beiersdorf began working with dermatologist Paul Gerson Unna on the development of a medicated adhesive bandage.

Unna had created salves that were effective in promoting the healing of damaged skin. However, no one had been able to develop an effective way to use them on a bandage; the secretions from the skin mixed with the salve and broke it down quickly, ruining its medical efficacy. Beiersdorf solved the problem by spreading a solution of gutta-percha, a substance similar to rubber, on gauze, making it impervious to the skin’s moisture. It was a completely new product, a bandage that made possible a precise treatment of skin problems using exact dosages of medication. He gave it the unwieldy name Guttapercha-Pflastermulle, which was eventually shortened to Guttaplaste.

Beiersdorf received a patent for his invention on March 28, 1882, the date considered the founding of Beiersdorf AG. Dr. Unna told fellow physicians about Guttaplaste and described it frequently in his publications, and the bandages caught on quickly. Prescriptions for Guttaplaste soon outstripped Beiersdorf’s ability to produce them in his pharmacy. In the summer of 1883, he closed it and established a small facility in Altona, a town just outside Hamburg where he could concentrate exclusively on his bandage business. By that time, Beiersdorf was manufacturing 54 different types of bandages. They were manufactured in the literal sense: nine workers produced the materials and medications by hand, then two other employees cut and packaged the bandages and wrote out the labels. Between 1882 and 1890 P. Beiersdorf & Co. began making other products as well: stick-salves, paste sticks, and medicinal soaps. But the adhesive bandage line, which soon grew to include 100 types, remained his bestselling and most important product.

In 1890 Beiersdorf’s 16-year-old son committed suicide. So shaken was Beiersdorf that in May 1890 he decided to give up his business. The buyer he settled on was a 27-year-old pharmacist from Silesia, Oscar Troplowitz. According to their deal, Troplowitz would pay 60,000 Marks and take over sole ownership in July 1891 after working for a year as Beiersdorf’s partner. When Troplowitz arrived in Altona in August 1890 to begin work, however, it was obvious that he and Beiersdorf would have difficulties working together. Troplowitz offered an extra 10,000 Marks to take over immediately and the company changed hands on October 1, 1890.

Developing New Products: The 1890s and 1900s

One of the first things Troplowitz did was to modernize Beiersdorf s primitive facilities. In 1892, he purchased a large parcel of land in Hamburg, built a factory, and introduced machine production—in particular for printing labels—which began on November 1, 1892. Troplowitz continued to work closely with Dr. Unna. One of their developments was a refinement of Guttaplaste, another medicated bandage called Paraplast, whose stiff cotton gauze made the gutta-percha solution unnecessary. Troplowitz also set out to create a surgical tape. The problem he faced was developing one that would adhere but without irritating the skin. His solution was to use zinc oxide, which counteracted the irritating effects of resin, the primary ingredient in bandage adhesives. The new medical tape was marketed under the name Leukoplast—from leukos, the Greek word for “white”—in 1901. Within a decade the tape was being used in hospitals throughout the world.

Working on Leukoplast led the Beiersdorf company into completely new product lines. Along the way, in 1897, Troplowitz had developed a brand new, self-adhering tape which was however not suitable for use on human skin. He marketed it instead, as a mechanic’s tape under the names Citoplast and Lassoplast. Beiersdorf advertised for repairing bicycle tires and other mechanical uses, the first such tapes in the world. Another new product, developed around 1900, was a paste made from the powder Troplowitz’s dentist gave to patients to clean their teeth. Troplowitz arranged to have it packaged in tin tubes to preserve its shelf life and began manufacturing the world’s first commercial toothpaste. On Dr. Unna’s recommendation, calcium chloride was added to the recipe to make the new product effective against infections and inflammations of the mouth. The toothpaste was called Pebeco and its first ads urged daily dental hygiene. Within five years Pebeco was Beiersdorf’s bestselling product, and eventually became the first to sell more than one million units.

Beiersdorf manufactured a wide range of products during the first decade of the 20th century, including soaps, depilatories, mouthwashes, pomades, and shaving soaps. A lip balm in stick form, called Lobello, became one of Beiersdorf s most popular products of all time. First sold in 1909, it remains the market leader in many countries. In 1911 Beiersdorf purchased the patent for a material called Eucerit. Developed by Dr. Isaac Lifschiitz, Eucerit was created as a stable, water-soluble foundation for medicinal salves. Beiersdorf took over the manufacture of Eucerit, but Troplowitz had the idea to use it as the base for a new skin product, called Nivea Creme. The name—which comes from the Latin word for snow—was not new at Beiersdorf. The company had begun selling a Nivea soap in 1905. That soap, long forgotten, bequeathed its name to Nivea Creme, which evolved into the world’s best selling skin cream. At first packaged in Art Nouveau-style cans, a simple yet elegant blue and white design was introduced in the middle 1920s. That essential design is still used today.

Beiersdorf expanded quickly to foreign markets. It signed an exclusive distribution contract with the New York firm Lehn & Fink in 1892. In 1898 it began exporting its products to Austria-Hungary. By 1909 Austrian revenues reached 218,000 Marks annually; by 1913 they had reached 556,000 Marks. Business in Austria was so good that Beiersdorf opened a branch in Vienna in January 1914. The company opened a London office together with a warehouse for distribution in the United Kingdom in 1909. By the start of World War I, there were production facilities in Buenos Aires, Copenhagen, Mexico, Moscow, New York, Paris, and Sydney Australia, and sales representatives in 29 countries around the world.

Troplowitz reinvested Beiersdorf profits in improved facilities. Two years after it opened, the Hamburg factory was too small for Beiersdorf s needs and had to be expanded. Every two to three years afterwards, until the start of World War I, a new facility was built. By 1913 the company’s total production area was 30 times larger than that in Troplowitz’s original plant. Between 1900 and 1914 Beiersdorf s product line tripled in size and its revenues increased 12fold. To help him manage his burgeoning enterprise, Troplowitz in 1906 made a partner of his brother-in-law Otto Hanns Mankiewicz. Troplowitz supervised company research and production; Mankiewicz, an attorney, oversaw sales, distribution, legal matters, and other external business.

Company Perspectives:

Beiersdorf Company Principles: We direct all our efforts in all parts of the world to the needs of our customers and the demands of the market. We develop, manufacture, and distribute brand products of reliable quality and of high benefit to the consumer. Our company is uniform throughout the world, while at the same time it takes into account the requirements of each of our diverse markets. We concentrate our activities on areas in which we possess mature competence with the goal of being among the world’s leading suppliers. We believe in fair, aggressive competition. We work continually for good profits, because they are a precondition for the company’s successful long-term development. We believe that creative, needs-oriented research and development is a critical element for the company’s security in the future. We do business in an ecologically responsible manner to protect the environment and natural conditions of our life. We cultivate open communication and reliable, long-term cooperation with our business partners and other social groups. We consider the qualifications, involvement and performance of our employees to be the decisive elements in Beiersdorf’s success. As a result, we have a responsibility towards our employees.

Organizational Turmoil: The 1920s

World War I ended Beiersdorf s expansion abruptly. In 1918, the final year of the war, Beiersdorf was struck by two crippling circumstances. In April, Oscar Troplowitz died suddenly of a stroke at the age of 55. Just six months later his 47-year-old partner, Otto Mankiewicz, died of a heart attack. Neither man left an heir. Together with Germany’s loss of the war and the collapse of the government of Kaiser Wilhelm, the two deaths created nearly insurmountable problems for Beiersdorf. Control passed into the hands of Frau Troplowitz, who was both Oscar’s wife and Mankiewicz’s sister; an advisory board, comprised of Max Warburg and Dr. Carl Joseph Melchior, from Beiersdorf s bank, was created at the same time to oversee company operations. To make company management more efficient, the legal form of the company was changed to a GmbH in February 1920 and the official name was changed to P. Beiersdorf & Co. GmbH. Frau Troplowitz owned the property and machinery; the bank invested 300,000 Marks and was given majority voting shares.

Then, in August 1920, Frau Troplowitz passed away suddenly and the company was once again thrown into turmoil. The crisis was overcome quickly, however, and within a month the land, buildings, and equipment held by Frau Troplowitz’s estate were transferred to the GmbH. During the runaway inflation of 1921-22, the company’s legal form was changed again and it became P. Beiersdorf & Co. AG on June 1, 1922. The change was not without problems, however. During the war, nations who fought against Germany had seized Beiersdorf holdings, patents, and trademarks. Afterwards they were reinstated to the GmbH, and successor corporations were prohibited from taking the patents and trademarks over. Thus, the GmbH maintained its separate existence as the holder of all rights and property, which it leased to the Aktiengesellschaft (AG).

Beiersdorf s foreign trade was ruined by the war. In 1913, foreign sales accounted for 42 percent of revenues; in 1919 there were no foreign sales. Furthermore, the nations that had been at war with Germany often seized all German holdings, including property, patents, and trademark rights. In the United States, Beiersdorf retained John Foster Dulles, who later served as secretary of state under Dwight Eisenhower, who regained its U.S. rights. The war and inflation put a temporary halt to Beiersdorf s new product development programs; a more pressing concern was finding replacements for raw materials which were no longer available or affordable.

During the 1920s, however, the company brought out some 70 new or significantly modified products. About half were personal care items such as tooth powders, hair products, children’s creams, lavender soaps, hair removal creams, sunburn creams, and insect bite salves. In 1921 Hansaplast adhesive bandages for cuts, scrapes, and other wounds appeared on the market. It was a product that would remain an important part of Beiersdorf s line for the remainder of the century. In 1929 Beiersdorf marketed the first deodorant in salve form. The company’s former leading product, Pebeco toothpaste, went into decline in the 1920s as the public’s preference changed from medicinal to minty flavors. The introduction of Nivea toothpaste in 1933 was an unsuccessful attempt to win back the market.

Beiersdorf researchers working with Dr. Carl Mannich made a major breakthrough when they developed a reliable heart medication from digitalis. Digitalis, a plant derivative, was known to regulate the heartbeat, but it had to be administered in precise dosages: under-medication was ineffective but over-medication was fatal. Mannich isolated the active chemical in a stable form from the Digitalis lanata plant. Beiersdorf took over the production and marketing of the medicine, called Pandigal, in 1927. The drug became the foundation of the company’s pharmaceutical division.

Depression and Dictatorship: The 1930s and 1940s

The German economy finally stabilized between 1924 and 1930, and Beiersdorf s growth resumed. Its German revenues during that period increased 300 percent—one third of its sales at the time were made directly to retail outlets such as pharmacies and cosmetics stores. A second production facility was built in Hamburg, and other plants were enlarged. The company’s workforce grew from about 300 just after the war and reached 1,000 for the first time in 1929. Remarkably, during the Great Depression, which left six million without jobs in Germany between 1930 and 1933, Beiersdorf did not lay off a single worker.

When the Nazis came to power in 1933 Beiersdorf was attacked as a Jewish company and Germans were exhorted by government media to buy from its “German” competitors instead. Board members and executives with backgrounds the Nazis considered non-Aryan resigned in the interest of the company. Carl Claussen, a non-Jewish member of the Beiersdorf board of directors, took over as head of the company, a position he would hold until the mid-1950s. Some former Beiersdorf executives left Germany to oversee the company’s foreign subsidiaries.

A consortium of foreign companies was established, companies whose debts of approximately 2.7 million Reichmarks had been paid off by Beiersdorf, creating a steady stream of foreign currency into Germany, as well as raw materials which were not available to the German parent company. Despite the regime’s hate campaign, which continued throughout the 1930s, the number of Beiersdorf employees and its revenues both more than doubled. The company’s most significant new product of the decade was a transparent tape that could be used in the office or home. Called Beiersdorfs Klebefilm, the tape was first released in 1935 and renamed tesafilm in 1941, a name it still goes by today. It quickly developed into one of the world’s bestselling tapes and a major product line for Beiersdorf.

Shortages and Rebuilding: The 1950s and 1960s

In the years immediately following World War II. Beiersdorf production was blocked by severe shortages of materials and energy, as well as regulations promulgated by the Allied military government. However, even though no cosmetics could be produced or sold in 1946, the company took out ads to keep its brands in the public eye. Finally, in 1947 it received permission from the military government to resume production of Nivea Creme and toothpaste, but raw materials were in such short supply that only limited quantities could be produced.

The economy took a turn for the better after 1949 and the company slowly returned to normal development and production. In 1951 8x4 Seife, Europe’s first deodorant soap, was introduced; it became the largest revenue producer of the company’s Body Care division. Other new products for Beiersdorf in the 1950s included a pH-balanced skin cream called pH5-Eucerin and Atrix, a glycerin-based hand cream. Atrix helped the company regain foreign markets where the rights to the Nivea brand name had been lost during the war. By 1957, Beiersdorf s rebuilding program was running at full steam. Some 30 percent of revenues were from products that had been developed after 1949. Two major factories in Hamburg were rebuilt and expanded in the middle 1950s. The high demand for tesafilm, in particular industrial tapes, necessitated a brand new facility which was built in 1961 in Offenburg, in southeastern Baden-Württemberg.

In 1952 Allianz Versicherung AG acquired more than 25 percent of Beiersdorf’s shares, the largest number in the hands of a single stockholder. The company expanded its executive board from four to six members in the early 1960s and, in 1967, shortened its name to Beiersdorf AG. It continued to expand its manufacturing capabilities through the 1960s and 1970s. In 1967 a 40,000-square-meter piece of land in Hamburg was acquired; in May 1971 a central laboratory and technology center was opened. In August 1969 negotiations for additional land for future expansion were concluded with the Hamburg city government. A new facility for the manufacture of industrial tapes was also completed in 1971.

New products were developed and product lines expanded in the 1960s. In 1965, the pharmaceutical division developed the first digitalis medication in tablet form. The new pills were just as effective as intravenous administration and by the mid-1970s the medication Novodigal was one of the most prescribed medicines in Germany. Tesafilm revenues swelled, spurred by worldwide automation of industry and the subsequent demand for industrial tape. New kinds of tape were continually introduced, including electrical tapes and watertight tapes made with plastic foam. The company was developing new bandages and adhesive strips as well and in the early 1970s a special line of bandages and medical products was formed. Despite tougher competition and market consolidation of the personal care area, Nivea solidified its position as the most popular skin cream in the world. By the early 1970s most company product lines—Nivea, tesa, and Hansaplast, in particular—were the European market leaders.

Reorganization: The 1970s and 1980s

In the early 1970s, Georg W. Claussen, who had succeeded his father Carl Claussen as Beiersdorf president, proposed that the company’s management structure be altered to reflect its current circumstances. In 1973 a large U.S. consultant company was hired to study the question and in 1974 a new organizational structure was introduced at Beiersdorf based on its recommendations. The division of Development, Production, and Sales departments into separate domestic and foreign areas was done away with. In its place, four market-oriented divisions were set up to cover Europe and North America, and a fifth division for all products was set up for the rest of the world. Two umbrella divisions were placed over the other five: one for finance and administration, and another to coordinate the work of the executive board. The head of each division was given an additional area of responsibility for the entire company, for example personnel, sales, or material purchasing. Responsibility for the performance of Beiersdorf s foreign subsidiaries was divided among executive board members at the same time. In 1978, the Tchibo Frisch-Rost Kaffee AG acquired a 25 percent share in the company, essentially enabling it to share control with Allianz. The same year a new company logo was adopted, the initials BDF followed by four dots meant to represent the companies product divisions.

From the mid-1970s until the mid-1980s Beiersdorf experienced a period of growth and new product development, in particular of its Nivea line. By the mid-1970s the foundation for the Nivea name—care, gentleness, and a reasonable price—had been laid. It released Nivea Pflege Schaumbad (bubble bath) in 1977, Nivea Duschbad (shower gel) in 1978, Nivea After Shave Balsam in 1980, and a bath oil, face cream, shampoo, and conditioning rinse between 1982 and 1984. Nivea’s combination of quality and value caught on with consumers: annual sales grew from DM 180 million in 1970, to DM 500 million in 1981. By 1990 they had passed DM 1 billion, and in 1998 they reached DM 3 billion for the first time. New Nivea products moved quickly into leading market positions. Within five years of its introduction, Nivea Visage had sales of over DM 500 million and had become the most successful Nivea product after Nivea Creme.

Beiersdorf restructured its strategic approach in three important respects during the 1980s and 1990s. First, it narrowed the focus of its operations to areas of core competence, skin care, tape, and medical supplies. Second, it began the systematic development of comprehensive Nivea and tesa product lines. Third, it set about making strategic acquisitions and mergers. In 1983 the company acquired Bode Chemie, a chemical manufacturer, and incorporated it into the Beiersdorf medical division. In 1984 Beiersdorf shut down its soap manufacturing facility and delegated production to newly acquired subsidiary Hirtler GmbH, which had greater expertise and state-of-the-art equipment. The acquisition of Futuro strengthened the company’s presence in the market for therapeutic hosiery.

Conquering International Cosmetic Markets: The 1990s

Beiersdorf carried out other internal reorganizations in the 1990s. It created a unified international marketing and production concept for its various product lines. It linked planning and production units and standardized product formulas, production, and packaging across the company and all its subsidiaries. In the 1990s Beiersdorf sales were fueled by its powerful line of Nivea cosmetics, a line that expanded constantly during the decade, building a seemingly never-ending variety of skin creams (including those for men), sun care creams, antiwrinkle creams, baby creams, shower products, and deodorants. In 1993 Nivea’s worldwide sales reached US$1.47 billion. Helping Nivea results for 1993 was Beiersdorf s reacquisition of the rights to the Nivea brand name in the United Kingdom, rights that had been held by an English company since World War II. So successful was Nivea—it accounted for 70 percent of sales for the company’s Cosmed division—that Rolf Kunisch, named Beiersdorf s president and CEO in 1993, predicted that Nivea’s annual international sales would reach US$3 billion by 2000. Nivea’s growth was exceptionally strong in Germany that year; sales increased more than three times faster than general consumer expenditures on toiletries and cosmetics.

Those results helped offset losses incurred by Beiersdorf s costly restructuring of the tesa tape division, which was experiencing economic difficulties, primarily because of a downturn in the automobile industry. There were rumors early in the decade that the company might sell off the tesa division entirely. Nonetheless, tesa continued to pioneer new processes and materials. The result was a number of new industrial tapes, including Bodyguard for cars and tesa Klarsichtfilm (transparent film), for computer data storage, with a capacity equal to 15 CD-ROMs.

Nivea sales increased worldwide. In 1996 international sales accounted for 60 percent of the company’s total turnover. U.S. sales increased by over 11 percent that year, reaching US$147.9 million; the United Kingdom, Turkey, Greece, Scandinavia, the Czech Republic, Hungary, and Portugal all reported doubledigit sales increases; Eastern Europe sales grew by 20 percent. The year 1997 was Nivea’s seventh consecutive year of doubledigit growth, climbing to US$1.38 billion. Increases were especially phenomenal in some Asian markets: 25 percent in Thailand and 40 percent in Indonesia. In 1998 Nivea’s annual sales reached an all-time high of DM 3.87 billion, an increase of 13.1 percent; DM 2.6 billion of that came from sales outside Germany. Nivea products outsold all the company’s other products combined.

Principal Subsidiaries

Juvena Produits de Beauty GmbH; La Prairie GmbH; Cosmed-Produktions GmbH; JOBST GmbH, Medical Stockings; Bode Chemie GmbH & Co; NOPI GmbH; Hirtler GmbH; tesa-Werke Offenburg GmbH; Beiersdorf Gesellschaft m.b.H. SA (Austria); Beiersdorf NV (Belgium); Beiersdorf spol. sr.o. (Czech Republic); Beiersdorf s.a. (France); Beiersdorf SpA (Italy); Juvena (International) AG (Switzerland); BDF México, S.A. de C.V. (Mexico); Beiersdorf, Inc. (USA); Futuro Inc. (U.S.A.); Beiersdorf Australia Ltd.; BDF Nivea Ltda. (Brazil); Beiersdorf SA (Chile); Beiersdorf S.A. (Columbia); PT. Beiersdorf Indonesia; Nivea-Kao Co., Ltd. (Japan).