Beauty Market
Matas’ EVP on how to build an LVMH for beauty in Scandinavia in 10 years
Michael Shin: ”The vision is that we will serve the international demand for beauty products from Scandinavia, which would then be incremental to our Danish retail business.”
11 Jun 2024

Shin has 25 years of experience in the beauty industry, including many years at L’Oréal. Three years ago, he met Matas CEO Gregers Wedell-Wedellsborg and the two agreed on the huge demand and potential for Scandinavian beauty products in the international markets. 

— Matas Group was also looking for how to create additional growth for the local retail business, he remembers. One of the areas identified was to become also a brand owner. Not private label — which is often associated with low price — but brands that could also be sold with other retailers, in international markets. The vision is that we will serve the international demand for beauty products from Scandinavia, which would then be incremental to our Danish retail business.

— We have French beauty brands, American beauty brands, and Asian beauty brands, which all have a clear positioning. Alongside these, we are seeing an opportunity for brands from Scandinavia, with different values and a different vision of beauty, which is a natural and healthy-looking one. In Scandinavia, we have a lot of brands, but on an international scale — where you need resources — we felt that there was an opportunity. 

Michael Shin. Photography: Mathilde Schmidt

Shin is now heading Grænn, Matas’ in-house brand division, building a strategy to serve international markets with Scandinavian beauty brands.

— When I first joined, I quickly realised that we needed to create a separate identity from Matas’. When I was talking to collaborators, journalists, and retailers internationally, and said that I came from Matas and was starting a brand division, they would go online and see that, ’Oh, Matas, you’re a retailer, what type of brands do you want to do?’ They immediately put us into one segment of the market. Potential partners would see a ’Matas Brands’ Division in the mass market, probably with competencies primarily in hair care and body care, due to our portfolio of private label brands, which is fine. But we see potential in the international prestige and masstige sectors, across fragrance, skincare, and make-up, so we needed to create a separate identity, which became Grænn. We then folded two brands — Nilens Jord and Miild Beauty — into Grænn, and created Flora Danica as a new in-house brand.

— We are a division that is funded by Matas, but on the day-to-day operations, we’re quite separate. It’s similar to how Boots created a division to sell their in-house brands internationally. The big, big, big vision that we have as a group is to be the LVMH of beauty of Scandinavia in 10 years — with, of course, a retail business as well as a brands business. Today, with the Kicks (the Swedish retailer recently acquired by Matas) brands, the Matas brands, and the Grænn brands, we already have quite a nice portfolio.

In Sweden, Kicks’ in-house brands have gained a following, not least due to the price. When you go to other retailers, price can be a challenge when the margins become lower.

— Yes, when you have your own brands and the full margin, it of course makes it much more attractive than if you try to sell that with another retailer. You need to give away some margin to them and the P&L (Profit and Loss) starts to become more challenging.

— We just had the Capital Markets Day where the group clearly declared that our goal is to be the number one omnichannel beauty and health retailer in all categories. That’s where the big resources come in and that’s where we’re going to be spending most of our time. There are a few priorities to succeed in the Nordic region. First, offering a wide assortment of exciting health and beauty brands across Matas and KICKS. Then expand and improve the portfolio of in-house brands, continue to drive our e-com market share and fuel our omni-channel presence. We’ll also be working on refreshing, upgrading, and opening new stores. Lastly, integrating our organisations and sharing knowledge and best practices to operate efficiently to, ultimately, build a long-term platform and culture.

— When it comes to the brands, we already have three that we need to build. That’s gonna take a lot of money and time. And we’re not putting ourselves under pressure in terms of time or reaching a certain turnover. Maybe we’ll expand with acquisitions, or we’ll do it with collaborations. It’s not so clearly defined but that’s the big 10-year vision.

You recently moved to the region. From an outside perspective, what’s your view on Scandinavian beauty and its potential?

— Just before and after Covid, more and more consumers were looking for brands that have certain values and certain ways of behaving. A lot of that — the values and way of behaving — we see in Scandinavia just as how the countries are, and how people are living together and respecting each other. You see that also in the brands, apart from the design aesthetics and the responsibility that goes into the products. More and more people are looking for that. Many French brands don’t have that. They’re trying to, but they were not born like that. American brands were not born like that and neither were Asian. The Scandinavian beauty industry is relatively new but the timing to hit these values is right. 

— What we often have as a problem is that we’re missing the international expertise, the industrial expertise, and, sometimes, the capital money. A lot of the local brands are fantastic and are doing well, but when it comes to the next level, to break through on an international level, it becomes challenging. The desirability of Scandinavia is interesting and so is how many different small brands there are and how creative the market is. For networking, it’s always nice to get in contact with these young brands. In the future, with the right funding, some of them can make it big international but they need the experience, expertise, funding, and to have an international outlook. 

— One thing not to underestimate is the ecosystem that goes around beauty; good research labs, good raw material manufacturers and manufacturers, and sourcing companies to find the right components. France has a very good ecosystem and so does the US and Asia. Here, I think the ecosystem is quite good when it comes to price entry and middle price, but not when it comes to high-performance products.

After 2,5 years of development, Grænn just launched its in-house fragrance brand Flora Danica’s first four products. 

— When we started Grænn three years ago, it was all about answering the demand for Danish and Scandinavian beauty brands, Shin explains. First of all, we were thinking what the first own brand could be. Should it be a celebrity brand? A makeup brand? A skincare brand? We decided that it should be one that represents what foreigners think about when they think of Scandinavia, and nature is the most immediate topic. 

— So, how could we ’do’ nature when it’s been done in so many different ways? We wanted to do it in a new way but not superficial. We scanned different ideas and came across Flora Danica (a comprehensive atlas of botany, from the Age of Enlightenment, containing folio-sized pictures of all the wild plants native to Denmark between 1761 and 1883, Ed’s note). We checked for the trademark, waited for three months, and couldn’t believe it when we got the news back that it hadn’t been registered for beauty, worldwide. We registered it and met Henning (Knutsen, a Danish Flora Danica expert) and discovered that it was a great way to talk about nature because it clearly gives a certain depth to a brand that it (the atlas) is a true story that we have used as inspiration. 

Flora Danica.

How will you secure growth for Flora Danica and your other in-house brands?

— We’re taking a step-by-step approach. Today, Flora Danica is available in Denmark, Sweden, Norway, and Germany, and we are quite likely to launch in France and the UK this year. Where possible, we want to go directly with retailers in these markets. When it goes further away, like in Asia or the US, we will probably partner with local specialists. But we only want to go there once we’ve found the right model that is working in Europe.

— Both the quality of the formulations and aesthetics are important for us. A lot of clean lines, modern, and to speak transparently to our customers and talk to them on an equal level — we don’t want to talk down on them.

— When it comes to distribution, different brands have different strategies. Nilens Jord is a masstige brand — prestige (market) quality but a more accessible price. Flora Danica is what I would call a commercial niche brand. The fragrance profile we’ve chosen is not very commercial, but it’s also not so niche or complicated. We want to have something that has personality but not a brand that you will find in a very wide distribution. The third brand, Miild, was just relaunched at Matas after two years of reworking the marketing mix. The first signs are very encouraging, focusing on formula safety.

What can you say about your plans on how you will work with Kicks and Matas in different markets?

— I’m not close enough — that is a question for the Kicks and Matas teams. What I do know is that the ambition is to extend the assortment and become the most important partner for all the beauty brands that want to come to Scandinavia.

What differences and similarities have you noticed in the Nordic markets?

— In terms of distribution, I would say it’s quite concentrated when compared to a market such as Germany. If I take Denmark, you have Matas, you have the supermarkets, you have Normal, and that’s basically it. When I compare that to a market like Germany, you have many different players. In Sweden, you have the main players and some pure players online, so also fairly concentrated. 

— When it comes to the categories, when I look at niche perfumes, it’s booming like crazy in Germany and the UK. I’m noticing less of those niche brands in distribution in the Nordics. I think it’s coming. On skincare, I’m noticing that people like products that are quite direct. I wouldn’t say simple, but you don’t like to have a big routine. I know the bronzing products are very popular here, much more so than in Germany. That’s what I’ve observed.

— I have seen that many new beauty brands in Scandinavia are also driven by a purpose, besides a new product idea and strong aesthetics. Would it not be wonderful, if the industry would find a way for these often smaller brands, to collaborate in order to conquer international markets and have more customers benefit from these purpose-driven brands? In many cases, trying to go alone is harder, takes longer and is more expensive. By combining experience, knowledge, and networks, there is a higher chance to success. The challenge is that in theory this sounds reasonable, but in practice, it is harder to execute. If only we could find a way…

You mentioned a few keys to success. These days, price has to be a huge factor. 

— Definitely. ’Tilbud’ (offer) is certainly a big culture in Denmark and a big part of the buying.

Going forward, Michael Shin will work on using geography as a strength in the brand growth for Matas’ in-house brands.

— The overarching discovery since I moved here is that whenever we go and speak to journalists, retailers, or consumers outside of Scandinavia, I’m always positively reminded of how powerful and desirable this region is. For us, we’re here and it’s normal, but you’d be surprised how many times I say that we’re from Copenhagen and initially, their eyes light up. The nation branding is so good, for Denmark and Sweden, and the way that we are working is so responsible. I do think there’s a real space in the market for brands and companies with these values. And for Matas, when we have such strong access to customers and can offer them more and more brands with a very seamless experience, we have huge potential.