Established in 1948, Hemas Holdings stands as a pioneering force in Sri Lanka, boasting over 4,500 dedicated employees and a diverse portfolio spanning the Consumer, Healthcare, and Mobility sectors. Hemas Consumer Brands, a strategic business unit (SBU) of Hemas Holdings, has not only expanded its influence regionally but has also emerged as a trailblazer in consumer innovation in the country. Fuelled by an unwavering commitment to addressing gaps in consumer needs, the company crafts accessible, high-quality products.
In this interview, Sabrina Esufally, Managing Director – Hemas Consumer Brands, Shiyan Jayaweera, Director Marketing – Hemas Consumer Brands, and Saumya Perera, General Manager, Beauty, Grooming and Wellness – Hemas Consumer Brands provide insights into the realm of innovation at Hemas Consumer Brands, highlighting its dynamic role within the broader framework of Hemas Holdings.
Can you give us an overview of the consumer market?
Sabrina: On a global and regional scale, we’ve observed two significant shifts in consumer preferences. First, there is a growing demand for personal care products perceived as safer and better tailored to individual needs. This trend has sparked innovation in the personal care industry, notably with the increased use of nature-based or nature-inspired ingredients.
Of particular interest to us is the changing perception among consumers. Historically, there was a belief that international products were of higher quality. However, there has been a notable shift in consumer sentiment, with a current preference for locally sourced or locally made products. This represents a major evolution in consumer preferences, especially in the realm of personal care.
Another overarching trend, applicable not only globally but also in our regional context, involves the increasing economic independence of women. As women’s lifestyles change, with more engagement in the workforce and outdoor activities, there is a corresponding diversification in the choices they seek in personal care. This shift has created substantial opportunities for innovation in categories such as beauty care, hair care, and notably, a growing penetration in areas like sanitary care. Products like sanitary napkins are increasingly designed to facilitate convenient and on-the-go lifestyles.
These global trends are not isolated but resonate strongly in our local market in Sri Lanka.
Shiyan: In light of the economic crisis, a notable shift in consumer behaviour has emerged. Traditionally, brand loyalty held considerable influence, with consumers prioritizing their affinity towards specific brands over other considerations. However, this paradigm has evolved. Consumers are now more inclined to redefine the concept of value, exploring new products that offer perceived benefits beyond the conventional understanding of price.
The expanded definition of value encompasses innovative propositions and unique product features previously unseen in the market. This shift has rendered consumers more open to embracing innovation than ever before. Unlike in the past, where loyalty to a particular brand often deterred consumers from trying alternatives, today’s consumers are willing to explore offerings within a category as long as they provide the desired value.
This trend is not transient but appears to be a continuous evolution. Additionally, consumers now exhibit greater flexibility in their product choices, readily substituting between categories. Unlike earlier patterns where consumers might drop out of a category or switch back and forth, they now demonstrate a willingness to alter their consumption habits promptly. For example, individuals may reduce their use of washing powder, switch to laundry soap, and then revert.
These shifts in consumer behaviour are notably influenced by prevailing economic challenges. As individuals navigate economic hardships, their willingness to experiment with new products and adopt more adaptable consumption patterns underscores the dynamic nature of the current market landscape.
Saumya: When we delve into Hemas’ portfolio, the dynamics shift, particularly in the beauty category, and we see a distinctive pattern emerging in the beauty sector. Although the male segment is gradually expanding, the majority of consumers investing in enhancing their appearance are still predominantly female. Despite potential cutbacks in other areas, whether it’s dietary choices or even more utilitarian categories like laundry, women are consistently willing to allocate resources to beauty-related products. This resilience in the beauty sector suggests a unique consumer mindset, wherein the desire to enhance personal appearance remains a priority, even in the face of economic considerations.
This pattern reveals that, in contrast to certain commoditized categories, consumers, particularly females, exhibit a continued willingness to invest in products that contribute to their sense of personal well-being and appearance. This resilience in the beauty market is indicative of a distinct consumer behaviour trend that transcends the challenges seen in other sectors.
What are the primary driving factors behind innovation at Hemas?
Sabrina: Our innovation ethos is fuelled by the belief that there are numerous unmet needs on the Sri Lankan consumer’s wish list. We not only aim to create products that address these needs but also strive to make them accessible to a broad audience by ensuring an affordable price point. We strongly believe that quality products should be within reach for everyone. For instance, when introducing products like serums in more advanced formats, our focus is on offering accessibility. Internationally or through imported products available locally, the cost might be five to six times higher, limiting accessibility to a smaller population. We bridge this gap by formulating high-quality, affordable products.
Our commitment to accessibility extends beyond pricing. It encompasses distribution as well. We aim to ensure that our quality products reach a broad audience, aligning with the desires of our consumers. This principle forms a significant part of our innovation strategy. Additionally, in response to challenging times, we recognize the emergence of needs in the discount segment. When consumers adjust their preferences or trade out of certain categories, we innovate to provide them with affordable options. This approach prevents them from entirely disengaging with our brand or product categories. These are two main themes that drive our innovation efforts within the company.
How has the commitment to agile innovation influenced the company’s expansion into different sectors?
Sabrina: Hemas has consistently been a forward-thinking company, adapting to the changing times. Our firm belief is that growth necessitates change. Since our inception, a core value ingrained in our origin story has been pioneering innovation. This commitment drives us to continuously provide innovative solutions that enhance the quality of consumers’ lives—a principle deeply embedded in our DNA.
From my perspective, I feel no conflict between our values and innovation; rather, innovation has been the cornerstone of our company. It has propelled us to diversify into various sectors, extending beyond consumer goods to healthcare. Additionally, it has motivated us to explore opportunities offshore where we could contribute with innovative approaches.
Innovation is not just a past value; it remains a living legacy, consistently relevant in shaping our trajectory.
Shiyan: Beyond traditional values, our approach to innovation has been transformative for our brands. A notable example is our work with the FEMS brand. Historically, this category operated discreetly and was seldom discussed. We disrupted this norm by bringing it into the open, particularly on digital platforms, turning it into an openly discussed topic. Recognizing that category education was pivotal for increased penetration, we took deliberate steps in reshaping perceptions.
For instance, we transitioned our communication strategy from depicting blue to red liquid. This change was not a mere gimmick; consumers appreciated the transparency and authenticity it conveyed. By showcasing the real nature of the product, we found that consumers felt more connected, as it represented their experiences and reasons for choosing the product.
Another strategic move involved shifting category discussions from private one-on-one settings to a more accessible platform. Our recent integration of a chatbot feature has yielded impressive results, particularly in engaging with Gen Z. While our brands boast decades of history, we recognize the importance of aligning with the preferences of newer generations, such as Gen Z and future Gen Alpha.
Through the chatbot feature, we’ve facilitated two-way conversations, addressing questions and providing insights related to category education. This approach has allowed us to break through traditional category codes, leveraging innovation to connect with consumers more effectively and address their evolving needs.
How are you leveraging innovation during the economic crisis?
Sabrina: During this exceptionally challenging economic period, we confronted a dual crisis: a supply crisis followed by a consumption crisis. In the initial phase, grappling with Sri Lanka’s liquidity challenges, our foremost objective was to ensure that we were still able to serve our consumers. We worked tirelessly, collaborating with the rest of our Group and financial institutions, to secure access to dollars and implement supply chain initiatives that bolstered our ability to deliver familiar brands to our consumers.
Transitioning to the consumption crisis, where Sri Lanka’s macroeconomic environment faced significant challenges, we adopted a three-pronged approach. First and foremost, we made a strategic decision early on not to compromise the quality of our products. Despite the tempting proposition to cut corners for margin management during tough times, we remained steadfast in our commitment to the promises made to our consumers. With 75 years of history and a commitment to endure for many more, we prioritized maintaining the integrity of our brands.
Moreover, we seized this challenging context as an opportunity to enhance our value propositions. In the case of Baby Cheramy, we improved product efficacy and claims, and in brands like Clogard, we took extra measures to strengthen quality parameters while increasing prices. This simultaneous focus on elevating quality and value propositions underscored our dedication to delivering excellence to consumers.
Thirdly, recognizing the economic strain on certain consumer segments, we aimed to provide accessible and affordable choices. Engaging in insightful discussions with consumers willing to adapt their behaviours, we introduced a range of value-engineered products that met their demands. Examples include a value-engineered laundry powder (Diriya under the Diva brand) and a cost-effective sanitary napkin (AYA). These innovations not only prevented consumers from entirely dropping out of the market but also provided a variety of options, including pack sizes and multi-packs, in the personal wash or soap segment.
Saumya: During that period of rising costs, we found ourselves compelled to manage business continuity by increasing prices carefully. However, as we subsequently observed a decline in prices, we were proactive in passing on the benefits to consumers swiftly. We implemented measures such as introducing multi-packs and offering price reductions. Our commitment to being reasonable in returning these benefits proved to be instrumental in maintaining the prominence of our brands in the market and safeguarding market shares. This strategic approach positioned us as leaders in navigating these changes.
Shiyan: During this time, we endeavoured to define the concept of value for the consumer. This involved innovating to determine effective price points and, consequently, suitable pack sizes. In this process, we introduced pack sizes that were previously non-existent in the category, such as smaller soap sizes. While initially uncertain of their success, some of these specific pack sizes gained rapid popularity and, interestingly, experienced a quick turnover due to changing consumer preferences. The necessity to swiftly meet consumer needs demanded a rapid pace of innovation. This agility was crucial in our ability to respond to the evolving situation, ensuring that we addressed the consumer demand promptly and effectively.
Sabrina: We were increasingly aware of societal challenges concerning different segments of society and we remained committed to our community outreach efforts tied to our brands during this time. Continuing our purpose-driven work, we sustained our involvement in community initiatives. This steadfast commitment allowed us to maintain a meaningful connection with our consumers during a period where many felt neglected by their favoured brands due to rising prices and other challenges. Consequently, our dedication to purpose-driven initiatives played a pivotal role in not only managing but also enhancing consumer loyalty, particularly in our major brands.
Can you share insights into the company’s R&D initiatives and how they contribute to the company’s innovation reputation?
Shiyan: At Hemas, we consider ourselves fortunate to possess an in-house Research and Development (R&D) function tailored to our local context. This local R&D function serves as a critical asset, aligning with our belief that understanding Sri Lankan consumer needs is fundamental to our business. Its intrinsic connection allows us to navigate and address these needs more effectively.
Our R&D team is uniquely positioned with local insight, understanding, and knowledge, and rather than confining this insight solely to the local domain, our approach involves linking into global trends and knowledge. Our R&D professionals are actively connected to various global portals, staying abreast of emerging trends and advancements in science, especially within the home and personal care categories that are integral to our operations.
Moreover, our R&D team is proactive in establishing partnerships with external entities, such as universities and reputable institutes. This collaboration serves the purpose of acquiring knowledge where it may be lacking internally. Whether these partnerships are locally or internationally based, we work collaboratively to assimilate external knowledge and enrich our in-house capabilities.
These strategies, whether locally or internationally oriented, enable us to tap into a wealth of knowledge and expertise, ensuring that we are well-equipped to address Sri Lankan consumer needs effectively.
Saumya: Our development efforts range from introducing new fragrances and fresh packaging to novel product formats and sustainability interventions. To achieve these, our R&D team, closely collaborating with our brand teams, proactively stays abreast of emerging trends and best-in-class industry practices, both locally and globally. By actively monitoring these trends, we position ourselves to swiftly embrace and integrate these innovations into our offerings.
Sabrina: It always strikes me as remarkable that, despite being a country of 21 million people, Sri Lanka boasts a distinctive set of preferences. Our preferences span various aspects, from the scents we favour to the textures we appreciate, all influenced by our climate, hair characteristics, and skin types. This unique set of preferences makes it challenging to simply replicate products from other regions.
In contrast to larger countries, a one-size-fits-all approach is not applicable here. Even if we had an R&D function in India, for instance, it wouldn’t be a straightforward process to import products designed for that market into Sri Lanka. This intricacy has become a source of fulfilment for us, as we find joy in tailoring solutions to the specific needs of Sri Lanka. Our nation stands as a microcosm with its distinctive preferences, differing significantly from those in other South Asian markets.
How do you ensure that innovations are closely aligned with consumer needs?
Sabrina: One of our foundational practices involves a robust consumer validation process. At the outset of any endeavour, we prioritize insights, ensuring that innovation is not pursued for its own sake but is intricately linked to addressing consumer needs. This involves identifying unmet needs or discerning ways to better meet existing ones by aligning with emerging global trends.
Upon conceptualizing a product, we subject it to a rigorous consumer validation process. This stage serves as a critical checkpoint, and any project or new product is not advanced beyond this point if it fails to resonate with consumers. This approach is pivotal because, ultimately, if a product doesn’t receive consumer approval, bringing it to market becomes futile.
In the event of consumer disapproval, we revisit the development process, striving to refine the product until it aligns with consumer expectations. Our commitment is not merely to gain approval but to exceed expectations, ensuring that the solution we offer is perceived as superior to existing alternatives.
This iterative process, focused on consumer validation and continuous improvement, is a cornerstone of our strategy. By consistently delivering solutions that resonate with consumers and outperform current offerings, we aim not only to solve their needs but also to cultivate a closer relationship, ultimately becoming their preferred choice.
Shiyan: Internally, we refer to this as the distinctiveness test, a crucial evaluation point in our innovation process. A substantial portion of our innovation initiatives undergoes this assessment, underscoring our commitment to ensuring each element is distinctive and valuable. We allocate considerable investment, attention, and cognitive resources to ensure our endeavours truly make a meaningful impact. Our objective is to avoid introducing products that merely replicate existing offerings (“me too” products) and, instead, focus on enhancing the consumer experience—a principle we highly prioritize.
Can you tell us about the modernization of local ingredients and heritage within Hemas Consumer Brands’ products?
Saumya: We operate within our unique ecosystem, where consumer needs and preferences are distinctly different due to cultural nuances and norms. This distinction extends across various categories, particularly evident in the realm of beauty. Our approach involves co-creation and a deep understanding of these distinctive values.
In our interactions with consumers, a significant insight emerged regarding the importance they place on indigenous ingredients and heritage processes. This understanding led to the development of a new brand called Prasara, where our goal was not to modernize it per se but to make it more relevant to today’s lifestyle. We acknowledged that consumers desired the essence of traditional practices without the time-consuming aspects associated with them.
Recognizing the gap in our internal knowledge, especially in terms of the product range of Prasara, we engaged in a selection process to identify a suitable external partner. This collaborative effort allowed us to bring authentic knowledge into our product development while maintaining our high-quality standards and safety measures.
Throughout the research and development process, we prioritized a close partnership with consumers, engaging in testing and retesting to ensure the product aligns with their expectations. Our objective was not to modernize for the sake of it but to genuinely value and incorporate traditional practices, making them relevant to the everyday lifestyle of our consumers.
Sabrina: Our vision for future growth extends beyond Sri Lanka; it involves expanding our presence regionally. Leveraging Sri Lanka’s unique biodiversity and potent ingredients, we recognize a distinct country advantage. Over the past few years, we’ve focused on developing competencies not only to utilize Sri Lankan ingredients but to formulate them for heightened efficacy.
In the realm of personal care, consumers often face a trade-off between safety and effectiveness. Our approach aims to bridge this gap by combining the heritage of formulating exceptional personal care products with the unique benefits of Sri Lankan ingredients. This synergy allows us to offer naturals that are not only safe but also deliver tangible benefits. For instance, in Vivya, we incorporate Sri Lankan heirloom rice, providing visible skin radiance within 14 days.
This harmonious blend of science and nature is a competency we are cultivating, not only for Sri Lanka but also to stand out internationally. Ingredients like Sri Lankan heirloom rice and others in Prasara are exclusive to Sri Lanka, adding a touch of uniqueness to our offerings. Our commitment to this approach in the personal care domain ensures that the products we create here can seamlessly contribute to our regional expansion efforts.
How do you ensure that global standards are met while using innovation to drive value?
Shiyan: Engaging in categories where we may not always be the initial entrants, we consistently bring added value to consumers through our products. This approach extends across various categories, including sanitary napkins and skincare. In the skincare segment, for instance, where face cream and face wash dominate the market in Sri Lanka, our brand Vivya has taken the lead by introducing face serums, night creams, under-eye gels, and scrubs.
By driving innovation in these categories, we aim not only to offer a comprehensive beauty regime but also to educate Sri Lankan women on the benefits of achieving radiant and healthy skin. This proactive stance reflects our commitment to exploring new categories and white spaces, thereby taking the lead and providing enhanced offerings to our consumers.
Sabrina: Our heritage has not always been rooted in nature. The shift towards natural products began over the last five to ten years as we enhanced our competency in this area. Throughout our journey, our focus has consistently been on adhering to international standards of safety and global parameters in formulation and manufacturing.We maintain a vigilant approach, always benchmarking ourselves against best-in-class standards rather than merely meeting regulatory requirements or local demands at any given time. This commitment to excellence has been a longstanding practice for us and is not a recent development.