COSMOFACTORY

Deanna: [00:00:00] This episode is about local wisdom, regional trends, and international brands. It's abaout sourcing raw materials from botanical gardens and global producers. It's about leading a horizontally integrated company that spans ingredients, Manufacturing, consumer brands, retail, professional beauty services, and education, consumer media, and more.
Deanna: Dr. Kilala Tilaar, owner and CEO of the Martha Tilaar group is my guest today on the Cosmo Factory [00:01:00] Podcast. Welcome.
Dr. Kilala Tilaar: Hello. How are you?
Deanna: I'm good. How are you doing?
Dr. Kilala Tilaar: I'm good. Good afternoon from Jakarta.
Deanna: Yes, I'm so glad you can join us for this.
Dr. Kilala Tilaar: Thank you so much for having me.
Deanna: no, you're welcome. Uh, before I ask about the company that you lead, I want to remind listeners, as you've just suggested, that the Martha Tilaar Group is based in Indonesia. Um, and it's a country, uh, that comprises quite literally thousands of islands.
Deanna: Um, it's also the fourth most populated country in the world, so only after China, India, and the U. S. Uh, Indonesia is also home, as I understand it, to over 3 million people. 1, 300 different ethnic populations, and most of those are indigenous peoples. Um, I also think it's important to know that the country has one of the world's highest levels of biodiversity.
Deanna: Um, so to start off with, I would love for you to tell us how important the natural resources, as well as the wisdom traditions of Indonesia are to your company's [00:02:00] founder.
Dr. Kilala Tilaar: It's natural resources and tradition is the most important element of our company's focus. And our eyes very dearly to our founder, because, uh, when she started the business back in 1970s, our founder found that the, all the beauty standards of the world, everything came from the West and in Indonesia, there's no.
Dr. Kilala Tilaar: Specific beauty standards. Uh, and, and in, in, in Indonesia at that time, we don't have, we didn't have any local brands and she realized that, um, you know, uh, not everything, you know, like imported products from the west is suitable for the Indonesian skin conditions because of the climate is totally different because we are in the tropical climates.
Dr. Kilala Tilaar: So. Then she began searching of what kind of ingredients or formula that is best suited with the condition in Indonesia. Now, being said, I said that, you know, Indonesia is a, [00:03:00] is a fast country, as you mentioned before, that we have abundant of natural resources. ingredients. We are the second largest tropical forest in the, in the world.
Dr. Kilala Tilaar: And we consist about, uh, you know, 17, 000 islands. And we have a lot of abundance, indigenous science to be explored from 300 cultural tribes there is in Indonesia. So, uh, so cultural and natural resources has been our differentiations. Uh, to compete in this Indonesian market and has been this heart and soul of innovation in the company since 1970.
Dr. Kilala Tilaar: So it's very important to our company.
Deanna: Yeah. Wonderful. I appreciate that. Thank you for sharing. Um, I'd like to think a bit about the contemporary economy of Indonesia as well. What do you think we should know about the market conditions and regional trends, particularly as they relate to the cosmetics industry?
Dr. Kilala Tilaar: Well, Dayana Indonesia has been one of the fastest growing economy [00:04:00] in Asia over the last 10 years. With this prolonged economic growth, uh, We've seen a lot of, uh, significant growth, uh, by 20 percent increase in the middle income segment out of population of 280 million people. And the direct impact of this rising middle income segment is that more people have more Uh, disposable income to invest in personal grooming. And as a result of that, the demand for beauty and personal care in Indonesia has increased significantly. The, the size of the, of the, of the industry itself is only 1. 9 billion U. S. dollar, but we are enjoying, you know, a steady, steady growth. 5. 3 percent growth rate during COVID and after COVID. So it's, it's, it's very, uh, it's very, uh, what do you call it?
Dr. Kilala Tilaar: Uh, it's very good market. Yeah. Nowadays in, especially in, in, in the world. Yeah. And, and [00:05:00] Indonesia domestic market is now it's became me. I became very highly competitive. As you can see, you know, the growth of the industry, you know, significantly, uh, uh, what do you call it? Boost up
Deanna: Yeah.
Dr. Kilala Tilaar: the, the interest, yeah, in the interest of many people to come into the, to the industry.
Dr. Kilala Tilaar: So it's, can be categorized as a red ocean industry now because of the intense rivalry. Uh, open accessibility and low entry barriers has led to, uh, You know, to a search of new entrance. This is a data fanfics. In 1970, there are only 50 players in the industry in 1990, uh, 2019, there are around 700 players, and this is very fun, you know, in 2024, and this is official government data suggested that the number search.
Dr. Kilala Tilaar: to 1, 040 players in Q1 and Q2, and in Q3 it became 1, 700 [00:06:00] players. So, uh, everybody want to, you know, get into this market, you know, because it's very sexy, yeah, very
Deanna: Yeah. That's a lot of, it's a remarkable, um, increase. Absolutely.
Dr. Kilala Tilaar: yeah.
Deanna: one of the things I want to talk with you about is the botanical gardens that the Martha Tilaar group owns. I, I understand that you use this gardens as a sort of school for farmers. I'm hoping you can, um, describe the gardens to us.
Deanna: Um, I'm wondering how large it is, what we would see if we got to visit, but also what the farmers are learning there.
Dr. Kilala Tilaar: Yep, uh, we have, uh, Uh, 12 acres of land in the Sukabumi Mountain region in, uh, west of Java in, uh, Java Island. And it contains, uh, collections of around 700 species out of 33, 000 species listed in Indonesia's, uh, government. So we are, we are, we are catching up. Yeah. Catching up. Still 700, but we have, we still have more to go.
Dr. Kilala Tilaar: Yeah. [00:07:00] And the primary purpose of this facility is to serve as laboratory for research of the Indonesian plants, uh, including, you know, the aromatic and medicinal plants, plant species. And secondly, it's, uh, the purpose is providing raw materials for productions. And as you mentioned earlier, training and certification for our networks of farmers.
Dr. Kilala Tilaar: Now we have 400 networks of farmers, around 1, 600 farmers collaborating with us. And, um, as I mentioned earlier, uh, we use, uh, you know, the, the garden to train our farmers in organic certifications, such as Cosmos, Echocert. Smeta and Echo Fadi. And we offer this training as a part of our collaborative efforts, uh, corporate, uh, social responsibility at no charge to the farmers.
Dr. Kilala Tilaar: And, uh, it's, it's a [00:08:00] win-win collaborations that, uh, benefit for both the company and, and the farmers. And in 19 and 2015, our effort. Uh, we're recognized by the UN Global Compact for our record, uh, commitment to sustainable business practices that elevate the welfare of Indonesian farmers. So this is, uh, really, uh, not only a garden, not only for supply, but also have a positive impact for the farming community in Indonesia.
Deanna: Yes. Yes. No, it sounds like important work for sure. You mentioned, um, some of the Indonesian ingredients, um, that we might find there in general terms, but I'm wondering if you can speak more specifically about ingredients that your owned brands use or that are sold for export that are particular to Indonesia.
Dr. Kilala Tilaar: Yeah, there are so many, uh, ingredients that we are, we are working, uh, working on it. Yeah. And, and the research began in 1999 when we had been actively [00:09:00] searching for bioactive compounds or other materials derived from local exotic ingredients. And, uh, we are conducting, uh, we are conducted, uh, extensive explorations in Indonesia, uh, rainforest and discovered many plants suitable for the use in beauty and personal care.
Dr. Kilala Tilaar: Uh, for example, I give you three examples that is very, um, I, I really like it. Yeah. Number one is the Tengkawang butter is a very exotic butter is the replacement for cocoa butter and shea butter. And it's locally made, uh, locally grown in Indonesia in West Borneo and have a unique characteristics of, you know, um, in terms of the.
Dr. Kilala Tilaar: The melting points of, of the, of the butters. Yeah. It's slightly higher than the coa butters, but also slightly lower than the shea butter. So it's, it give us, you know, softer textures and, and, [00:10:00] and abs absorbs absorption. Uh, it's easily to absorb in the skin. Uh. I like this, uh, this ingredients because it's very exotic.
Dr. Kilala Tilaar: Yeah. Uh, it's a, it's a alternative of, you know, the well known cocoa and shea butter. And there's a philosophy behind that, you know, uh, the, the source of this, uh, materials in the depth of the West Borneo Island. And, uh, it's, uh, the cultural belief in, in that Island, uh, it's that, uh, you cannot, uh, uh, Take it, uh, uh, what do you call it?
Dr. Kilala Tilaar: You have to wait until the, the, the nuts, uh, leave the tree. So you cannot just take it out of the tree, but you have to let it, the not, uh, uh, what do you call it? Um,
Deanna: would fall to the ground.
Dr. Kilala Tilaar: fall, fall into the ground. Yeah. And, and the way they, they cultivate this, uh, the nuts is only done by women only. So there's no, uh, uh, man's involved in, in this kind of, uh, cultivation.
Dr. Kilala Tilaar: So [00:11:00] it's, it's very beautiful. There's a local wisdom behind, behind this, uh, uh, exotic butter. And number two is, I think, uh, is the, you know, in Europe, you know, grapes are. You know, abundantly, uh, grown in Europe, but in Indonesia, we have this one particular region that can grow, uh, winery and grapes as very hot in Indonesia.
Dr. Kilala Tilaar: You know, it's not like, uh, in, in, in European countries, there is, uh, four seasons is only one season and it's 35 and this particular, it's very, it's
Deanna: I've never lived somewhere where there's only one season.
Dr. Kilala Tilaar: and it's always summer. So summer all the time. Yeah. So this particular grapes grown in Bali, you probably, you heard about the Balinese island, Balinese island.
Dr. Kilala Tilaar: Yeah. And, uh, the seed contains a very potent OPC and a powerful antioxidant. You know, it's, uh, based on our research, it's 20 times greater than [00:12:00] vitamin E and 50 times greater than vitamin C. And we get, uh, a patent out of this, uh, grape seed, uh, uh, compound.
Deanna: Yes.
Dr. Kilala Tilaar: And, and so many more, you know, I can, I can give you more one, one more time.
Dr. Kilala Tilaar: I want more species. Yeah. It's a, it's a local delima fruits. It's probably, uh, only in, in, uh, Asian countries and it's contains, you know, high Antoin and antioxidants and also have sink and many, many more, you know, so we can use it for, you know, formulations in skincare and also the, uh, haircare is very good.
Dr. Kilala Tilaar: So yes, we've been working a lot to, to research a lot of, um, species in our country and we get, uh, for this effort, 38 patent of bioactive, uh, that, uh. We are, you know, we are using it in our products and we are exported into 12, uh, to 50 countries [00:13:00] across Europe, U. S., Asia, and Latin America.
Deanna: Yeah. Yeah. That's impressive. Thank you so much. Um, and while we're thinking about Indonesian ingredients, and we've mentioned biodiversity here in our conversation as well, I do want to ask about your company's policy and practices for sourcing palm oil. Can you tell us about, um, your approach for sourcing this ingredient or using palm oil derivatives?
Dr. Kilala Tilaar: Yeah, well, palm oil is, I think, is the main ingredients for formulations in cosmetic and personal care, as you know. But, uh, in Marta Tilaar, we strongly believe It has to be sustainable. Yeah. It has to be from sustainable resource. So we select palm oil suppliers that have SPO mass balance certifications so that all the palm oil we use follows the certifications of standard for sustainability.
Deanna: Okay. Yeah. That's helpful. Thank you for sharing that.
Dr. Kilala Tilaar: Yeah. In terms of palm oil, you know, Indonesia is the number one [00:14:00] producer for palm oil, unfortunately.
Deanna: I know it's, it goes both ways for sure. Um, so I know like many ingredient suppliers, you have some research partnerships with universities as well as your own innovation center. Can you help us think a little bit more about the research projects that your company is at work on?
Dr. Kilala Tilaar: Well, yeah, our research projects have been handled by an entity called the Marta Tilar Innovation Center. And Marta Tilar Innovation Center believes that in order to drive innovation faster, we cannot do it alone. So we need a lot of collaboration with multiple stakeholders, including the government research centers and universities.
Dr. Kilala Tilaar: Currently, we work with 26 universities, both local and international. And What kind of activities that we are working on together is activities such as bio explorations, efficacy testing, [00:15:00] project uh, scaling up and in vitro plant seeding and domestications of rare plant plants for industrial use. So, um, for example, we collaborated with, uh, Leiden University for almost 10 years now on ethnobotany and medical anthropology.
Dr. Kilala Tilaar: And, uh, by doing this collaboration, we found, uh, around endangered species that, uh, we are successfully, uh, bring it to, uh, uh, we, uh, we successfully, uh, developing this species is to become, uh, rare anymore, you
Deanna: yes,
Dr. Kilala Tilaar: not in danger anymore by using in vitro technologies and domestication. So, uh, we have, we have quite happy to not only, you know, to take something from the land, but we also giving back to the nature.
Deanna: Yeah, no, very cool. Thank you for that. Um, and as I, as I mentioned in [00:16:00] the intro, um, your company, um, has some manufacturing facilities and manufacturers as I, if I'm correct, you manufacture not only for your own brands, but also for brands that are owned by other companies. Can you share with us a bit about the manufacturing services you provide for other brands?
Dr. Kilala Tilaar: Yes. Um, we are vertically integrated beauty business. So from, you know, raw raw materials to manufacturing our own brand, but also we have, you know, the OEM ODM company, you know, we have a company called Sedefindo, which established in 1980s as a joint venture with Lancôme Paris, but not since 1990s. 1999 is 100 percent owned by our group and today Cedevindo is one of the largest OEM ODM company in Indonesia.
Dr. Kilala Tilaar: We catered around 650 brands. Including multinationals like, uh, Unilever, PSET Cousins, New Skin, [00:17:00] Disney, and many more, as well as national and indie brands. And we offer, uh, services across all categories in the beauty personal care product portfolio. But in particular, uh, we are, we are very strong in natural decorative makeup, natural skincare, and natural baby products.
Deanna: Very good. Thank you for that. That was helpful. Um, I know that many decades ago, or at least several decades ago, I should say, um, that Martha Tilaar are herself opened a beauty salon. Um, and that today your company has, um, what could be described as a strong business operating salons, spas, and even a beauty academy.
Deanna: Um, Before I ask you about, uh, your company's professional business, I'll just mention, um, in an earlier episode of the Cosmo Factory podcast, it was, um, episode number 26. We heard about L'Oreal's go to market strategy for professional beauty in the Sub Sahara Africa region in particular. And I think [00:18:00] there might be some similarities, um, with how you're approaching the Indonesian market, if anyone listening wants to go hear that episode after they finish this one.
Deanna: But what do you think we should know about your company's professional beauty business?
Dr. Kilala Tilaar: Well, as you mentioned earlier, you know, our, our company is a particularly integrated beauty business and we focus not only developing, you know, beauty products, but also building a comprehensive beauty business ecosystem that's including, you know, supply chain from end to end. Including ingredients, branding, manufacturing, OEM, retail, beauty schools, and spa.
Dr. Kilala Tilaar: And right now, um, we operate 65 spas across Indonesia and Asia. And, uh, yeah, um, and it's, uh, the spa business, uh, we are one of the pioneer of the Indonesian, uh, philosophy of spa. Back then it's only the Swedish spa, but in 19, you know, [00:19:00] in the 80s, in the, in the 90s, right? Uh, uh, our founder, Dr. Mata Tilar, you know, uh, pioneered, you know, local Indonesian, uh, what do you call it?
Dr. Kilala Tilaar: Methods of spa philosophy and now becoming one of the biggest, I think, uh, biggest spa operators in the world with 65 spas.
Deanna: Wow. Yeah, no, that's impressive. Thank you. Um, and, and we've mentioned retail as well. Can you tell us a little bit about the retail side of your business?
Dr. Kilala Tilaar: Yeah, we are 54 years in the, in the, in the, in the, in the industry. And then I think, uh, we've been, uh, building, uh, you know, a strong, uh, distribution, uh, infrastructure for our business. And our brand has been, uh, distributed in 100,000 retail outlets nationwide. And in terms of channel, we have presence in modern trade.
Dr. Kilala Tilaar: General trades and online channels. And, uh, we sell our product in our own retail [00:20:00] stores located in all the shopping malls across Indonesia. And we also distribute our products in, uh, 65 spas in Indonesia and ASEAN.
Deanna: sure. Perfect. Thank you for that overview. Um, and we've skipped over it entirely, but will you remind us, um, of the portfolio of brands, um, at your company? Um, how many are there? What categories are you specialized in?
Dr. Kilala Tilaar: Yeah. Uh, we have. Around 12 brands serving multiple segments from the lower end to the high end. And the categories is pretty much everything, you know, haircare, body care, skincare, makeup, baby products and spa services and spa products.
Deanna: Yeah. Very good. If you were to, um, give us an example of one of your brands that might stand out in the Indonesian marketplace, what should we be looking at?
Dr. Kilala Tilaar: As you look at the Sariayu Marta Tilaar brand, this brand is our bread and butter. Uh, [00:21:00] Sariayu is a beauty brand that has been in the market for more than 45 years, serving the mass market and offering multiple beauty categories. And It was a pioneer, uh, among the first local beauty brands in Indonesia and bringing local wisdom, natural products, and cultural heritage with a scientific approach to its customers.
Dr. Kilala Tilaar: This is a legendary brand that served four generations. You know, the boomers, the X, the Z, the Z, sorry. And then the gen alpha right
Deanna: Yes. No, that's very cool. Thank you for that. Um, and you mentioned, um, exporting the brands as well throughout Asia. Um, but can you share a bit more about that part of your business?
Dr. Kilala Tilaar: Yep. Uh, our brands, one, uh, three of our brands has been exported to mainly ASEAN countries like Brunei, Malaysia, Thailand. land, the Philippines, et cetera. And you might ask [00:22:00] why ASEAN countries? Because, uh, we have similarities, similarities in terms of climates, skin conditions, and customer preferences. So that's why it's more easier to penetrate the ASEAN market first.
Dr. Kilala Tilaar: But in terms of ingredients, we've been exported into, uh, 50 countries, uh, worldwide.
Deanna: No, that makes sense, doesn't it? Once you formulate for a particular market, there is a sensibility, um, but the ingredients have a much wider reach.
Dr. Kilala Tilaar: Right.
Deanna: Yeah.
Dr. Kilala Tilaar: And more cheaper. Because to penetrate the market, you know, you need, you need to invest a lot of, uh, advertising and promotions, but for the ingredient itself, it's only, you know, if your, your ingredients is very good, then it will sell itself.
Deanna: Exactly. Exactly. Well said. Yeah. Um, before we end our conversation, I'd, I'd like to ask about how your, um, company is impacting, influencing, and integrating more broadly with the global beauty economy. Help us think about, um, [00:23:00] the role that this, Expansive, I should say. Horizontally integrated company plays in the industry at large.
Dr. Kilala Tilaar: Wow. Such a very important questions. All right. I'll try to answer it. Yeah. We are active in pursuing the, you know, the realizations of the, you know, sustainable development goals of the United Nations and Mata Tilar Group. Uh, we are also, you know, the founding members of United Nation Global Compact Movement.
Dr. Kilala Tilaar: It's a movement started, you know, among others, is Dr. Marta Tilaar. It's trying to, uh, make the private sectors be involved in the realizations of the, you know, SGDs. So it was, uh, conceived by Kofi Annan and among others is Dr. Marta Tilaar in 2000s. Uh, to, you know, to make, you know, to encourage, you know, private sector to, to do something about, [00:24:00] about, you know, about the poverty, about, uh, sustainability, et cetera, you know, and, um, Yeah, uh, we've been using also sustainable processes and ingredients.
Dr. Kilala Tilaar: We aim to ensure that we contribute, you know, to the, uh, saving our planet through our business supply chain. And we did, we done a lot of initiative, including effort to mitigate the effect of global warming and reduce environment destructions, such as, uh, we undertake an extensive, uh, 100. Thousand acres of reforest, uh, reforestation efforts in the islands of Calment and Sumatra.
Dr. Kilala Tilaar: We've been working a lot, uh, for 20 years with WWF to preserve the Indonesian wildlife and coral, uh, what Coral, uh, what do you call
Deanna: Sure. The coral reefs.
Dr. Kilala Tilaar: [00:25:00] Yeah. Coral reef, uh, reconstructions. So, and together with government, we've been able to save, uh, you know, several nearly extinct plants and help them to thrive. And, uh, we are committed to empowerment, focusing for both women empowerment and also farmer empowerment.
Deanna: Excellent. No, I appreciate hearing that. Thank you. I know. Yes. Maybe hard to summarize how a company like yours is, is, um, you know, doing such important global work, but, but so many of the multinationals are, are making an effort. I appreciate your putting that together in a summary for us. Um, but I have to for a very interesting interview today.
Deanna: I'm so glad you could join me here on the Cosmo Factory podcast. Thank you.
Dr. Kilala Tilaar: Thank you so much for having me.
Deanna: You're welcome.
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