Just after the Berlin Wall came down in 1989, a Fiat with Polish license plates drove up to a natural skincare company in Homburg, southwestern Germany. The driver wanted to buy Swedish bitters, a home remedy for digestive problems.
He had 2,000 German marks in cash, about €1,000 or $1,096 in today’s money, and wanted as many bottles as he could buy, recalled Peter Theiss. A few weeks later, the man returned, this time with 5,000 marks in his wallet and a trailer attached to his car.
“In 1989, I wanted to go straight into the new markets myself, as I saw opportunities there,” said the 70-year-old Mr. Theiss, who founded Dr. Theiss Naturwaren in 1978. “I travelled a great deal through Hungary, Slovakia and the Czech Republic.”
The businessman who wanted the Swedish bitters all those years ago is still his partner in Poland, where Theiss’s natural products generate €50 million in revenues.
Today the company makes a range of natural cures and cosmetics, including shower gel, eye and skin creams and special products for dermatitis. The bestsellers are anti-inflammatory remedies made from mountain pine oils, Lacalut medical toothpaste and Medipharma olive oil-based cosmetics.
Producers who expand their distribution channels to include discounter drugstores run the risk of a pharmacy boycott.
Dr. Theiss Naturwaren now generates annual revenues of more than €200 million with 1,500 employees. Two-thirds of those revenues come from Eastern Europe, mainly Russia, Poland and the Czech Republic.
Everything is produced, marketed and distributed out of Homburg in the state of Saarland, southwestern Germany.
The cornerstone of Mr. Theiss’ sales strategy is selling exclusively to pharmacies. In Germany, there is a distinction between pharmacies, where a professional pharmacist is on hand to advise customers, and general drugstores, where shoppers simply select their products and take them to the checkout counter.
One big advantage of only selling through pharmacies is that the inclusive consultation justifies charging higher prices for the products. There are of course exceptions, such as the Swiss company Weleda, that sells in pharmacies and discount stores at the same price.
That is not an option for Mr. Theiss. He fears the power of the more than 20,000 pharmacists in Germany. They decide what goes in the shop window and what lands in a dark corner of the store. And they can manipulate consumers. Producers who expand their distribution channels to include discounter drugstores run the risk of a pharmacy boycott, according to Mr. Theiss.
The entrepreneur prefers to pursue expansion abroad instead. The company has a presence on six continents. There are also online shops on Amazon, for example.
For now, the founder is confident about the health of the company and said the business doesn’t have any real problems, except for one – the age of his target group. “It really could be younger,” he said.
His customers are mostly women in their 50s and 60s, often with skin problems. Younger consumers tend to go for other manufacturers.
Mr. Theiss is investing a lot of money in TV advertising to try to tap a younger demographic – since 2014 the TV ads have featured Jana Ina Zarrella, a Brazilian model and TV show host who is popular with the younger generation.
The co-chief executive is comparatively young, too. Giuseppe Nardi, 48, a Saarland-Italian, is responsible for marketing, sales and day-to-day business. “I employed him as a 17-year-old and realized then that he had great potential,” said Mr. Theiss.
The entrepreneur has long since transferred shares of the company to Mr. Nardi, the man from outside, which is rare.
Mr. Theiss, who even as a child used to mix herbs in his father’s pharmacy, has had many opportunities to sell his company. But up to now, he has steadfastly rebuffed all advances.
In the 1980s, Wella, one of the world’s largest hair-care and cosmetics companies, took over shares in the family company. But the partnership did not work well, said Mr. Theiss. After an “instructive few years,” as he calls them, he bought back the shares.
And nowadays he does not need it: The equity share of his company is currently 68 percent, according to Mr. Theiss.
“With a clear concept and strategy, a comparatively small company has good market opportunities,” said Marlies Spiegel, an expert at IMS Health, a technology and healthcare consulting company.