Top Companies Report

2. L’Oréal

August 11, 2011


The Body Shop rolled out Rainforest hair care this year.

France

www.loreal.com


Sales: $25.8 billion


Key Personnel:

Jean-Paul Agon, chairman and chief executive officer; Laurent Attal, executive vice president, research and innovation; Jean-Philippe Blanpain, managing director, operations; Nicolas Hieronimus, managing director, luxury products; Jean-Jacques Lebel, president, L’Oréal consumer products division, worldwide; Brigitte Liberman, worldwide president, L’Oréal active cosmetics division; Marc Menesguen, managing director, strategic marketing department; Christian Mulliez, executive vice president, administration and finance; Alexander Popoff, managing director, Latin America zone and Africa, Middle East zone; Sara Ravella, general manager, corporate communications and external affairs; Frederic Rozé, managing director, North America zone; Geoff Skingsley, executive vice president, human resources; An Verhulst-Santos, general manager, L’Oréal professional products division.


Major Products:

Hair care, skin care, sun care, color cosmetics, toiletries and fragrances sold under many brand names in different channels. Consumer—Garnier, L’Oréal Paris, Le Club des Créateurs, Maybelline, SoftSheen-Carson. Professional—L’Oréal Professional, Kerastase, Redken, Matrix, Mizano, Shu Uemura Art of Hair, Keraskin Esthetics. Luxury—Lancôme, Biotherm, Helena Rubenstein, Kiehl’s, Shu Uemura, Giorgio Armani, Ralph Lauren, Cacharel, Viktor & Rolf, Diesel, YSL Beauté. Active Cosmetics—Vichy, LaRoche-Posay, Innerve, SkinCeuticals, Sanoflore. Personal care—The Body Shop.


New Products:

Maybelline New York The Falsies mascara, L’Oréal Paris Matte Morphose and Youth Code, Garnier Pure Active Exfo-Brusher, L’Oréal Paris Volume Million Lashes; Professional—Matrix Socolor Dream Age, Kérastase Elixir Ultime, Redken Style Connection, L’Oréal Professionnel Fiberceutic; Luxury—Lancôme Hypnôse Precious Cells, Trésor in Love and Teint Miracle, Yves Saint Laurent Rouge Pur Couture and Belle D’Opium, Ralph Lauren Big Pony; Active—Vichy Normaderm Tri-Activ, La Roche-Posay Anthélios with Mexoplex, Innéov Hair Health DS, Skinceuticals Pigment Regulator and Sanoflore Nourishing Regenerating Honey Range; The Body Shop—Rainforest, Natrulift and Dreams Unlimited.


Comments:

After a tumultuous couple of years, 2010 marked L’Oréal’s return to growth as consumers returned to cosmetics counters, beauty aisles and fragrance tables around the world. By division, consumer products accounted for 52.5% of sales, followed by luxury products (24.9%), professional products (15.0%) and active cosmetics (7.6%).


Consumer product sales rose 5.5% to more than $12.6 billion. The company credits the gain to the introduction of Youth Code, which marks a new era in mass market skin care, according to L’Oréal, and the successful debuts of Elséve in India, China and Southeast Asia. Professional products’ sales rose more than 4% to nearly $3.6 billion on the success of Matrix products in emerging markets and the continued expansion of Inoa hair colorants. Luxury product sales rose 7% to nearly $6 billion as Lancôme skin care posted double-digit gains and sales in Asia soared nearly 20%. Sales of active cosmetics rose 4.7% to more than $1.8 billion as Vichy posted an 18.4% gain in Latin America. Finally, The Body Shop posted sales in excess of $1 billion and received a boost from a 31% gain in e-commerce sales.


By business segment, skin care accounted for 27.2% of sales, followed by hair care (22.1%), makeup (21.2%), hair colorants (15.0%), perfumes (10.0%) and other (4.5%).


By region, Western Europe accounted for 39.6% of sales, followed by New Markets (36.8%, of which 47.9% came from Asia Pacific, 20.9% Eastern Europe, 22.8% Latin America and 8.4% Africa, Middle East) and North America, 23.6%. But like other companies, L’Oréal’s focus these days is on the developing world.


Earlier this year, chairman Jean-Paul Agon made it clear that L’Oréal’s future is solidly entrenched in emerging markets such as China, India and Brazil. According to L’Oréal’s estimates, by 2020, consumers in emerging markets will reach 2.7 billion with total spending power that is equivalent to current levels in the US. In contrast, L’Oréal’s 2010 sales were achieved with less than 15% of the planet’s global population. Therefore, in addition to the BRIMC (Brazil, Russia, India, Mexico and China) countries, the company has targeted 15 growth markets for its products: Poland, Ukraine, Argentina, Colombia, Indonesia, Thailand, Vietnam, Philippines, Turkey, Egypt, Saudi Arabia, Pakistan, Kazakhstan, South Africa and Nigeria. These new consumers are often urban and live in the megalopolises of the southern part of the world, such as Shanghai, New Delhi and Rio. Sales in emerging markets rose 11.3% last year. Taking a closer look at this dynamic segment, sales in Asia Pacific rose more than 11% to $4.2 billion as the company gained share in India, the Philippines, Indonesia, South Korea and Taiwan. Sales in Eastern Europe rose more than 8% on gains in Russia and Ukraine, where consumer demand for makeup, Garnier and all products within the luxury division were strong. Sales in Latin America jumped 17.5% to more than $2 billion as Brazil and Argentina posted good growth and Mexico posted gains as well. Finally, sales in Africa and the Middle East rose 4.1% to $741 million, helped along by gains in Lebanon and Morocco.


Last year, L’Oréal USA acquired Peel’s, C.B. Sullivan, Maly’s Midwest and Marshall salon services to expand its position in the US hair salon market.


For the first half of 2011, sales rose 5% to $13.3 billion. Professional product sales rose 4.2% to nearly $1.9 billion; consumer products sales rose 4.5% to $6.6 billion; luxury product sales were up 6.9% to about $2.9 billion; active cosmetics sales rose 4.9% to $1 billion; The Body Shop sales rose less than 1% to $446 million and sales of dermatology products jumped 13.6% to more than $400 million.

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