FRANCE. Chief executive Lindsay Owen-Jones commented on L’Oréal’s outstanding results for last year, which saw double-digit earnings growth for the 18th consecutive year combined with success of new products and in emerging market subsidiaries.
Faced with uncertainties in 2003, Owen-Jones said there are distinctive features of the cosmetics market which make its prospects resilient. He presented specific examples to illustrate L’Oréal’s strategy and innovations.
“We are fortunate to be operating in a steadily growing market,” he said, elaborating on three specific trends.
The perfumery market maintained its steady growth of +4.8% per year over the past decade coming out at +4.6% in 2002. Secondly, the rate of growth in developing countries was twice the rate of developed countries; and the rate of growth in developed countries, with the exception of Japan, stayed close to the average rate.
L’Oréal perceives that this positive phenomenon relies on one major factor: more and more women in all age categories use cosmetics products. For example, when L’Oréal launched Plénitude 20 years ago, 50% of women used a face cream. Today the proportion is two thirds and it could reach 80% by 2015. Other factors include the development of the men’s market as well as the general aspiration for quality. “Based on the information available to us,” Owen-Jones said, “steady market growth in the future seems to be possible – and should last for a long time.”
L’Oréal continues to place organic growth as a priority. Investment in research and in quality control, concentration on a limited number of business sectors and brands, and international development has systematically favoured specific consumer segments characterised by a higher growth rate than average. These segments can also be geographic.
Owen-Jones said the group’s substantial investments in emerging countries are now bearing fruit. Their contribution to L’Oréal global sales grew from 6.8% to 16.7% over the past decade. Other specific growth segments include product categories. In the US for example, the overall market increased by +15.5% over the past four years, while make up and professional hair care products sales grew by +29.7% and +26.2% respectively.
“It should not come as a surprise that L’Oréal is well positioned on the fastest growing segments of the cosmetics markets,” Owen-Jones added. “We are constantly on the look-out for new consumer segments that could further speed up our growth over the coming years.” Examples here are the promising markets of “beauty pills” or cosmetic dietary supplements.
“Over a long period, we have gradually selected, clarified and consolidated our brand portfolio. Not all the brands have been introduced in all countries, but all of them could be introduced without changing their positioning or distribution channel,” said Owen-Jones, emphasising the group’s ambitious long-term targets.
