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L'Oreal is the global #1 in cosmetics with a portfolio that contains many of the world's biggest hair and beauty products, including such brands as Garnier, Maybelline and Lancome. It also markets fragrances and cosmetics under license for other companies such as Giorgio Armani and Ralph Lauren. More than 80% of group sales are generated outside France, with operations in every major territory. Since the 1980s the group has made North America a particular focus of attention, wrong-footing domestic rivals with dynamic marketing and a series of smart launches and clever acquisitions. Among the most recent of these were the purchase of ethical beauty products retailer Body Shop in 2006 and the YSL Beauté portfolio in 2008. See also
Who handles L'Oreal's advertising? Most advertising is split between the McCann and Publicis networks, although TBWA also has a share of the business. Global media is split between ZenithOptimedia and UM, although the group also manages some media activities inhouse. In 2012, WPP's Group M joined the roster for the first time in Germany, with the launch of a dedicated Team L'Oreal buying unit which also added China.
Ad Age estimated global measured advertising expenditure of $5.64bn in 2012. Including unmeasured media, L'Oreal declared advertising and promotional expenditure of E6.89bn (almost $9.2bn) in 2013. In France, Kantar (in Strategies) estimated advertising expenditure of at least E546m in 2013. Biggest spending divisions were LaScad (E199m), L'Oreal Paris (E178m), Gemey Maybelline Garnier (E114m) and Lancome (E55m). In Germany, Nielsen reported measured spend of E346m in 2011.
See Personal Care index for other companies.
L'Oreal Paris is supported by lower-priced (or "accessible" as the company describes it) Garnier, targeted at a slightly younger market. Particularly well-established in Europe, worldwide sales are around E2bn. Like the L'Oreal brand, it operates across multiple sectors including haircare, skincare and deodorants. It has its own portfolio of sub brands including hair colourants Nutrisse, Belle Color and Movida. The group has steadily rolled out Garnier Fructis shampoo worldwide since introducing the product in France in the late 1990s. Fructis served as the platform for the launch of the Garnier haircare brand in the US in 2003, and it has experienced considerable success there. Garnier has long been the umbrella for a wide variety of skincare products, originally as the umbrella for leading global suncare brand Ambre Solaire. It entered a more specialised area with the introduction of the Synergie sub-brand in the early 1990s, and the portfolio now comprises a number of facial moisturisers, cleansers and anti-wrinkle products under the Skin Naturals banner. The company strengthened its suncare portfolio in 2005 with the acquisition of Spanish brand Delial, and the group also owns Canadian brand Ombrelle. Like L'Oreal Paris's "Because you're worth it" slogan, Garnier has developed its own overall brand message: "Take Care". A key growth market in recent years has been China. The group acquired that country's #2 mass-market skincare brand Mininurse at the end of 2003, followed a year later by leading cosmetics brand Yue-Sai from Coty. In 2013, in a deal worth around $840m, it agreed to acquire Magic Holdings, a company which produces cosmetic facial masks under the MG brand. In France, the Garnier portfolio includes a range of deodorant products including Obao and Neutralia, and L'Oreal also owns markets a range of less expensive mass-market products, managed through a separate subsidiary, LaScad. These include Narta deodorant, shampoos Dop and P'tit Dop, H Pour Homme, Jacques Dessange, Ushuaia and Mixa. In 2012 it acquired the Cadum skincare range, best-known for baby products.
The US serves as the HQ for three other consumer brand portfolios. Maybelline New York is the world's #1 make-up brand, housing a collection of regional sub-brands such as Jade (in Germany), Miss Ylang (in Argentina), Gemey (in France) and Colorama (in Brazil). Soft Sheen-Carson is the world #1 manufacturer of ethnic cosmetics and hair products. Operating primarily in the US, it has a 30% share of the North American ethnic market. Dark & Lovely is its subsidiary brand in South Africa. The latest addition to the consumer portfolio is the nail cosmetics range Essie, acquired in 2011. The Consumer division is rounded out by mail order operation, Le Club des Createurs De Beaute, previously a joint venture with 3 Suisses, now wholly owned by L'Oreal. It markets mail order-only cosmetics by under license from designers such as Agnes B and Michel Klein.
Luxury Products (or L'Oreal Luxe), consists of a variety of prestige cosmetics and perfume brands, mostly marketed through department stores and other upscale retail outlets, as well as duty free outlets. It has been one of the group's strongest businesses in recent years, despite the challenging economy. For 2013, revenues rose by over 5% (or almost 7% excluding currency fluctuation) to E5.87bn. The key brand here is Lancome, the world's best-selling luxury cosmetics brand, with a portfolio of skincare, make-up and perfume products. Key sub-brands include Visionnaire and Genefique anti-aging products, Hypnose fragrance and make-up, and Tresor fragrance. Brand ambassadors include actresses Kate Winslet, Julia Roberts and Emma Watson. Lancome is supported by entry-level luxury skincare and make-up brand Biotherm. More traditional Helena Rubinstein has been phased out in many Western markets, but remains very popular in China.
The fragrances arm has licenses to market perfumes under several major designer brands. The biggest collection in the division is Giorgio Armani. Sub-brand Acqua di Gio claims to be the world's best-selling male fragrance, while other strong performers include latest launch sister brand Acqua di Gioia, Emporio Diamonds, Armani Code and Armani Mania. The Armani brand has also been extended successfully into cosmetics and skincare products. The Armani range is partnered by the Ralph Lauren Polo collection (including Polo, Polo Explorer, Ralph, Polo Blue and Polo Black - together they were worth a combined total of $441m at wholesale in 2006 according to Ralph Lauren), Cacharel (including Promesse, Anais Anais, Noa and Amor Amor), Guy Laroche (including Drakkar Noir) and Paloma Picasso (including Mon Parfum). Kiehl's is a premium-price US skin and bodycare business. In 2001 the group formed a strategic alliance to market the Shu Uemura cosmetics range outside Japan, and subsequently acquired a majority stake in the Japanese company in 2003. The group introduced the first Viktor & Rolf fragrance, Flowerbomb, in 2005 and took over the fragrance license for upscale denim label Diesel in 2007. Its biggest success to-date has been the Only The Brave fragrance.
In 2008, L'Oreal sealed an agreement with Gucci Group, a subsidiary of luxury and retail group PPR, to acquire its YSL Beauté fragrance and cosmetics division for E1.15bn. That portfolio includes a number of fragrances and cosmetic products under Gucci-controlled brands such as Yves St Laurent and Boucheron. (The Gucci perfume range, however, is still run under license by Procter & Gamble, and the Stella McCartney and Alexander McQueen licenses also moved to P&G in summer 2013.) The portfolio of Yves St Laurent fragrance and cosmetics brands, including as Opium, Paris, Rive Gauche and Kouros, is by far the biggest product line. Unlike most other fashion houses, whose beauty products are produced under license by other companies, YSL Beauté is a self-contained unit with its own laboratories and distribution network.
In 2012, L'Oreal agreed to acquire high-end make-up line Urban Decay for an undisclosed sum. The brand reported sales of $130m in 2011. Launched in 1996 by Cisco Systems co-founder Sandy Lerner, the brand has passed through the hands of several owners since then. It was acquired by LVMH in 2000, but sold on two years later to duty free and fashion company Falic Group. They in turn divested the business to private equity owners in 2009.
The group's Professional Products division is the world's #1 marketer of professional haircare products, sold to or through a network of around 500,000 salons worldwide. It also operates 115 L'Oreal Professional academies, making it the worldwide #1 in hairdressing training. Divisional sales slipped by 1% on a reported basis in 2013 to E2.97bn. (Like for like sales excluding currency fluctuation were up slightly). The range encompasses a huge variety of shampoo and conditioning products, colorants and styling preparations, as well as an increasing number of salon skincare products. These are sold under four main brands: Matrix is positioned as the lead brand in emerging markets, while Redken is promoted as an archetypal "New York" brand. L'Oreal Professional is an international premium, priced just below luxury range Kerastase. There are a number of sub-brands and more specialised products. The group acquired US hair care and styling brand Artec in 2002, repositioned as L'Oreal Professional sub-brand Tecni-art, and also controls premium ethnic brand Mizani. Based in the US, it was introduced into the UK with some success during 2005. In 2007, the group acquired high-end US professional brand Pureology, as well as two distributors of professional products to hair salons, Maly's West and Beauty Alliance. A series of similar purchases have followed, including CB Sullivan and Peel's. These are all now consolidated as the SalonCentric distribution network. In 2014, L'Oreal agreed to acquire the Carita beauty salon in Paris and its cosmetics brand, as well as Decleor salon-distributed cosmetics from Shiseido of Japan for a total of E227.5m, or more than twice their combined annual revenues of around E100m.
The Active Cosmetics division deals with specialist cosmetic and dermatological brands, often for customers with more difficult or sensitive "borderline" skin. They are marketed mainly through pharmacies or similar specialist outlets. The main brands are Vichy and La Roche-Posay. In 2001 this division acquired BioMedic, a US business which manufactures specialist cosmetics for plastic surgery use. In 2005, it acquired US-based professional skincare range Skinceuticals, followed by Sanoflore of France in 2006. It is also the umbrella for Parisian herbal perfumier Roger & Gallet. This business too has performed strongly in recent years, with revenues rising almost 5% (or almost 8% like for like) in 2013 to E1.60bn.
In March 2006, L'Oreal agreed a Ł652m deal to acquire UK-based beauty products retailer The Body Shop. That deal was greeted with surprise by many industry observers, because of the outspoken criticism voiced in the past by Body Shop's high profile founder Anita Roddick of animal testing and other methods employed by L'Oreal and other cosmetic companies. However the French group's new CEO Jean-Paul Agon had already expressed his determination to enhance L'Oreal's range of natural products, and to cease animal testing altogether. The group has also pledged to maintain Body Shop's stance as a retailer of ethical beauty products. The chain has more than 2,750 owned or franchised outlets in 66 countries. In 2013, it acquired control of Brazilian chain Emporio Body Store. It currently positions its products under the banner "Nature's way to beautiful". Anita Roddick remained a consultant to the business until her untimely death in 2007. Body Shop remains a standalone business within the group, contributing revenues of E836m in 2013.
Laboratoires Inneov is a joint venture between L'Oreal and Nestlé, which develops nutritional supplements designed to to improve the quality of skin, hair and nails. The first product, skin redensifier Inneov Firmness, launched in Europe in 2003. L'Oreal and Nestlé were also until recently partners in Galderma, which develops specialist prescription dermatological products for medical skin conditions. Its main products include acne cream Differin, Rozex/Metro for rosacea and therapeutic moisturiser Cetaphil. Total sales in 2013 were E1.65bn, of which L'Oreal consolidates a 50% share in its own revenues. However, in early 2014, L'Oreal announced plans to sell its 50% holding in Galderma to Nestle. Finally, L'Oreal still holds an investment stake in French pharmaceutical giant Sanofi. It reduced this from over 10% to just under 9% in 2007. Those shares were worth E6.7bn at the end of 2011.
Overall performance was held back in 2008 and 2009 by the economic downturn and the negative impact of currency fluctuation. Revenues dipped from just over to just under E17.5bn for 2009 and net profits also fell, down by 8% to E1.8bn. However, 2010 delivered a strong rebound. Revenues rose by almost 12% to E19.5bn, helped along by positive currency exchange which accounted for almost half of the increase, while net profits jumped 25% to E2.24bn. The increase for 2011 was more modest, although revenues topped E20bn level for the first time, up 4% (or 5% on a like-for-like basis) to E20.3bn. Net profit rose 8% to E2.4bn.
Revenues for 2012 grew by over 10% to E22.46bn, helped along by currency fluctuations, while net profit jumped almost 18% to E2.87bn. Western Europe contributed a total of E8.16bn, of which E2.53bn came from France. North America added another E5.8bn. However the best growth comes from new markets in Africa & the Middle East, Latin America and Asia. Sales in China broke the E1bn level for the first time in 2010, making it the group's #3 market behind the US and France. In 2012, excluding the contributions from the Body Shop and the dermatology division, the group derived revenues of E6.05bn from skincare, E4.47bn from make-up, E4.06bn from general haircare, E2.76bn from hair colourants and E1.84bn from fragrances.
Challenging economic conditions weighed on performance in 2013, with revenues rising by just 2% to E22.98bn (or by 5% on a like for like basis) because of weak performance in Western Europe, still L'Oreal's biggest region. Revenues there edged up just 1% to E7.48bn, while North America added E5.37bn. Even new markets were lacklustre, contributing growth of just 3%.
British-born Sir Lindsay Owen-Jones, architect of the group's expansion since the late 1980s, passed over the role of president & group CEO to Jean-Paul Agon at the end of 2006. He stepped down as chairman as well in March 2011, at which point Agon became group chairman & CEO. Owen-Jones remains a director, and has the title of honorary chairman.
Agon announced a complete overhaul of L'Oreal's management team from July 2013, reshuffling several roles and divisions. As a result, other members of the executive committee include Christian Mulliez (EVP, administration & finance), Laurent Attal (EVP, research & innovation), Jean-Philippe Blanpain (EVP, operations), Marc Menesguen (president, consumer products), Nicolas Hieronimus (president, selective divisions including luxury products, professional, active cosmetics & Body Shop), An Verhulst-Santos (president, professional products), Brigitte Liberman (president, active cosmetics), Frederic Rozé (EVP, Americas), Alexandre Popoff (EVP, Eastern Europe), Jochen Zaumseil (EVP, Western Europe), Alexis Perakis-Valat (EVP, Asia Pacific), Geoff Skingsley (EVP, Middle East & Africa) and Sara Ravella (EVP, corporate communications & public affairs).
Cyril Chapuy is global president of the L'Oreal Paris brand. Jeremy Schwartz succeeded Sophie Gasperment as global president of The Body Shop in 2013. Alexandre Choueiri is general manager of international designer fragrance collections, with Guillaume de Lesquen as president, Ralph Lauren Fragrances and Veronique Gautier as general manager, Giorgio Armani Fragrances. Other managers include Francoise Lehmann (general manager, Lancome International), Barbara Lavernos (managing director, luxury travel retail), Stephan Bezy (international general manager, Yves Saint Laurent) and Samantha Daude (director of new media & CRM worldwide).
Former US marketing chief Marc Speichert was appointed as global chief marketing officer in November 2013, but resigned from that role six months later to join Google. Some of his duties were assumed by Marie Gulin, VP, global integrated marketing & communications. Marketers at L'Oreal in France include Karen Jones (VP, global marketing, Garnier suncare, bodycare, deodorants), Antonia Georgiadi (marketing director, YSL Europe), Charles Roullet (marketing director, consumer products, travel retail), Myriam Benichou (global purchasing director, marketing services), Milan Mladjenovic (global marketing director, Garnier Fructis), Candice Llorens (global marketing director, L'Oreal Paris), Caroline Lamprecht (marketing director, Gemey Maybelline France), Carine Delliere (marketing director, Garnier France), Ludovica Lemaitre (marketing director, luxury designer fragrances, Europe), Severine Breton (director, global marketing, L'Oreal Paris), Laura Levy (marketing director, YSL Europe), Isabella Weinstabel (international marketing director, YSL Beaute) and Marie-Caroline Darbon (international marketing director, Lancome).
On paper at least, the controlling shareholder in L'Oreal is Liliane Bettencourt, the daughter of founder Eugene Schueller, and the world's wealthiest woman with a fortune estimated at around $24bn. By mid-2014, she and her family will control just over 33% of L'Oreal's shares. Bettencourt, who turned 90 in 2012, was until recently a long-standing director of the company. Her daughter Francoise Bettencourt-Meyers also sits on L'Oreal's board, and Francoise's husband Jean-Pierre Meyers is group vice chairman. (The family also maintain a charitable foundation, Fondation Bettencourt Schueller). However, mother and daughter became embroiled in a prolonged legal battle between 2007 and 2011, initially over the friendship between the elderly matriarch and a society photographer, who was accused by Bettencourt-Meyers of being a gold-digger. Bettencourt responded with a law suit against her daughter for mental harassment. That row appeared to have been resolved by the end of 2010, but a new dispute arose in 2011 when Bettencourt-Meyers launched a new campaign accusing her mother's entourage of lawyers of exploiting her age and health. In October 2011, a French court accepted a medical report which found evidence of dementia in Bettencourt, and upheld her daughter's request that she placed under the guardianship of her 25 year-old grandson Jean-Victor Meyers. In Feb 2012, Liliane Bettencourt resigned as a director of L'Oreal and was replaced by Jean-Victor Meyers.
Nestlé has a large minority shareholding in L'Oreal, but reduced this from 29% to 23% in 2014. Its chairman Peter Braebeck-Letmathe is also a director. Nestlé has pledged to remain a passive investor during Liliane Bettencourt's lifetime, but has first rights to make a bid for the whole group if she chooses to sell, or when she dies.
L'Oreal's business was originally based on hair colourants. In 1907, French chemist Eugene Schueller developed one of the first stable hair-dyes made from safe synthetic ingredients. He set up a company to manufacture and market the product, which he named L'Aureole (French for halo), to hair salons. At the time he gave the business the cumbersome name of the Societe Francaise de Teintures Inoffensives Pour Cheveux ("The French Safe Hair Tint Company"). Within a few years, Schueller had begun to export his dyes to neighbouring Holland, Austria and Italy, then further afield. The L'Aureole name was replaced by L'Oreal because it was easier for non-French-speaking countries to pronounce. German subsidiary Haarkosmetik und Parfuemerien was formed in 1930; UK arm Golden Ltd was formed in 1932 by family friend HS Laurenson (see L'Oreal UK). The name L'Oreal gradually developed to guard against mispronunciation of the main L'Aureole product in non-French markets.
To support the business's growth, Schueller acquired soap manufacturer Monsavon and began developing additional products, including Dop, the first ready-to-use shampoo made without soap. Launched in 1934, it is still one of France's best known domestic brands, and was followed by Ambre Solaire sun-oils, launched in 1936. He was also quick to adopt advertising as a way of developing awareness of the company's brands. L'Oreal had been one of the first businesses to advertise on French radio in the 1920s, then became a major poster contractor in the 1930s. In one early promotional stunt, the company covered the front of an office with a giant sheet advertising its O'Cap hair lotion. In 1933, Schueller backed the launch of women's magazine launched the magazine Votre Beauté, and moved into cinema ads in the late 1940s and 1950s, and subsequently television.
The variety of new products continued. Oreol, for example, introduced after the end of World War II, was the first cold-wave perm and widely regarded as a revolution in hairdressing. With America already a big market for L'Oreal's products by the beginning of the 1950s, Schueller formed a separate company, Cosmair, to distribute his haircare products there from 1953 onwards. During the 1950s, Schueller transferred his shareholdings in both L'Oreal and Cosmair to family holding company Gesparal. Upon his death in 1957, deputy Francois Dalle took over management of the business. He persuaded Schueller's only daughter Liliane to float a large part of the company's stock in 1963 and used the additional resources to fund a series of acquisitions including Lancome in 1964, Laboratoires Garnier a year later, and Biotherm in 1970. Key brands launched during this period included Elnett hairspray in 1957, the first home-dye kit Recital in 1966 and Elseve shampoos in 1972. The group developed its research laboratories with the acquisition of a controlling stake in Synthelabo pharmaceuticals in 1973.
Concerned about the growing nationalism of French politicians and their tendency to interfere in the affairs of the country's leading businesses, Dalle also persuaded Bettencourt of the need to broaden ownership of the group outside France, and negotiated a groundbreaking deal to sell a 49% stake in Gesparal to Swiss group Nestle. In 1977, L'Oreal backed the launch of publishing company Marie Claire Album. Press baron Jean Prouvost had sold his substantial publishing empire to Hachette in 1976. A year later his three daughters bought Marie Claire magazine back from Hachette, with financial backing from L'Oreal, who took a 49% stake in the business. The business went on to achieve great success under the management of eldest sister Evelyne Prouvost-Berry.
The booming 1980s saw L'Oreal greatly increase its profile, particularly in the US, with the acquisition of the Ralph Lauren and Gloria Vanderbilt cosmetics and fragrances licenses in 1984, Helena Rubinstein cosmetics (1988) and a half-share in Lanvin (1989) fashion and luxury goods. Lindsay Owen-Jones, known as "OJ" within the company, took charge of the group that year. His first task was to defend the company against a string of unpleasant allegations from a former employee who claimed to have uncovered anti-Jewish activity by Eugene Schueller and other figures close to the ownership of the company. Schueller was shown to have collaborated with Nazi groups before and during the occupation of France in WWII, while Liliane Schueller's husband Andre Bettencourt, a leading French politician as well as a director of L'Oreal, had written anti-Semitic articles for pro-Nazi periodicals. Owen-Jones fought a strong campaign to clear the company's reputation, investing in Israeli businesses and settling accusations of compliance with Arab boycotts. Meanwhile Bettencourt apologised for what he said were youthful indiscretions and promptly resigned from the group, passing his seat on the board to his Jewish son-in-law, Jean-Pierre Meyers, whose parents had died in Nazi camps during the war.
Owen-Jones went on to apply his attention to the US, a market in which L'Oreal was at that point little more than a margin player. A key development was the purchase in 1996 of cosmetics brand Maybelline. L'Oreal quickly rejuvenated the ailing brand, re-establishing it as the country's best-selling mass-market make-up. A year later, L'Oreal strengthened its position further in North America with the purchase of Canada's Ombrelle suncream business. In 1998, it acquired America's #1 ethnic haircare business Soft Sheen Products and expanded its US operations by reintroducing the Helena Rubinstein cosmetics brand, which had been unavailable in the US since 1983. The group bolstered its portfolio in 2000 with the acquisition of ethnic cosmetics business Carson, luxury brand Kiehl's, and professional haircare range Matrix Essentials (from Bristol Myers-Squibb). It also acquired Argentinean mass-market cosmetics brand Miss Ylang. As a result of aggressive marketing, the group's hair colouring business overtook US market leader Clairol in 2000. Meanwhile, back in Europe, at the end of 1998, the group merged its pharmaceutical subsidiary Synthelabo with Elf Aquitaine's Sanofi to form Sanofi-Synthelabo, Europe's 6th biggest pharmaceutical group, and France's #2. In 1999, the company announced the European launch of shampoo L'Oreal Kids, backed by a substantial marketing spend. (The children's shampoo had been available in the US since 1997).
Late in 2000, L'Oreal was drawn into a family squabble between the Prouvost sisters who controlled Groupe Marie Claire. Each sister had held a 17% stake in the business since 1977. One of the three, Donatienne de Montmort, attempted to sell her stake back to Hachette. The deal was blocked by the other sisters and L'Oreal, who exercised a pre-emption right. This increased L'Oreal's stake to just over 57%. As part of a refocusing of the group portfolio this stake was sold back to Marie Claire chairman Evelyne Prouvost in 2001 for $296m. The group also agreed to sell off Lanvin to the investment consortium Harmoinie.
In late 2000 the group acquired a 35% stake in Japanese cosmetics company Shu Uemura and international rights to the company's skincare and other brands. It also acquired Scandinavian shampoo Respons from Colgate-Palmolive, as well as Brazilian cosmetics brand Colorama (from Revlon, for $72m) and specialist US dermatology range BioMedic (for $28m).
The group's shareholder structured was revised in 2004. Nestle swapped its 49% stake in holding company Gesparal for what was then a 27% direct equity position in L'Oreal. The Bettencourt family swapped their 51% for a 28% direct shareholding, and Gesparal was dissolved.
Last full revision 13th September 2013; updated 14th February 2014
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