L'Oreal

1. Company Overview

The L’Oreal company we know today was created by the young French chemist, Eugene Schueller, who set up the company in 1907, when he created the first hair dyes and sold them to French hairdressers. This move would lead to a focus on research and investment to enhance the beauty of consumers and towards the name L’Oreal.

L'Oréal is the second leading beauty and personal care manufacturer in the world , following Procter & Gamble at number one. Excluding shaving, L'Oréal’s market ranking rises to number one globally. The company has a comparatively narrow focus, exclusively in beauty and personal care, as opposed to some of its key rivals Procter & Gamble and Unilever which are present in home care and beauty and personal care.

L'Oréal’s exclusive focus has enabled it to make more targeted investment in R&D and advertising, growing to be a formidable force in the industry. In colour cosmetics, L'Oréal is the leading provider at over 19%, with Estée Lauder a distant second at 8% market share. It has also made strong strides in skin care through a number of launches based on cutting edge technology.

Despite its good market coverage, the company’s market share dropped marginally. L'Oréal has been affected by lower hair care sales in Western Europe. In addition, market growth was partly driven by commodities such as oral care and bath and shower in which L'Oréal has limited presence.

L'Oreal Market Summary (April, 2012)

Forbes L'Oreal's Market Share, Numbers, and Information:

-Industry: Household/Personal Care;

-Founded: 1907;

-Country: France;

-CEO: Jean-Paul Agon;

-Website: www.loreal.com;

-Employees: 68,886; and

-Sales: $26.35 Billion.

L'Oreal Market Summary (April, 2012)

Forbes Lists L'Oreal as:

-#25 World's Most Powerful Brands;

-#34 Innovative Companies (#26 in 2011);

-#209 Global 2000;

-#341 in Sales;

-#185 in Profit;

-#670 in Assets; and

-#92 in Market val

L'Oréal’s key portfolios are skin care, hair care and colour cosmetics, with a combined contribution of 80% to its retail sales in 2011. While skin care, colour cosmetics and hair care contributed 50% to total industry absolute value growth in 2011, for L'Oréal these categories made an 80% contribution to the company’s absolute value growth. The remaining 50% of the industry’s absolute growth derived mainly from categories such as oral care, bath and shower and deodorants, witnessing increasing premiumisation. Launches in oral care claimed more professional cleaning features, while bath and shower tapped into spa technology taking advantage of reduced spa visits in the face of the economic recession. Deodorants have benefited from technological advancement.

Net sales break down geographically as follows: France (11.3%), Western Europe (25%), North America (25.7%) and other (38%).

L’Oreal reports and segments its products range on the basis of price range and distribution channel into: Professional, Consumer, Luxury and Active products.

Professional Products constitute about 14% of net sales and are meant for professional hair care by stylists at hair salons. The main brands include: L’Oreal Professional, Kerastase, Matrix, Mizani and Redken.

Consumer Products constitute about 49% of net sales and are sold through mass volume retailers and drugstores. Consumer products include makeup, skin care and hair care products competitively priced and distributed through mass-market retailing channels. The main brands include: Garnier (skin and hair care for men and women), L’Oreal Paris (skin care, makeup, hair care

and hair colors under Studio-Line, Dermo-Expertise and Elseve productlines), Maybelline New York and Softsheen-Carson (hair care for African ethnic descent consumers).

Luxury Products constitute about 25% of net sales and compriseprestigious brands and premium service through department stores, upscale perfumeries, travel retail outlets as well as free standing stores and ecommerce websites. The main brands include Lancome, Biotherm, and Kiehl’s.

Active Products constitute about 7% of net sales and include dermocosmetic (cosmetics with medicinal ingredients and recommended by pharmacists and dermatologists) skin care products sold exclusively through pharmacies, specialty drugstores, medi-spas and even dermatologists. The main brands are La Roche-Posay, Skinceuticals, Vichy and Sanoflore.