L’Oreal finds India worth it

Tuesday, 03 May 2011

L’Oreal’s sixth research and innovation centre worldwide will start operations in Mumbai by the end of 2011. This facility’s Indian location confirms the obvious – L’Oreal is focusing on India full throttle. The firm, whose Indian unit has a turnover of Rs 1,000 crores, will spend the better part of this year launching some locally-developed products — part of its strategy to get the Indian consumer hooked. The French cosmetics major will launch products this year, of which 70 per cent will be locally designed and developed. Jacques Challes, MD, L’Oreal India feels with almost 70 per cent locally designed and developed products it highlights just how important the Indian market is. The balance 30 per cent will be products from the international stable.

Challes is optimistic about the future of locally developed L’Oreal products. For he feels with a team of qualified people sitting in India, developing solutions that are relevant to the Indian market will only grow. The top five countries for the cosmetics giant at the moment are the US, France, China, Germany and Brazil. But as consumer sentiment remains weak in the West, L’Oreal knows it is the emerging markets that hold the key to its success. Already two emerging markets -- China and Brazil -- find mention in the top five consumer market list. India’s inclusion, according to Challes, is not far off.

While competitors such as Procter & Gamble and Unilever have had a head start over L’Oreal in putting an India-specific strategy in place, the $28.08 billion cosmetics giant is in no mood to let their advantage get in its way. Challes argues that the Indian units of P&G and Unilever have been around longer than L’Oreal. In fact, L’Oreal that came to India 15 years ago had a compounded annual growth rate (CAGR) in the last decade of about 30 per cent. The brand intends to maintain this pace of growth and in the next 10 years it should be amongst the top five in the L’Oreal universe.