L'Oréal taps Indian trends

10 July 2012

NEW DELHI: L'Oréal, the cosmetics group, is hoping to tap into the ongoing shift among Indian consumers away from "pre-premiumisation" and towards becoming "discerning and sophisticated".

Speaking to Forbes India, the business title, Jacques Challes, L'Oréal's managing director for the country, argued it has witnessed dramatic changes since he assumed the post in 2008.

"The industry was already under transformation ... mainly due to what I call 'pre-premiumisation'. The Indian market was seeing an increasing aspiration for the slightly more expensive brands," he said.

"In fact, there was a decline of the cheaper brands that had established themselves in the local market. At that time, L'Oréal was focused just on the consumer division and didn't have many brands."

Between 2008 and 2011, however, the French firm has tripled its turnover to some $200m per year, and boosted market share levels in urban areas to around 10%.

"I think the consumer is more and more aware, educated and is conscious of the brands. Indian women have become more discerning and sophisticated," said Challes.

"Four years back, L'Oréal was relying only on the consumer division. Today, the consumer division itself has expanded and we also now focus on professional and luxury segments."

Similarly, the multinational corporation has enhanced its factory in Pune to deliver 200m units per year, and is building a research and development centre in Mumbai.

According to Challes, who is taking up a position as L'Oréal's chief innovation officer, the latter site - the sixth globally after Brazil, China, France, Japan, and the US - is set to play a crucial role.

"We will be innovating the present products and will launch new ones for the Indian market," he said.

"The future for L'Oréal lies in markets like India, Brazil and China. So in terms of ideas and innovation, these will come out of these countries and this will be instrumental for the whole company."

One outlet posing greater obstacles for beauty brand owners such as L'Oréal is the Indian countryside, where consumer staples are very much the mainstay of household expenditure.

"We don't do soaps, washing products, toothpaste or oil, which are big in the rural market. At the same time, we are going to reach the smaller towns," said Challes.

Data sourced from Forbes; additional content by Warc staff