L'Oréal targets Indonesia

07 November 2012

JAKARTA: L'Oréal, the cosmetics group, is heightening its focus on Indonesia, a country seen as holding considerable potential for brands in many categories.

"Indonesia is our fastest-growing market in Asia-Pacific," Jochen Zaumseil, L'Oréal's executive vice president, Asia Pacific, told the Financial Times.

The Indonesian beauty sector was worth approximately $1.5bn over 2011 as a whole, and has been increasing in size by roughly 10% every 12 months in the recent past.

At present, L'Oréal takes a modest 7% of sales, but it has enjoyed annual growth of 30% in each of the last four years.

Its Garnier and Maybelline ranges have proved popular with the middle income audience, and products from the Body Shop and Shu Uemura have helped the firm succeed with high-end audiences.

Within this, male shoppers are a key target market, as this segment of the beauty industry expanded by 60% in 2011 and by 65% in 2012 to date, according to L'Oréal's figures.

L'Oréal has just finished constructing a new plant in the Indonesia. Costing around €100m, the factory will be its largest such site worldwide, with 450 staff delivering 500m units a year by 2015.

While 70% of these offerings will be exported across Asia in the near term, serving local buyers is likely to become the longer term objective.

Among the main drivers of this trend is the strength of the domestic economy, which has expanded by at least 6% annually in recent years, and allowed more shoppers to make category purchases.

The number of Indonesian consumers expected to reside the middle class – spending between $2 and $20 per day – should thus surge from 131m today to 244m by 2030, to the advantage of L'Oréal.

"Indonesians are brand-driven and there's always a trend to upgrade as people get wealthier," Zaumseil said.

Data sourced from Financial Times; additional content by Warc staff