"The real internationalisation of our brands is only just starting," according to L'Oréal's international cosmetics brand director Jean-Paul Agon. Agon was underlining the way the major emerging countries have become key markets for L'Oréal in its search for growth. He cited the cases of India, one of five major new markets, along with Brazil, Russia, Mexico and China. The company is putting increasing efforts into expansion in these countries in order to offset a relative slowdown of activity in Western Europe and North America."The real internationalisation of our brands is only just starting," according to L'Oréal's international cosmetics brand director Jean-Paul Agon. Agon was underlining the way the major emerging countries have become key markets for L'Oréal in its search for growth. He cited the cases of India, one of five major new markets, along with Brazil, Russia, Mexico and China. The company is putting increasing efforts into expansion in these countries in order to offset a relative slowdown of activity in Western Europe and North America.
L'Oréal's sales in India are expected to reach t100m in 2007 or less than 1% of the T15bn of total sales in 2006 but the market is expanding at an annual rate of between 25% and 30%. Didier Villanueva, director general of L'Oréal India, said the Indian population was now some 1.1 billion and although 800 million were living on income of less than $2 per day, 250 million were now capable of affording L'Oréal's products. Currently the Indian customer base is about 50 million.
The company has set up its HQ in Bombay and has a plant in Pune with most of the production - about 95% - being sold on the Indian domestic market. Most of the main brands are now sold in pharmacies, grocery stores and small cosmetics outlets including Garnier, Maybelline New York, Vichy and - more recently - Matrix, Body Shop and Lancôme. These outlets cover 85% of sales but L'Oréal has now started marketing the 15% remaining in new outlets including supermarkets and modern perfumeries, including the Body Shop. Body Shop was acquired in July last year and has opened 17 new shops this year compared with only seven in 2006. A further 11 will be opened through 2008.
It is estimated that the French group now has 9% of the Indian cosmetics market behind Unilever with 30%. Business in India has been profitable for over two years with a margin on sales of about 5%.