L'Occitane – local roots and global appeal

Founded in 1976, L’Occitane en Provence was the brainchild of French entrepreneur Olivier Baussan. Nadia Di Martino looks at how he grew the business from selling rosemary oil at open air markets in Provence to the multimillion pound operation it is today

Founded in 1976, L’Occitane en Provence was the brainchild of French entrepreneur Olivier Baussan. Nadia Di Martino looks at how he grew the business from selling rosemary oil at open air markets in Provence to the multimillion pound operation it is today

L’Occitane en Provence (often just known as L’Occitane), the French C&T company which is synonymous with natural and organic body care products, has been in the news quite a bit of late. Its decision to become the first French company to acquire a listing on the Hong Kong stock exchange earlier this year has propelled it into the media spotlight as it tries to further target the Asia Pacific market where it enjoys such success.

The sale of company shares, which the company operated before its official listing on 7 May, raised €530m and amounted to 25% of its total capital, in a move that put the value of the company at approximately €2.1bn.

The listing in Asia was an understandable move as L’Occitane currently achieves 35% of its sales in Asia Pacific and seems set on doubling the number of its outlets in China from the current level of 40 in the next few years. Certainly the press has largely perceived the move onto the Hong Kong stock exchange to be down to the company’s desire for more capital to fund expansion plans in Asia Pacific. Japan is currently L’Occitane’s leading market, accounting for 24% of sales compared with just 13% in its native France.

Further to this, the recent debt crisis in Europe and the equally slow recovery in the US are diverting capital towards markets in the Far East.

Although eyebrows were slightly raised as to why the company didn’t list on the French stock exchange as might have been expected, the move does not seem to have done it any harm. L’Occitane holds a special place in consumers’ hearts, both in France and all over the world, according to its founder Olivier Baussan.

“For me, our products always carry the inherent value of the brand within themselves. Since these values have been sincere and true for 34 years now, consumers understand and feel the immediate benefits of the products.”

Company details
Founded: 1976
Address: Z.I Saint-Maurice-04100 Manosque, Provence, France
Website: www.loccitane.com
Number of employees: 4,682
Shops: over 1,500 worldwide
Ceo: Olivier Baussan

Dreaming big

Baussan makes it clear that the company he founded is more than just about the products it produces: “L’Occitane has always tried to be a company that plays a role in the conservation of the equilibrium between man and environment. We make these ethical values come alive by protecting the customs and traditions connected to how men work with nature.”

Selling natural-based products with ingredients coming largely from Provence is the brand’s unique selling point and consumers seem to have a constant appetite for them – at least judging from the company’s recent sales performance.

Founded in 1976 at Manosque in upper Provence, L’Occitane has posted sales of $731m in the 12 months to March 2009 with 86% of its total sales coming from international markets. With products sold in 80 countries and with more than 1,500 stores worldwide, the company is now trying to consolidate the subsidiaries through which it works directly.

“We don’t want to expand our distribution any further but we do want to strengthen our business in the subsidiary markets because most of them still have a big potential for growth,” says Reinold Geiger, the group’s president.

From Provence to the world

“L’Occitane was a name chosen by Olivier to pay tribute to Occitania which was a medieval province that stretched across southern France and the basque country. The region also included the Italian Occitane Valleys so L’Occitane is literally the woman of Occitania,” explains Geiger.

He also discusses how the company still harks back to its geographical and cultural roots in choosing its ingredients. “We favour local and traditional production (the main manufacturing site is still in Provence) so for this reason we use Haute-Provence fine lavender from Contadour and organic immortelle and verbena from Corsica,” he says.

Today, being a natural cosmetic company means something different than it did back in the 70s. According to Laure Pierrisnard, international marketing director for skin care at L’Occitane: “The reason for the success of natural and organic skin care products is that consumers need reassurance about the ingredients that make up the products they buy and a guarantee that they are using a product which is of a higher quality.” The economic downturn has accelerated changes in the modes of consuming, with her concluding: “Consumers don’t want to consume less product, just better product.”

Geiger is also very clear about what the real challenges in the history of L’Occitane have been: “For us it was more about building a team of excellent professionals. Obviously we have succeeded in doing so otherwise we could not have achieved this development.

“And our business continued to expand despite the recent recession and in fact we benefited from the lower interest rates available.”

Keeping up with the times

L’Occitane has learned how to work in the context of a growing and competitive market without resting on its laurels. “We offer high quality products with natural active ingredients which offer the experience of the Mediterranean while guaranteeing good results,” says Pierrisnard. “Plus, L’Occitane has been mixing the themes of tradition, nature and research following the principles of phototherapy and aromatherapy throughout its 30 year existence.”

Another area in which the company has grown has been that of online sales. According to Geiger: “Our internet sales increased significantly during the financial year ending 31 March 2009 and we plan to dedicate further resources to this distribution channel, as we believe it offers a high growth potential.”

The Peony colour cosmetics collection

In the past year L’Occitane has made a big investment in terms of its skin care with the highly anticipated launch of Divine Cream, a super-charged anti-ageing cream. “Divine Cream was a huge retail success, selling out in many stores and creating waiting lists and this year will see the launch of Divine Eyes and Divine Serum which we hope to be just as successful additions to the range,” comments Geiger. “And after the impressive results of the Peony fragrance and colour cosmetic collection this year we have great expectations moving forward with our highly creative pre-Christmas colour and fragrance collection – Fleur Cherie.”

Unsurprisingly, given his success up to to date, Olivier Baussan says that even if he could go back to the beginning, there’s nothing he would do differently. “The people I have met throughout the years – from the women working to be independent in the co-operatives in Africa to the artisan who makes soap and offered me his tool so that his craftsman would survive and continue – all these encounters have built my life.” Baussan sounds like a very contented man, and while the business continues to flourish this should be the case for the foreseeable future.

Giving something back
L’Occitane has long been a supporter of fairtrade and recently celebrated the 20th anniversary of the partnership between itself and a women’s co-operative in Burkina Faso in West Africa. This co-operative harvests the shea nuts which produce the shea butter to go into L’Occitane’s extensive Shea Butter skin care range of products. Laure Pierrisnard comments on the relationship.
“This exchange goes far beyond a simple commercial transaction as far as we are concerned. L’Occitane values the work of the women by buying directly, and at a fair price, the shea butter they produce on the site.
“They are paid with a decent salary that covers the cost of their production, the environmental and social costs and which also leaves a margin for further investment. We pre-finance up to 80% of the production, and help the export and the research of new markets for sales.
“Since 2003, we are also buying biological butter that is more convenient for the producers and we are in charge of certifying it with Ecocert. Taking into account the organic and non-organic shea butter produced, L’Occitane is in charge of about 50% of the shea butter which is produced and exported by Burkina Faso as a country.
“In fact these women, who were only some dozens at the start, are today more than 12,000 in number. And our work in Burkina Faso is doubled, via The L’Occitane Foundation which is the charitable arm of our business, as we also have local development projects in Burkina Faso such as the creation of schools, kindergartens and similar things.”

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