"Our iconic brands, skincare and Asia were the keys to success in 2018"
Nicolas Hieronimus
Deputy Chief Executive Officer, in charge of Divisions
The luxury market has been booming for the last couple of years and L’Oréal is well positioned in this field. Could you please tell us a bit more?
I’m very happy to tell you about the performance of L’Oréal Luxe in 2018 as it was an exceptional year; with growth of +14.4% like-for-like , we’ve achieved one of our best years ever. This incredible performance is obviously helped by a very dynamic luxury market growing at double digits . But the great news is that for the eighth consecutive year L’Oréal Luxe has over performed this market and gained market share again.
This performance obviously benefits from our very balanced geographical footprint but one of the key elements behind that success is the strength of our brand portfolio. This brand portfolio is wide and balanced at the same time. We have on the one hand big brands and on the other hand, we have growth relays, smaller brands, brands that are not totally global which will be our big brands of tomorrow. And this year in 2018 our biggest brands, our four billionaire brands: Lancôme, Giorgio Armani, Yves Saint Laurent and Kiehl’s have all enjoyed a double digit growth.
The exceptional performance of Lancôme, our historical brand, demonstrates our unique capacity to reinvent ourselves and to reconnect with all the generations of consumers.
Our couture brands, Yves Saint Laurent and Giorgio Armani have also had a fantastic year. I must say that the decision of Mr Armani to entrust us once again with the license of his brand until 2050 is fantastic news for L’Oréal, as Giorgio Armani Beauty is bound to be one of the leading luxury brands of tomorrow.
There are also our new brands, our recent acquisitions, IT Cosmetics or Atelier Cologne, which both started successfully their international rollout. And there are the brands of tomorrow; I’m thinking about the Valentino brand which has just joined our brand portfolio and which will start running in 2019.
And to conclude, I would like to pay a special tribute to the fantastic work done by the L’Oréal Luxe teams in every country around the world. They are the ones who work with our consumers and they are the ones who are responsible for our success.
And in Asia, how do the L’Oréal Luxe brands position themselves?
Asia is a very important region for L’Oréal Luxe: not only is it our biggest market but it’s our number one growth engine with this year, once again, a very strong double-digit growth. This result benefits from the particular appetite of Asian consumers for our brands. Obviously the Chinese market is very strategic for us and it has been the centre of our attention and of our investment for the past couple of years. We have invested to make sure that our brands could become the favourite brands of the Chinese consumers. This is the case for Lancôme, which is the No.1 luxury beauty brand in China, strengthening its leadership year after year .
But the Chinese consumers also love our couture brands: Giorgio Armani or Yves Saint Laurent, or a brand like Kiehl’s which provides the natural and efficacious skincare. We also introduced our new brands in China. This is the case this year with the launch of the brand Atelier Cologne; and to complete the brand portfolio, we also have Asian brands such as Shu Uemura from Japan and Yuesai from China which make us particularly relevant in the region.
The strategic focus on China is very important, not only because it’s the biggest market but because it has a global impact as Chinese consumers travel all around the world to shop our products, particularly in airports, which allows Travel Retail to have one of its best years ever in 2018. Globally our capacity to overperform the market doesn’t just rely on Asia or China. We have pretty strong performances all around the world: beating the Western European market , having strong growth in Eastern Europe or Latin America and having pretty good performance in North America particularly in skincare and in fragrance.
How do you adapt to the distribution shifts, such as e-commerce for example?
Indeed luxury beauty has become truly omnichannel, with the explosion of e-commerce, with the difficulties experienced by some department store chains, or with the strong development of assisted self-service chains such as Ulta, Sephora or Douglas.
L’Oréal Luxe has to adapt to this new landscape and to be the best in every single channel. Obviously e-commerce is a strong priority: it is our number one growth engine, growing 42% and reaching 16% of the Division’s turnover in 2018. To achieve such a performance, we’ve had to develop new skills such as improving our product pages or mastering the search engine optimisation. But the strong strategic choice of L’Oréal Luxe is to invest in D-to-C, direct-to-consumer, which means our brand boutiques, our stores and our branded e-commerce sites.
This D-to-C allows us to have a privileged relationship with our consumers, engage them on the one-to-one basis, to serve them better by understanding better and also to retain them better.
In terms of categories, how did the L’Oréal Luxe Division perform in 2018?
Well first of all 2018 has been a great year for skincare. The market has accelerated strongly , boosted by older generations’ consumption but also by the recent Millennials’ appetite for skincare and on that dynamic market, L’Oréal Luxe has had an exceptional year at more than 20%.
Our magic recipe on that market is brands that have developed a strong trust relationship with the consumers; whether it’s Lancôme, a generalist brand, or a specialist skincare brand like Kiehl’s or Helena Rubinstein, very powerful franchise products, such as Génifique, and a few game changing innovations from our labs, such as the Life Plankton Clear Essence from Biotherm.
But also a good year in fragrance where despite a very strong competitive activity we’ve managed to strengthen the position of our leading brands. La Vie est Belle from Lancôme is more than ever the No.1 European fragrance , and continues to progress on the American markets. Black Opium has confirmed its status of darling fragrance brand of the younger generations. But we also have improved the position of Sì with the launch of Sì Passione and Acqua di Giò with the launch of Acqua di Giò Absolu for Giorgio Armani. And finally we’ve had a few more unexpected initiatives, such as the very successful Yes I am by Cacharel amongst the European teenagers or at the end of the year the very trendy and unique launch of Mutiny by Maison Margiela.
Regarding makeup, the market has clearly slowed down with the transfer of consumption towards skincare but I think we’ve played our cards right, particularly in foundation with the great success of Teint Idole Ultra Wear by Lancôme, launched this year in China, the great performance of IT Cosmetics or Yves Saint Laurent. We’ve also had a great innovation in lipstick at the end of the year with a fantastic formula from the L’Oréal Labs launched by Yves Saint Laurent under the Slim lipstick which will has a great future.
