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India among L' Oreal's top 5 global markets

February 08, 2008 10:30 IST

Buoyed by the 40 per cent growth in its India operations, L'Oréal has identified the country as one of its top-five growing businesses globally.

The French cosmetics major's sales in India grew 40.3 per cent last year. According to the company spokesperson, "Being a part of the BRIMC (Brazil, Russia, India, Mexico and China) countries, India offers high potential for us. This was recognised by L'Oréal from the start of our Indian operations 13 years ago."

L'Oréal operates in India through its wholly owned subsidiary, L'Oreal India, and has four divisions -- consumer products, professional products, active cosmetics and luxury products.

The company attributed the growth in India to its penetrated distribution channel and team work.

It has also spent substantially on advertising. Unlike the average spend of 12 per cent of sales on advertising in the fast moving consumer goods sector in India, L'Oreal spends nearly 30.7 per cent of its sales on advertising globally.

Its portfolio of brands includes the cosmetics range of L'Oreal Paris and Maybelline NY, shampoo range Garnier, luxury products such as Lancóme and active cosmetics such as Vichy. Its closest global competitor in the premium make-up segment is Revlon.

The company has adopted a six-pronged approach for growth, which are technological innovation, creation of blockbusters, product value enhancement, brand power, globalisation and acquisition. Its last global acquisition was Body Shop for £652 million.

The company plans to open 110 more Body Shop outlets across the globe next year. The share of the Indian market to L'Oréal's turnover of €15.8 billion is small, but is growing, said the company. With other emerging economies, India's contribution to the growth in the global cosmetics market amounts to 60 per cent.

Jean-Paul Agon, the CEO of L'Oréal, has termed this potential as a big opportunity for the company. The company sees an addition of 70 million new consumers due to growth in per capita income in the world's population projected by the World Bank.

The beauty and wellness sector in India is on the brink of a boom, according to research agency AC Nielsen.

This segment, along with the foods category, will lead the growth for the fast moving consumer goods sector in India, said analysts.

Ruchita Saxena in Mumbai