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Importance of India evident for L’Oréal

By Andrew MCDOUGALL , 23-Oct-2012

Cosmetics titan L’Oréal is using the strong strategic importance and solid foundation it has in India as a gateway to other markets in Asia-Pacific and beyond.

It has become a key region for many cosmetic and consumer goods manufacturers, and L’Oréal now sees the opportunity to build on its strengths and further distribution elsewhere in Asia-Pacific, and exports its India-specific goods overseas.

The French firm has already launched numerous bespoke lines in India, like fairness creams and hair dyes, and is assessing its international prospects, according to Satyaki Ghosh, its director of consumer products in India.

"We are now in different stages of moving from few distributors in emerging countries such as the Philippines and Indonesia to several of them similar to how we operate in India, where we have over 750 distributors serving millions of retail outlets,” he told The Economic Times.

Building its business

L’Oréal has been building its business in India for some time and has highlighted it as a key area of growth for the company.

In its first half 2012 results, the France-based firm reported that ‘New Markets’, which includes Asia and Africa, as the leading drivers of sales for the first time, accounting for 40 percent of the group’s turnover.

According to company chief executive Jean-Paul Agon, Asian markets will be key to growth in the next two decades for the world's biggest cosmetics company, with the markets in India highlighted as holding the ‘great opportunity’.

"India will be a priority for the group. The potential for growth in [India] is considerable," says Agon.

Favorable region

India is also being targeted by global cosmetic giants due to its favorable demographics. The modern, urban Indian women are becoming increasingly conscious about their style and looks, with great emphasis on lightening of skin tone.

This has made the market an excellent base for product innovation and development, and it is not only L’Oréal that has targeted the region.

While exporting ideas from Indian business to other markets isn't new, what has changed is the increased aggression on distribution of products in India.

Earlier this year, Unilever set up a Customer Insight and Innovation Centre in Mumbai to study how consumers shop for FMCG products-its first such hub in India and seventh in the world.

"These learnings are compiled from all the work that we do in India and other key markets, and our effort is to continuously take our repeatable models across as many markets, as quickly as possible," Punit Misra, vice-president of global customer development-route to market and traditional trade channels at Unilever, said.

Direct seller Avon has also targeted growth in India to try and revive what has been a tough financial period for the company.

The New York-headquartered company currently has a wholly-owned subsidiary, Avon Beauty Products India, operating in the country, selling around 1500 products through a list of direct selling agents.

The beauty firm is looking to maintain a 40 percent growth rate in India this year with the launch of over 300 products across various categories, according to the country’s news agency, Press Trust of India.

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