L’Oreal to open largest ever factory in Indonesia

18-Feb-2011 - Last updated on 18-Feb-2011 at 11:43 GMT

L’Oreal will build its largest ever factory in Indonesia, expected to be operational this year, in an attempt to take advantage of the growing Asean market, according to press reports.

Speaking at a news conference at the company’s South Jakarta headquarters, L’Oreal Indonesia president Jean-Christophe Letellier announced the factory will be built at the Jababeka industrial estate in West Java.

“The factory will become our biggest in the world and focus on consumer products, especially for Asean countries,” he said.

Building one hub for the region

Letellier went on to explain: “the Asean market is growing very fast so we have decided to build one hub that will support the growth and accommodate the entire region.”

The company’s existing factory is situated in Ciracas, East Jakarta and produces 100 million units a year, however, Letellier explained that the new facility will be able to produce 300 million units a year by next year, with a forecast of reaching its maximum production of 500 million units per year.

The cosmetics giant has invested $100m (€73.8m) in Indonesia this year, half of which is allocated for this factory, which began construction last October, according to Letellier.

He also explained that the company was targeting a 30 per cent growth in annual sales, and expected to attract 50 million new customers in Southeast Asia’s largest market by 2020.

Presence in Asia

L’Oreal’s presence is already felt in Asia, with two factories in Japan and one each in both China and Indonesia.

L'Oreal and Nestle also plan to enter the Chinese market this year with their beauty pill brand Inneov.

Reports stated that L’Oreal currently gets about a third of Inneov sales from markets such as Asia and Latin America and it aims to increase that proportion to as much as 60 per cent in the next 10 years.

Inneov estimates that Asia accounts for about half of the world’s nutricosmetic sales (€1bn) while Europe and the Americas each generate around €500m.

“There is a huge opportunity in Asia,” said Brigitte Liberman, head of L’Oreal’s Active Cosmetics unit, which operates Inneov.

She explained that nutritional supplements for skin and hair, or nutricosmetics, are “part of the routine of Asian women.”