‘Equipped to win’: Why L’Oréal CEO doesn’t believe C-beauty brands are a ‘big threat’

Chinese beauty brands – dubbed C-beauty – used to be pocket-friendly alternatives to foreign brands, but a new wave of C-beauty brands have risen to challenge multinational stalwarts.

However, beauty giant L’Oréal seems to be unfazed by the buzz surrounding these exciting newcomers.

“At the first six months of the year, we’ve looked at the top 200 brands on Tmall beauty… The weight of Chinese brands is decreasing by 3% over six months with a share of 14%. So, it’s not as if they are eating a lot of market share,”​ said CEO Nicolas Hieronimus during an earnings conference.

“They’re increasingly competing amongst themselves and other Asian brands like the Korean brands namely. We see that Western brands – our brands – maintain their weight on Tmall at over 28%, so over twice the weight of local Chinese brands overall.”​

Hieronimus admitted that C-beauty brands were pushing the company to up its game. For instance, he highlighted the recent appointment of K-pop band Itzy as its newest global ambassadors of its beauty brand Maybelline New York.

“[C-beauty] is real competition and it’s good because it forces us to be even more creative… but we don’t see it as a big threat,”​ he said.

He added that the company was ahead of Perfect Diary, a C-beauty brand founded in 2016 that has been grabbing headlines for its staggering growth.

“I often hear about Perfect Diary but then on 6.18, the famous great digital day, they grew single digit and lost ranking to 3CE, which is our Korean make-up brand,” ​he said.

“It’s a tough fight in the Chinese market, but it’s a fight that we are equipped to win,”​ he concluded.

Growth across the board​

China remained a major contributor to L’Oréal’s performance in the first half of the year, rising 34.2% as L’Oréal China gained market share in all divisions and all categories.

“The queen category in China is skin care and it continues to grow very and that's very important for us because we are really leading that category in China. Make-up is bouncing back strongly, and we see it in the bounce back of some of our luxury brands such as YSL or Armani make-up,”​ said Hieronimus.

The company also saw strong growth from hair care in China.

“We are growing in hair care in both division in professional with Kerastase​ which is really flying in in in in China and also our L'Oreal Paris haircare brand which we have valorised so it's a more premium version of Elseve that what you might know when in Western Europe,”​ said Hieronimus.

“Overall, the total performance of L’Oréal China in hair – so all hair categories together including hair colour is over 50% growth in the first half. It's pretty positive.”​

Moving forward, the firm will also be keeping an eye on China’s fragrance market, which it believes hold huge potential.

“[Fragrance] is growing at over 80% so it's still small in percentage but we are confident that China is going to become the first fragrance market in the world in a couple of years,” ​said Hieronimus.