In April, the French beauty giant reported a sluggish market in China. In the second quarter (Q2), growth returned to the mid-teens.
Overall, the market grew by more than 7% in the first half ending June 2023.
“Appetite for beauty remains strong both offline and online. In the second quarter, beauty growth recovered to plus 6.5%. As you remember, it was still negative in the first quarter. Our growth accelerated strongly from broadly flat in the first quarter to mid-teens in the second quarter,” said Nicolas Hieronimus, CEO of L'Oréal.
He highlighted that the company had a very successful 6.18 shopping festival in China. The company has six brands in the top twenty rankings, which was led by Lancôme and L’Oréal Paris.
While these signal that the Chinese market is “getting back to normal,” he noted that this progress was still slower than anticipated.
“In Mainland China, we are seeing clear signs that consumption is recovering. Consumer confidence is improving, restaurants are full, local travel is resuming. The recovery has been a bit slower than expected, but let's be honest, three years of COVID will take a bit of time to be fully digested,” said Hieronimus.
Skin care still queen
The company continues to see huge potential in the skin care market. Hieronimus said Chinese consumers were becoming more discerning about buying beauty products, which presents major opportunities for the firm.
“Chinese consumers are more rational about their beauty purchases than they were before COVID. And they are really looking for efficacious product for performance. And again, that's for me a good omen for the L’Oréal products, which as you know, are always created based on efficacy.”
Skin care, he added was by far the top category, with opportunities across three divisions: derma beauty, consumer products and luxury.
“Dermatological Beauty us still quite small in China, but it's growing three times the market. We see that La Roche-Posay has some good traction and SkinCeuticals is also very strong in China.”
The eponymous L’Oréal Paris remains very strong in skin care, including the men’s skin care category, said Hieronimus.
Luxury skin care: ‘Our number one weapon’
However, the company sees the most potential in the luxury skin care market.
“L'Oreal Luxe is our number one weapon or division for skin care gains. We are pushing because that's what the Chinese consumers want. We are pushing the most premium brands because it's about the quality of the product and it's about also the experience that you can provide at a counter,” said Hieronimus.
He highlighted Takami and Helena Rubinstein as prime examples of luxury skin care demand in China.
In particular, he noted the potential of Carita to follow closely in Helena Rubinstein’s footsteps.
Carita is a Parisian skin care line the firm acquired as of April 2014. While the brand is still new in China, Hieronimus said the firm has “great ambitions” for it.