History & Origin . . . . . . . . . . . . . . . . . . . 3
Early Evolution . . . . . . . . . . . . . . . . . . . . 5
Modern Business . . . . . . . . . . . . . . . . . . 8
Global Expansion . . . . . . . . . . . . . . . . 13
Company Structure . . . . . . . . . . . . . . 17
Recent Efforts . . . . . . . . . . . . . . . . . . . .19
Company DNA . . . . . . . . . . . . . . . . . . 30
Summary . . . . . . . . . . . . . . . . . . . . . . . .32
Social Media Accounts . . . . . . . . . . . .33
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L’Oréal is the world's leading company in cosmetics and beauty care
products
Originally named as Société Francaise des Teintures Inoffensives pour
Cheveux (literally translated French Society for Inoffensive Tinctures
of Hair) and was founded in 1909 at Clichy, France by Eugène
Schueller
L’Oréal‘s founder Eugène Schueller entered the Institute for Applied
Chemistry in Paris and became an instructor at the Sorbonne
He worked as a chemist at Pharmacie Centrale de France and later
became the head of their research laboratory and chemical services
In 1905, he was visited by a hairdresser who was anxious to pay
someone 50 Francs a month to find a safe and reliable hair dye
This is when Eugène’s life, and the future global cosmetics industry,
changed.
In 1907, he launched his new hair dye under the brand name Auréole3
To publicise his ventures, he contributed articles to a magazine
called Coiffure de Paris.
While Eugène had been giving the German army the treatment he
later doled out to his competitors, the management of L’Oréal was
in the hands of his wife. L’Oréal did very well.
The formula for success was already very well established, and top
scientists were coming up with products, which offered
breakthrough performances at affordable prices.
In 1919, he bought out the Lumière film production company
He also dabbled in companies making Bakelite, cellulose acetate
and artificial silk
Revenues ran at 300,000 francs a month
In 1954, he managed to run a soap company, a paint factory and a
magazine alongside L’Oreal
4
L’Oréal employed three (3) chemists in 1920
In 1925, L’Oréal came up with its first real blockbuster product,
L’Oréal d’Or, a hair dye that added golden highlights which made
dyed blonde hair seem natural
Business boomed because of a sea of change in women’s
hairstyles.
Hollywood star-inspired craze for the bob and frequent dying was
bad for hair
It immediately set the business to work on devising a ground-
breaking bleach
In 1929, L’Oréal Blanc, the hair bleach was launched
The rise of the perm was another threat. Perms did not accept hair
dyes that did not penetrate the hair
They filed a patent for paradiamines which formed the basis of
fast-penetrating hair colours, Imédia, a perm-friendly dye 5
Company revenues in the year exceeded a million francs a month
In 1934, Dop, the first mass market shampoo was launched,
marking the start of making its science available at affordable
prices to as wide as a market as possible
During the same year, Ambre Solaire, the sun protection oil was
developed and launched
With 300 employed salesmen, L’Oreal was by far the country’s
most successful hair and skin-care company
A French politician, André Bettencourt joined the business in 1938
and François Dalle in 1941
In 1942, they developed a mixing tower that embodied a new
saponification process which became the industry standard,
improving the manufacture of soap
In 1951, the company had more than 100 chemists
6
During the same year, the first lightening tin, Imélda D was
produced.
In 1954, the company expanded its research capabilities in skin
care.
They signed a technical agreements with Vichy, owned by a
cosmetologist Georges Guerin.
They used the Vichy Thermal Spa Water to treat a skin wound
while staying at the famous spa
Subsequently developed a range of skin products all containing
the magic elixir
In 1955, the first coloring shampoo, Colorette, was introduced
In 1957, Eugène Schuller passed away and François Dalle was the
next in line as the new boss.
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In 1957, hair products were launched onto the consumer market
This took the science to a new level, thus, the establishment of a
Fundamental Research Unit
Focused on developing a greater understanding of how skin
and hair actually function
Focused on hair and skin care products and sold off the soap
business
The firm worked on enhancement of any hair and skin care brands
with the use of research capabilities in basic skin and hair
physiology and function
In 1964, Lancôme became the first major acquisition
This took the company into the upscale perfume and make-up
sectors
The Kérastase brand was also launched, a cross between a hair
treatment and a spa experience8
In 1965, Laboratoires Garnier was acquired, a manufacturer of hair
care products made with organic ingredients
In 1970, another brand, Biotherm, was acquired.
During the same year, L’Oreal was already employing 500
scientists and had just acquired the mass-market Gemey brand of
makeup
In 1973, a majority stake was taken in the pharmaceutical
company, Synthélabo
In 1979, the company bought the pharma company, Metabio-
Joullie, and substantial strakes in both Marie Claire and Interedi-
Cosmopolitan
By 1980, the merging of Synthélabo and Metabio-Joullie took place
Gesparal, a new French holding company, was formed owned 51%
by Liliane and 49% by Nestlé.
It provided L’Oréal a strong defense against hostile takeover 9
For Nestlé, it was an excellent investment into a category that was
growing faster and had higher profit margins than most of their
core businesses
The idea of the business with Nestlé is that it protect the company
from the short-term demands of the stock market
The partnership enabled them to take a longer-term perspective to
business strategy
Cacharel was also invested in.
This was where the Parfums et Beauté International expertise
was applied to
The perfume arm of Cacharel and Anaïs Anaïs was taken
control of
Designed to be the first perfume bought by or for teenage girls
In 1981, a new state-of-the-art dermatological research facility,
Laboratoires Dermatalogiques Galderma, was opened10
Another tangible benefit from their Nestlé shareholder, a 50:50
joint venture between the two companies
For the Ambre Solaire brand, the company patented an ultra-
powerful, anti-UVA ingredient, Mexoril SX
It kept abreast of the changing nature of the sun cream market -
away from bronzing to protection
The company was convinced it could revive Helena Rubinstein
while benefiting from its attractive stable of brands
The brand, along with Estée Lauder, was one of the Grande
Dames who dominated the early cosmetics industry
The US arm of Helena Rubinstein’s company grossed $22
million a year
By 1972, the company was sold out to Colgate-Palmolive for
$146 million
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In 1983, Helena Rubinstein Inc.’s Japanese and South American
business units were bought
By 1984, 45% of the main business had been purchased
Come 1986, the high-end Lancôme launched the market’s first
anti-ageing cream, Niosôme
In 1988, the company gained full control of the brand and business
they had long coveted (Helena Rubinstein Inc.) and L’Oréal
became the largest cosmetics company in the world
It was making a profit of over a billion francs a year
It made Madame Liliane, the largest individual shareholder, the
richest woman in France.
In 1988, a 42-year-old, Welsh-born L’Oréal lifer, Lindsay Owen-
Jones became the company’s third CEO. Owen-Jones’ governance
would make Liliane the richest woman in the world.
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In 1912, L’Oreal started selling their products in Holland, Italy and
Austria
In 1922, they opened an agency in Berlin but failed to prosper
From 1936-1937, company subsidiaries were established in Italy,
Belgium, Denmark, UK, Algeria and Argentina
In 1953, using a complex ownership arrangement, Cosmair was
established as the sole US licensee for L’Oréal products
Most of the action was in mainstream cosmetics (market that grew
at 10% a year throughout the 1950s and 1960s)
It was handled by Jacques Corrèze (slowly began to gain
distribution for a select few L’Oréal products)
By the mid 1970’s, they were busy gaining foothold in Uruguay,
Peru, Algeria, Mexico, Canada, Japan, Australia, New Zealand and
Hong Kong
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By 1976, a joint venture was set up: L’Oreal with the Soviet
chemical company, Mosbytchim, to gain a toehold into the Soviet
Union
The company was generating an annual turnover of about $350
million
By 1984, Cosmair doubled its size and acquired Warner Cosmetics
from Warner Communications, with the help of Nestle
In 1985, Biotherm was launched into the US market to add further
impetus
In 1989, Plénitude was launched with a $35 million advertising
blitz
The success of Giorgio Armani men’s fragrance, Helena
Rubinstein’s brand gave Cosmair another step change in the size
of its US and global operation
In 1990, L’Oréal ranked second only to Unilever due to the
acquisition of Armani and Ralph Lauren brand franchises
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The year after, L’Oréal was turning over $1 billion in sales
They were also dubbed as the sixth largest marketer of cosmetics
in the United States
It had 3,600 employees in a company laboratory located in Clark,
New Jersey
In 1994, L’Oréal became the first foreign company to obtain
authorization from the Indian government to establish a 100%
owned subsidiary
By 1996, the company had acquired the mass-market makeup
giant, Maybelline.
This propelled L’Oréal into the number two slot in US cosmetics,
behind Proctor & Gamble
They distributed the product as a range of low-priced makeup
aimed at teenagers
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Come 1997, L’Oréal China was formed as part of a multi-divisional
Asian zone structure
By 1998, Maybelline brand was launched to spearhead their
charge in China.
Soft Sheen, leader in ethnic hair care, was also acquired in the US
By 2000, Carson was acquired, a leading beauty products
business, aimed at the African American sector
L’Oréal transformed its position with the acquisition of the sector’s
leading brand, Matrix Essentials, followed by Kiehl’s
In 2001, L’Oréal acquired a 35% share of the Japanese firm, Shu
Uemura Cosmetics, Inc.
Redken was acquired in 2003
Cosmair was purchased by L’Oréal to be a 100% owned subsidiary
which Nestlé has 70%; Liliane Bettencourt 26% and L'Oréal only
4%. 16
L’Oréal has had such a consistent strategy over time that has
resulted in very little internal disruption due to re-organisations.
The McKinsey recommended divisional structure from 1969 was
tweaked in 1985 when Parfum’s et Beauté division became
unwieldy
By 2004, the structure re-arranged as follows:
Professional Products - Key brands: L’Oréal Professional;
Redken; Matrix, distributed through hair salons
Consumer Products - Key brands: L’Oréal Paris; Garnier;
Maybelline; SoftSheen-Carson, distributed through mass-
market channels, including hypermarkets, supermarkets and
drug stores
Luxury Products – Key brands: Lancôme; Biotherm; Helena
Rubinstein; Giorgio Armani; Ralph Lauren; Cacharel; Kiehl’s
since 1851; Shu Uemura
Active Cosmetics – Key brands: Vichy; La Roche-Posey,
distributed through pharmacies and dermatologists
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L’Oréal acquired Body Shop which was set up as the fifth division.
In 2009, Kérastase had been added to Professional Products; Yves
Saint Laurent and Diesel to Luxury Products and Innéov and
Skinceuticals were added to Active Cosmetics
The Gasparal Holding Company, which had been set up to facilitate
the selling of family shares to Nestlé, was merged with L’Oréal to
create a more normalized shareholding arrangement
Nestlé’s 49% stake in Gasparal became a 26.4% direct holding in
L’Oréal, with Liliane Bettencourt, taking 27.5%
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1995
L’Oréal reached an annual turnover of over 8 billion Euros
Sales were significantly boosted by the 1990 launch of Lancôme’s Trésor,
the world’s best-selling perfume
1996
Garnier Fructus was launched, offering a range of affordable hair products
Acqua di Gio, the world’s best-selling men’s fragrance, was likewise
launched
Merger between their 57%-owned Synthélabo pharma unit and Elf
Aquitaine’s Sanofi
2001
L’Oréal sold its stakes in Lanvin and Marie Claire
L’Oréal bought Revlon’s Colorama make-up brand
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2003
L’Oréal announced its 19th consecutive year of double-digit growth
in operating profits
Sales reached14.5 billion euros
2004
3.6% sales increase, primarily driven by a sluggish European
market which accounted for half the company’s sales
Launch of L’Oréal’s ReFinish, Kérastase’s Réflection and Innéov Hair
Mass
Growth on the Professional Products (up 7.6% like-for-like) and
Active Cosmetics (up 165% like-for-like).
Shift in consumer spending patterns between price bands
L’Oréal opened stores for Lancôme and Biotherm
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U.S. Growth was still building sales (up 8.1% like-for-like to break
the $4 billion barrier) and share in the largest cosmetics market in
the world
Sales in Asia grew 17% (Sales in China almost doubled through
organic growth), while in Eastern Europe by 29% (Vichy, up 37%
in Eastern Europe, and had become Russia’s leading skincare
brand and was launched in India in the year)
2005
The sales increase almost doubled to 6.5%
Sales in North America, grew by 8.3% after launching Garnier
Fructus
The first year in which two significant shifts in the business
crossed key thresholds: No longer a Western European-dominated
company and no longer a haircare-dominated company 21
R&D labs continued to fuel product innovation with 2,900
researchers.
Invested 496 million euros, registering a staggering 529 patents
(70 of them on packaging developments)
Put increased emphasis on men:
In 1990, 4% of European men used a skincare product and will
increased to 20% by 2003.
In Japan, 30% of men under 30 were skincare users and over
80% in South Korea
Vichy had been ahead of the game
Launched Basic Homme in 1986
L’Oréal Men Expert was launched into mass-market channels
Shu Uemura brand was launched on the US West Coast
Matrix was expanding from America into markets such as Brazil,
India, China and Eastern Europe 22
2006
Fourth L’Oréal CEO: Jean-Paul Agon announced some tweaks to
their strategy
Invested on a new product, Age Recharge by Kérastase, with a
budget of 533 million euros.
The product contains Pro-Xylane, a revolutionary anti-ageing
compound for mature skin made using green technology which was
being sold on Seniors/older people
Lancôme, Vichy and La Roche-Posay, all launched products
containing Pro-Xylane
Acquiring the Body Shop during the year, marked a new direction
They opened its first store in India and began online shopping in
Germany
Signed license with Diesel
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In the Active Cosmetics division, L’Oréal acquired Sanflore
The global market share increased from 15% to 15.6%
2007
Sales increased by over 8% to over 17 billion euros
Every division grew like-for-like by at least 7.5%
Business segment perfumes and skincare both grew by double
digits
Both Western Europe and North America grew a respectable 4%
Signed an agreement with Light BioScience
US Professional Products division was strengthened with three
acquisitions: Luxury haircare brand, PureOlogy, and two regional
salon distributors, Beauty Alliance and Maly’s West
The Body Shop delivered a healthy 5.7% like-for-like growth
Russia delivered the highest absolute sales growth of any country24
Brazil and China were already top five world markets for cosmetics
L’Oréal increased its focus on what it called the “Next 12”
countries
Sales went up in Argentina by 37%, Columbia 27%, Czech Republic,
Dubai, Indonesia by 21%, Philippines and Poland 16%, South Africa
and Thailand 22%, Turkey, Ukraine (already the third-largest
Eastern European subsidiary, after only three years in existence)
and Vietnam, where a subsidiary was established.
2008
Advertising and promotional spends were maintained
Third-largest advertiser in the world
Increased share of voice
Research and development budget was increased by nearly 4%
Increased the department employee count by 6%25
Selling, and general and administrative costs came down as part of
a policy of “permanent restructuring”
Acquired the following: Yves Saint Laurent Beauté, Boucheron,
Stella McCartney, Zegna, Roger & Gallet and Oscar de la Renta
Strengthened its American route to market and had acquired
Columbia Beauty Supply, a third salon distributor
2009
A sales decline of 0.4%, given a heavy influence by retail inventory
reduction on a massive scale
The Body Shop held steady
Dermatology JV grew by over 10%
Action was taken in the poorly performing regions and sectors
Lower-priced Garnier Essentials range priced at under 5 euros
helped the brand grow 26
Luxury Products division introduced small format perfume bottles
and entry-level-priced skincare products
Kiehl’s was promoted to pillar brand status
Total sales growth, up by 28%
Yves Saint Laurent brand grew by 17% in the US
Notable year for making official that it’s primary goal was to
reorient the company decisively towards developing and emerging
markets
The company set the goal of recruiting an extra billion
consumers
Two new strategic changes to facilitate this shift:
Further ramping up of R&D capabilities and investment
Transformation of company culture and structures
A new product was developed, the Innovative Renewal Lash Serum
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2010
Sales were up a very impressive 11.6% to just under 20 billion
euros
Global retail monitoring calculated theirs at $24 billion
Efficiency measures had driven the operating profit margin in New
Markets up to 16.9%
Consolidated its three Asian research centres into a new Asian
division of R&D
Increase the focus on products relevant for Asian skin and hair
needs
Professional Products grew by 4%, having added 35,000 salons
Luxury Products growing by 7% due to the growth of Génifique,
Kiehl’s, Yves Saint Laurent and Lancôme
Maybelline was spearheading the drive exemplified by Falsies
Mascara and became the best-selling mascara in North America
and Western Europe
28
First factory in Russia opened its doors, to service the countries of
the old Soviet Union
Essie nail care brand was purchased by the North American unit
2011
Sales breached the $20 billion Euros mark
Sales in New Markets came within 20 million euros
Luxury products grew by 7.7%
Best-performance of the cosmetics divisions
Lancôme Visionnaire became the first ever-fundamental skin
corrector on the market
Acquired Clarisonic, the market leader in sonic skincare technology
The Body Shop finally showed like-for-like growth just over 4% with
around 16 online stores
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Competitors can easily predict what the company will do, but it is
extremely difficult to pre-empt them, copy them or stop them from
doing it
Built a unique business model with a well-entrenched company
culture
Their superior research function has enabled them to grow and
develop virtually every brand they have acquired
Commitment to the centrality of core research into skin and hair
has been passionate, prolonged and ongoing
By focusing their research into skin and hair, rather than any
specific production technologies, their research has always been
solution neutral
L’Oréal is unbeatable at their business
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Two factors combined for longer timescales:
Consistency of management
o Has had just four CEO’s in a century
o Keeping it in the family – both personal and corporate –
became a key part of the company’s future success
Consistency of ownership
150 years of L’Oréal service
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The combination of the following has led to consistent success
over a long period of time
Scientific Capabilities
Acquisition Strategy
Regional Expansion
Nestlé buying L’Oréal outright would be deciding factor in 2014
Restrictions on either Nestlé or the Bettencourt family selling
to outside parties are lifted
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Website: www.loreal.com/default.aspx LinkedIn: www.linkedin.com/company/loreal Facebook: www.facebook.com/beautyforallbyloreal Twitter: twitter.com/LOrealParisUSA Instagram: instagram.com/beautyforallbyloreal Youtube: www.youtube.com/user/lorealparisnyc Google+: plus.google.com/u/0/110853080416846743402/about Pinterest: www.pinterest.com/lorealparisfr/
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