L’Oréal is actively looking at acquiring Indian beauty brands and startups in the beauty-tech space. Chairman Jean Paul Agon told Vinod Mahanta that the India unit has been one of the top three fastest growing L’Oréal subsidiaries in the past two years. Agon, who was included in Harvard Business Review’s Best CEOs list for 2019, spoke about the India business, trends shaping the global beauty industry and the Kylie Jenner-Coty $600 million deal. Frenchman Agon, 63, has worked for L’Oreal since joining the company after business school in 1978. Edited excerpts:The Indian consumer market is facing a slowdown. Has L’Oréal India been affected?I've been here two days and we did an extensive review of our businesses. India has been one of the most successful subsidiaries in L’Oréal in the last two years, growing in the mid-teens and we are confident we will achieve that number this year too. In terms of contribution to growth of the company, it’s one of the top three countries.India is also one of the top three or four strategic countries for us worldwide, so the fact that we have done well is extremely positive. Our mission is to outperform the market every year. We have done that globally, we will do that in India.As an investor, do you feel that the government’s ease of doing business thrust has worked?To be honest, from the very beginning, I did not believe that it was that difficult.We have invested a lot in plants, R&D centres, teams etc., and we never faced major difficulties in this country. And it's true, from what I've heard, and from what I've been told, that the present government and administration are favourable for business and are trying to kickstart a new chapter of economic development in the country.There is a rising trend of traditional organic beauty products in India.Are you looking at acquisitions in India, in traditional beauty companies or otherwise?The trend has been around for some time now. We have been looking for opportunities but we haven’t found the right fit yet. We are actively scouting for acquisitions in India in all types of beauty products. In order to look at startups, we have invested in Fireside Ventures, an early-stage investment fund focused on Indian consumer brands. We are doing our best efforts to identify businesses that we can co-own and develop in beauty and beauty-tech. You have been talking about beauty-tech for the past year. Do you think even the beauty industry will be disrupted by technology?It’s just like fin-tech or med-tech. Beauty-tech is a vision I had one year ago. It’s my belief that technology will transform the beauty industry like every other industry.So the future of beauty will be beauty-tech. At L’Oreal, we want to be the champion of beauty-tech of tomorrow. We were the first consumer company in the world to embrace the digital revolution in a big way. Our transformation will continue and we will be the most advanced beauty-tech company in the world. In 2010, Ideclared it would be the digital year for L'Oreal, and it was very funny because at that time nobody knew what it meant, not even me. It energised the whole company.Social media is reshaping the beauty business. How has it changed your marketing plans?The marketing game in this past five years has changed completely. The marketers today at L’Oréal don’t work at all like they used to work a few years ago; they use social media, they use influencers. For example, L’Oréal is the third biggest advertiser in the world with an 8.14 billion euro budget. And I can tell you that almost 50% of the media spend is now on digital platforms from literally zero five years ago. So, there is a complete transformation. For us, the priority is to keep evolving permanently so that we are at the place where things are happening.How are you Indianising the product portfolio?That’s why we have two R&D centres and two factories in India — 90% of the products we sell in India are made in India. And probably two thirds of the products that we sell in India are created in India. So, in India and for India.For example, a hair colour like black natural has been invented in India for Indian consumers and is manufactured in India. We are starting to export this product to Southeast Asia, the Middle East and Latin America. While we have global products, we feel the right way is to develop products in countries where we sell them, especially in large countries like India.Social media celebrity Kylie Jenner just sold her brand to Coty for $600 million. The four-year-old brand was valued at $1.2 billion. Do you see competition from new sources—like celebrity brands?New brands stimulate consumption, stimulate appetite of consumers for beauty. Personally, I welcome competition — it leads to overall market growth. Despite competition, a big brand like L’Oréal had its best year in 2018. The market is open for all. You may see some new competitors in the market but the question is how sustainable the business is. We have been successful for 110 years and we are still outperforming the market.
from Economic Times https://ift.tt/35suRvl
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