Emerging markets shine: India, SEA will drive growth amid China’s slow recovery – L’Oréal

On October 19, the L’Oréal Group announced that sales in the South Asia Pacific, Middle East and North Africa region (SAPMENA) achieved outstanding growth of 15.6%.

According to the firm, all countries in the region reported double-digit like-for-like growth. The Australia-New Zealand cluster, India, and Thailand were the region’s top three contributors.

However, the overall performance of Asia was hampered by North Asia, which declined by 4.1%. The company attributed this to the slump in the travel retail business, which has recently been impacted by China’s crackdown on ‘diagou’ shoppers.

Against this backdrop, L’Oréal is expecting emerging markets in SAPMENA, namely India and SEA to be the driving factors of its growth this year.

“As far as contribution to growth is concerned, this year, considering the growth of the different regions and the impact of both travel retail and the slow market in China, the sum of these two emerging markets will be the bigger growth contributor to the group then North Asia,”​ said Nicolas Hieronimus, CEO of L'Oréal.

Hieronimus highlighted that both markets had ample room to expand and grow in these markets, where the firm is behind in market share.

“In India, we are only at 8% when it's 15% at a global level. We are accelerating and growing very significantly, with growth of over 20% in India at the end of nine months.”​

L’Oréal outperforms in China​

Despite the muted recovery in China, Hieronimus emphasised the strength of L’Oréal and its brands in the market.

“I’ve just come back from China and the two things I can say is that while I was not super impressed by the market, I was super impressed by the teams and the performance. The market is, as everybody has said, a bit slow to recover. It’s flattish after nine months but L’Oréal continues to really outperform,”​ he said.

According to Hieronimus, L’Oréal has 33% market share in China thanks to its stalwart brands such as Lancôme, L’Oréal Paris, Skinceuticals and YSL. He added that new brands like Prada Beauty are also contributing to this.

“We have a 10-point gap with the market, we're gaining share in all divisions, and that’s really the result of great online activity and good offline comeback on the market. Consumers are still a bit shy in in their spending, but we are achieving record shares.”​

The company also has room to grow within the different cities in China, Hieronimus highlighted.

“Our market share overall in China is extremely different between tier one cities and tier three cities and tier five cities. It’s over 25% in tier one cities and below 10% in tier three and five. Right now, we are opening new counters in tier-three cities – that’s where we are going to gain the largest number of consumers. Today, we sell approximately to 100 million consumers in China out of an addressable target of 400 million. So, we have lots of people to reach.”​