Mass acceleration: China’s mass beauty market now ‘more dynamic’ than luxury – L’Oréal CEO

According to the firm’s Q1 results, growth was sluggish in mainland China. Alongside a weak travel retail market, L’Oréal reported a 1.1% like-for-like contraction in North Asia, which also includes Hong Kong, Japan, South Korea, and Taiwan.

North Asia was fuelled by the consumer products division in the thriving mass market. It was propelled by the impressive expansion of L’Oréal Paris, particularly with the Age Perfect range.

Nicolas Hieronimus, chief executive of L'Oréal observed the robustness of mass market beauty in China as of late.

“What has changed in China at the beginning of the year… is that we’ve seen more of an acceleration of the mass market and a slowdown of luxury in the first quarter.”​

That being said, L’Oréal’s luxury division continued to outgrow its market in China, with consumers gravitating towards brands such as Helena Rubinstein, Yves Saint Laurent, Maison Margiela, Prada and Valentino.

“L’Oréal Luxe has once again broken records with share reaching 34% of the luxury market in China,”​ said Hieronimus.

Additionally, L’Oréal’s dermatological beauty brands such as CeraVe are continuing to do well in China, especially with the emphasis of health and safety among Chinese authorities, said Hieronimus.

He emphasised the importance of winning over Chinese consumers with its ability to bring high-quality and innovative products to market.

“Chinese consumers are sophisticated. More and more, they are very demanding of the product quality. So once again, it's a game of innovation, of bringing them the best product and when I look at my brand portfolio in which brands are doing great. It's not based on price; it's based on innovation. If we don't bring the things that are exciting enough it's harder to tempt the Chinese. That's why we are focusing on increasing even more quality of our innovation for the Chinese market.”​

Douyin influence

He attributed this consumer shift to the strong influence of Douyin, the Chinese counterpart of social commerce platform TikTok, highlighting that L’Oréal Paris has been gaining share in China over Q1 thanks to its Douyin entry.

“A lot of the growth right now in the Chinese market is driven by e-commerce and by Douyin in particular. It started in mass but now luxury brands are joining and catching up. Of course, most of our brands have been on Douyin and we’ve been doubling our business on Douyin in the first quarter so its really promising for the future.​

The firm started launching its mass brands onto Douyin but was now progressively bringing its luxury brands to the platform.

“It’s a new channel with growth to some extent at the expense of Tmall. Right now, as of the first quarter, Douyin in total sales was bigger than Tmall. It’s been a really big shift in the Chinese market… Overall, online is more dynamic than offline and at the market level mass has been more dynamic than luxury,” ​said Hieronimus.

He assured that the company will continue to value other channels online and offline.

“We continue to invest in Tmall and we continue to invest, in particular, also in brick and mortar… We’re investing to continue to boost the image and the quality perception of our brand. And it’s always this combination of O+O – online plus offline – which allows us to widen our share in China as we've done again in the in the first quarter.”​