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L’Oreal Turns up Fragrance Volume with V

NEW YORK -- Having built a business on treatment and color cosmetics, the L'Oreal division of Cosmair Inc. is looking to broaden its horizons.<BR><BR>It will begin that quest in May with the launch of a new women's fragrance, V by...

NEW YORK — Having built a business on treatment and color cosmetics, the L’Oreal division of Cosmair Inc. is looking to broaden its horizons.

It will begin that quest in May with the launch of a new women’s fragrance, V by Vanderbilt.

It will be L’Oreal’s first foray into the fragrance category in nearly 10 years, and the company hopes it will be a stepping stone to a much larger U.S. presence.

John Wendt, senior vice president and general manager of the division, said the firm is considering the establishment of other fragrance brands.

“We are exploring the possibility of working with other licenses,” Wendt said. “We are planning another fragrance entry for 1995.”

While Wendt declined to disclose specific dollar figures, he said the division is shooting for a 16 percent increase in volume for 1994.

Industry sources estimated that last year the L’Oreal division had an 11 percent increase, reaching a total wholesale volume of $300 million. A 16 percent increase this year would give the division an estimated volume of $350 million.

“V is our signal to the industry that we are attending to this category with the same level of concern and detail of product imagery that we give to treatment and color,” Wendt said.

V, which will be backed by $7 million to $8 million in advertising this year, is projected to have a wholesale volume of $30 million by 1995.

Vanderbilt, a women’s fragrance launched in 1982 under the Gloria Vanderbilt license, has been the company’s main fragrance focus for roughly a decade.

Sources estimated that last year, the brand had a wholesale volume of about $35 million. The company also markets the Ralph Lauren Chaps men’s fragrance, which has an estimated $10 million in sales.

V will be aimed at active and sophisticated women who tend to prefer lighter and fresher scents than Vanderbilt, Wendt said.

“V certainly is hot,” said Valerie Cheney, cosmetics and fragrance buyer for Happy Harry’s Discount Drugs in Newark, Del. “They seem to be going after the right age group. If they continue to support it after the launch year, it should do really well.”

“V should really do well,” agreed Carl Lynch, cosmetics and fragrance buyer for I Got It At Gary’s of Eagleville, Pa. “They have a lot planned to support it and we are going along with whatever they are doing.”

But V is just part of the strategy to achieve L’Oreal’s aggressive growth plan. While building the fragrance business, L’Oreal intends to keep its momentum going in treatment, as well as continuing to build sales of color cosmetics.

A major new skin care product called Plenitude Excell-A3 will make its debut in May. According to Wendt, Excell will be supported with the heaviest launch budget for any treatment item in the division’s history.

The company is planning to spend $20 million on a print and TV campaign, which represents two-thirds of total Plenitude spending for the year. The company is also planning to distribute 18 million samples.

“As Excell grows, we will put even more fuel behind it,” Wendt said.

Industry sources estimate that Excell could have a wholesale volume of $30 million, or one-third of Plenitude’s projected $90 million wholesale volume for the year, sources said. The $90 million would represent roughly a 20 percent increase in total Plenitude sales.

“We are planning an extremely aggressive growth pattern for Plenitude over the next two years,” Wendt said. “We are looking to keep increasing sales by double digits.”

According to sources, double-digit growth over the next two years would put Plenitude at $100 million.

L’Oreal will also step up spending behind its color cosmetics line. The company, said Wendt, is planning to spend $26 million to $27 million — a 13 percent increase — behind its color products this year.

“Color has been growing on an average of 12 to 15 percent per year over the last three years,” he said. “We expect to keep the momentum rolling with increased ad spending, new technology and exciting new products over the next few years.”

Wendt noted that the company is anticipating a 16 percent increase this year in cosmetics sales and a 15 to 20 percent growth in the category for 1995.

L’Oreal color cosmetics will have a wholesale volume of roughly $200 million this year, according to estimates by industry sources, and are expected to reach $250 million in the next few years.

Currently, fragrance comprises less than 10 percent of the division’s overall volume. Color cosmetics make up the bulk of sales, generating 60 percent, with Plenitude coming in with the remaining 30 percent, according to industry sources.

Under the Plenitude umbrella, Excell will be considered the star product for the year. The new facial treatment, which contains alpha-hydroxy acids, antioxidants to combat free radicals and a sunscreen, represents a new technology for the company and for the treatment industry.

“We believe we are the first company to incorporate these three ingredients into one product,” Wendt said. “Previously, they were incompatible.”

“We feel pretty strongly that Excell will add significantly to our Plenitude business,” noted Lynch of I Got It at Gary’s. “We do an extraordinary amount of Plenitude business and anything they seem to come out with in treatment is a winner. They have an aggressive approach to promoting it and we have created special end cap displays for the line, which seem to be paying off for us.”

As the company concentrates on fragrance and Plenitude, color — the category on which L’Oreal was founded in the U.S. in 1983 — will not fall by the wayside.

Two years ago, the company launched an ad campaign carrying the phrase More Beautiful by Design. The tag line was created to give the brand glamour, while increasing its accessibility.

“Color is an emotional purchase as well as an issue of performance,” Wendt said. “We had felt that our last few campaigns concentrated a bit too much on technology and benefits. Our goal was to still talk about the benefits, but to bring a softer tone with more joy and energy.

“Unfortunately, I don’t think More Beautiful by Design has gotten us quite there,” he added. “It hasn’t hurt us but it really hasn’t helped us. I think we over-intellectualized things and made them somewhat more complicated.”

Wendt noted that the company’s agency is working on a new tag line, but that the sophisticated look of the ads, with their airy ambience and vivid images, would remain untouched.

In addition to advertising, L’Oreal has continued to roll out its System 2000 display, which hit stores two years ago.

According to industry sources, the company has invested more than $17 million on the fixture, which groups all L’Oreal products by skin type and product function. System 2000 is now in 16,000 to 17,000 of L’Oreal’s total of 21,000 doors and will continue to expand in the next few years.

Wendt noted that at least 95 percent of the doors that have taken System 2000 are giving L’Oreal eight feet of space or better, which has typically meant a 20 to 25 percent increase in the company’s space for those doors.

In terms of new product launches, L’Oreal plans to continue its strategy of bringing prestige-inspired items to the mass market.

“L’Oreal is very on top of everything with their color cosmetics,” said Cheney at Happy Harry’s. “They are big on new ideas and we do a very strong business with their mascaras and their lip and nail products.”

Next month, the company will launch Dualite Perfectly Flawless Compact Makeup that can be used dry for a natural powder finish or wet for more matte coverage.

While several department store brands have incorporated this type of technology in a foundation, there have been few entries of this kind in the mass market. L’Oreal will also attempt to broaden the mass market’s lipstick vocabulary by adding 12 sheers to its Colour Riche Hydrating Lipstick line. Most mass market lines offer cream or frost finishes and only a few matte shades.

“Last year we had a 16 percent increase in total L’OrÄal business, including color, and I’m expecting a 15 to 20 percent increase this year,” said Lynch of I Got It at Gary’s. “L’Oreal is being much more aggressive with its color advertising this year and we’ve always done exceptionally well with it. I think it will continue to grow because people are becoming more familiar with it. Their packaging far exceeds anything else in the mass market.”

“We’ve done really well with L’Oreal color,” said Nancy Germano, cosmetics and fragrance buyer for Harmon Discount Stores of Fairfield, N.J. “They have great products and really back them up. What more can you ask for?”