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MUMBAI, India — Jean-Paul Agon, chief executive officer and chairman of L’Oréal, arrived here last week with more on his mind than just the ceremonial chore of cutting a ribbon at the company’s first research and innovation center to open in India. He underscored the importance of the Indian beauty market for L’Oréal, the global industry leader. India would be one of the top five markets for L’Oréal in the coming years, Agon declared, with the goal of adding 150 million customers by 2020.
This story first appeared in the January 18, 2013 issue of WWD. Subscribe Today.
Agon also helped connect the dots, explaining how local innovation would help lead to his policy of universalization, and speaking about the growth of L’Oréal India, which has been doubling in terms of sales every three years over the last decade.
Business and politics may not always go hand in hand, but when Agon and Prithviraj Chauhan, chief minister of Maharashtra, stood side by side at the ribbon-cutting ceremony, an already quickly rising brand was given added impetus. “We will accelerate the growth of innovative products tailored for the Indian market,” Agon added.
The springboard for his optimism was a 53,819-square-foot research and innovation center in Mumbai, the sixth in the world for the L’Oréal group. It was opened with a mission to translate local needs into innovative products, including skin care, hair care, hair color, color cosmetics and personal hygiene.
Agon said the opening was another reflection of the group’s “confidence in the great potential of the Indian market in which an investment to the tune of 9.7 billion rupees [or $178 million at current exchange] from 2011 to 2016” would help the group further strengthen its position in India.
L’Oréal has had a wholly owned subsidiary in India since 1994 and its products are available at about 750,000 points of sale. The company is expected to have sales of 15.8 billion rupees, or $291 million, for 2012 in India.
Pierre Yves Arzel, managing director of L’Oréal India, appears comfortable with what may seem an uphill task, even though he has been in India for only six months. “We will reach our target of 70 billion rupees [or $1.29 billion in sales] and 150 million consumers by 2020,” he said.
Agon observed that the center was an important step forward in L’Oréal’s global strategy of universalization. “Don’t try to find this word in a dictionary it doesn’t exist — because we invented it — we wanted to create the concept,” he said, addressing a gathering of the media before the inauguration. He explained that it was in fact a globalization “but in that we want also to localize the formula and the products themselves to create tailor-made products that are adaptable to the specific culture, beauty tradition, habits, lifestyle and purchasing power of every country and so specifically and especially for India.”
Agon added, “It is all about observing and listening very carefully to women and men with a profound respect for their uniqueness and their expectation.” In the process of universalization, the R&I center would contribute to L’Oréal’s target of adding nearly one billion new consumers worldwide, he said.
“With one of the highest growth rates in the Asia Pacific, India will be a key contributor in achieving this objective because we are convinced that the beauty market in India will quadruple in the next few years,” Agon noted.
Laurent Attal, executive vice president, research and innovation, L’Oréal explained the positioning of the new center. “This hub has a dual mission. First, to adapt technologies developed by our international worldwide centers to meet the expectations of Indian consumers and second, to invent from scratch totally dedicated technologies and products. In order to fulfill this mission, the hub encompasses two state-of-the-art facilities. The product development center here in Mumbai and an advanced research center in Bangalore.”
Mohammed Kanji, director of research and innovation at L’Oréal India, spoke about the cutting-edge technology at the center as well as the additional advanced research center in Bangalore, a 21,528-square-foot facility that would complement the one in Mumbai. “A special focus would be on decoding Ayurveda roots thanks to modern biological, chemical and analytical methods,” he said.
Agon pointed out that a “new consumer was appearing in India, who was more discerning and brand-conscious than ever, demanding innovation, quality and convenience.”
Agon said India would become one of L’Oréal’s top five countries in terms of sales in the next few years and was a “very important strategic market.”
“We have already doubled our sales in India every three years in the previous decade and our objective, the objective of the team here, is to quadruple our current level of sales by 2020,” he said.
L’Oréal has had many firsts for products in India, with the most recent being the launch of the BB cream in a special variant for Indian skin and a kajal that is referred to by the local team as part of the “Indovations” for the local market.
Agon mentioned that the fairness and henna-inspired products would be high on the list for research and innovation.
“India has been probably the fastest-growing beauty market in the world in 2012 and we think it will continue like this,” Agon said.
In fact, 2012 marked a milestone for L’Oréal globally, as for the first time in the company’s history, new markets had higher sales than Western Europe and North America. “This is a very crucial point when you bear in mind that these new markets will represent two-thirds of the entire market worldwide in 10 years time, and perhaps 80 percent of [L’Oréal’s] total beauty market worldwide,” Agon pointed out.
Speaking about the role India would play in terms of global beauty, he said he saw it as a “fantastic source of inspiration with a great heritage of beauty” but also as a source of talent, with many players of the L’Oréal team worldwide coming from India.
“We want our company to take on a new dimension in India,” he said, adding that the company had taken a “very long-term vision” on India.