L'Oreal SA plans to invest Rs 500 crore to open more factories, laboratories and an innovation centre in India, which the French cosmetics giant wants to be one of its top six markets in the world by the end of this decade, a top official said.
The company also plans to take several brands developed in the country to other markets, L'Oreal's Asia Pacific Zone MD Jochen Zaumseil says. "Garnier Color Naturals, Matrix oils, a salon specific brand and Kaajal (eyeliner) are all Indian innovations that we will be soon launching in other countries, especially in South East Asia because we feel that if its successful in a market like India, it should so well in other emerging countries too," says Zaumseil.
He was here to check the progress of the firm's research & innovation centre- its sixth such global facility-that will be inaugurated at Mankhurd in Mumbai next month.
India currently accounts for less than 1% of L'Oreal's annual sales kitty of over euro 20 billion. L'Oreal India targets 1 billion (Rs 6,300 crore) from its business in the next few years, up from Rs 1,000 crore in calendar 2010. The company wants to compensate for its late-mover disadvantage by flooding retail shelves with global products as well as brands developed locally.
WORKING ON ASPIRATION
The French company, which is almost synonymous with Bollywood actress and its brand ambassador Aishwarya Rai Bachchan in India, face strong competition from global rivalsUnilever and Procter & Gamble. In sales, the country's largest consumer products firmHUL is twenty times bigger than L'Oreal, whileProcter & Gamble is double its size.
While both Unilever and P&G have been making efforts to reach more than a billion Indians through affordable products, L'Oreal hopes to instead capture the growing ranks of middle-class customers by luring them upscale with aspirational products. "We don't want to tweak the product quality just to make it more affordable. We would want to sell products that are aspirational," says Zaumseil, who has spent more than 27 years with L'Oreal in seven countries.
Also, unlike most global consumer firms, L'Oreal follows an autonomous policy where most business decisions and product development are done in India itself. And it's already showing in numbers. Its sales have doubled every two years and the company has been profitable for more than five years now.
The company's target audience, which comprises the 60 million urban middle-class men and women, is on the rise too, and should increase to 200 million by this decade end, according to L'Oreal's internal estimates. Analysts back its game plan. "L'Oreal has kept its positioning consistent over the years and we are witnessing that consumers are increasingly going for indulgent or slice of luxury products where L'Oreal fits in perfectly," brand consultancy firm DY Works President Alpana Parida says.
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