Recently, foreign media reported that Ye Hongmu, CEO of L'Oreal Group, lowered the growth forecast of the global beauty market at the JPMorgan Chase event in Paris, from the initial 5% to the range of 4.5%-5%, which has attracted widespread attention in the industry. In particular, Ye Hongmu pointed out that the weakening growth momentum of the Chinese market is one of the main factors in adjusting expectations.
FMCG has learned that it is worth noting that Ye Hongmu was optimistic in April this year that the global beauty market would grow strongly at a rate of about 5%, and L'Oreal itself aimed to surpass the market and increase market share. However, just two months later, this expectation had to be adjusted in the face of the strong performance of domestic beauty brands during China's 618 e-commerce festival, especially Proya's market share squeezing L'Oréal on Tmall and Douyin. According to the data, Proya led the sales during Tmall 618, while L'Oreal suffered a year-on-year decline of 10.8%.
Signs of weakness in the Chinese market echo L'Oréal's internal description of the Chinese market, where "weak" and "complex" have become key words in L'Oréal's assessment of the market since last year. Analysts believe that the downward revision of the growth forecast of the global beauty market can be seen as L'Oréal's response to the changes in the Chinese market.
The picture shows Mr. Ye Hongmu, CEO of L'Oréal Group
Despite this, L'Oréal's overall performance continued to grow. In the first quarter of 2024, the Group's sales reached approximately RMB86.722 billion, a year-on-year increase of 8.3%, achieving growth in the first quarter for four consecutive years. The Group's four major business units all reported growth, with the Dermatology & Beauty division performing the most eye-catching, with sales increasing by 19.6% year-on-year. However, growth in the Luxury Products division was only slightly increased by 2.2 percent due to the impact of North Asia, especially China.
In a complex market environment, L'Oréal's growth was driven by its diversified brand portfolio and its precise grasp of market trends. In 2023, the Group will continue to strengthen its layout in the field of scientific skin care through the acquisition of brands such as Aesop and Lactobio, a microbial research company, while adjusting brands that do not meet the long-term strategy, showing its determination to transform into a technological and professional brand.
In the financial report, Ye Hongmu emphasized that L'Oréal Group is moving towards a new era with beauty technology at its core, which will not only strengthen the group's market leadership, but also improve its responsiveness to consumer needs and promote the innovation and sustainable development of products and services.
Source: Blue Eye