Last month L'Oreal CEO Jean-Paul Agon announced that the company plans to use its $2bn cash pile to make acquisitions as part of its expansion plans.
Great opportunity in emerging markets
And according to the head of L’Oreal’s business in Latin America, Africa and the Middle East, Alexandre Popoff, Brazil holds a great opportunity for the company.
“We are still very much in opportunity territory. The big part of the growth will be coming from mass-market products,” he said, in an interview with Bloomberg.
Popoff explained that the company may look to buy a Brazilian brand to help this expansion, particularly following Agon’s previous comments stating the same.
Agon stated growth in Latin America is accelerating and that the Paris-based company will aim for 30 percent market share in Brazil this year.
Hair care key part of strategy
In the Bloomberg interview, Popoff stated that hair care is a key part of the company’s growth strategy. The reason behind this, according to the executive, is that 60 percent of Brazilian women use four or five products a day on their hair making it the world’s largest in the category on volume, and second to the US in terms of value.
Popoff explained that because of their hair and lifestyle, women in Brazil use a lot of post-shampoo products.
The heavy product use combined with the growing economy in the growth markets, are the main factors driving L’Oreal’s latest strategy.
Develop customer understanding
Last year the company set up research centers in emerging markets to better understand consumers, as it bids to capture a billion new customers.
The ability to innovate for these markets, which L’Oreal says now make up 53 per cent of the global beauty market, must come from a deep understanding of the habits, needs and preferences of the Chinese, Indian and Brazilian consumers, the company explained.
In addition to consumer habits altering between regions, the company also said that a consumer’s experience of a product, and perception of performance, can also differ.
For example, L’Oreal said the foaming ability of a shampoo or shower gel is not appreciated in the same way by different cultures. In an attempt to address these different perceptions of performance, the company said it would be adapting its testing methods for different markets.
In Brazil, it plans to accelerate investment in research and development where there are currently 20 researchers employed.
At centers like this the company are producing new products, which Popoff claims account for 20 percent of L’Oreal’s annual sales in Brazil, and are introducing a Garnier body lotion that claims to keep skin moisturized for seven days.