A comprehensive background of L'Oréal containing its History and Origins, Early Evolution, Modern Business, Global Expansion, Company Structure, Recent Efforts and Company DNA. As one of the chapters of the book FMCG: The Power of Fast-Moving Consumer Goods by authors Greg Thain and John Bradley. For more details on their success story and that of other leading FMCG companies, check www.fmcgbook.com or Amazon http://amzn.to/1jRyd20.

2. History & Origin . . . . . . . . . . . . . . . . . . . 3
Early Evolution . . . . . . . . . . . . . . . . . . . . 5
Modern Business . . . . . . . . . . . . . . . . . . 8
Global Expansion . . . . . . . . . . . . . . . . 13
Company Structure . . . . . . . . . . . . . . 17
Recent Efforts . . . . . . . . . . . . . . . . . . . .19
Company DNA . . . . . . . . . . . . . . . . . . 30
Summary . . . . . . . . . . . . . . . . . . . . . . . .32
Social Media Accounts . . . . . . . . . . . .33
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3.  L’Oréal is the world's leading company in cosmetics and beauty care products
 Originally named as Société Francaise des Teintures Inoffensives pour Cheveux
(literally translated French Society for Inoffensive Tinctures of Hair) and was
founded in 1909 at Clichy, France by Eugène Schueller
 L’Oréal‘s founder Eugène Schueller entered the Institute for Applied Chemistry
in Paris and became an instructor at the Sorbonne
 He worked as a chemist at Pharmacie Centrale de France and later became the
head of their research laboratory and chemical services
 In 1905, he was visited by a hairdresser who was anxious to pay someone 50
Francs a month to find a safe and reliable hair dye
 This is when Eugène’s life, and the future global cosmetics industry, changed.
 In 1907, he launched his new hair dye under the brand name Auréole
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4.  To publicise his ventures, he contributed articles to a magazine called
Coiffure de Paris.
 While Eugène had been giving the German army the treatment he later
doled out to his competitors, the management of L’Oréal was in the hands
of his wife. L’Oréal did very well.
 The formula for success was already very well established, and top scientists
were coming up with products, which offered breakthrough performances at
affordable prices.
 In 1919, he bought out the Lumière film production company
 He also dabbled in companies making Bakelite, cellulose acetate and
artificial silk
 Revenues ran at 300,000 francs a month
 In 1954, he managed to run a soap company, a paint factory and a magazine
alongside L’Oreal
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5.  L’Oréal employed three (3) chemists in 1920
 In 1925, L’Oréal came up with its first real blockbuster product, L’Oréal d’Or,
a hair dye that added golden highlights which made dyed blonde hair seem
natural
 Business boomed because of a sea of change in women’s hairstyles.
 Hollywood star-inspired craze for the bob and frequent dying was bad for
hair
 It immediately set the business to work on devising a ground-breaking
bleach
 In 1929, L’Oréal Blanc, the hair bleach was launched
 The rise of the perm was another threat. Perms did not accept hair dyes that
did not penetrate the hair
 They filed a patent for paradiamines which formed the basis of fast-penetrating
hair colours, Imédia, a perm-friendly dye
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6.  Company revenues in the year exceeded a million francs a month
 In 1934, Dop, the first mass market shampoo was launched, marking the start
of making its science available at affordable prices to as wide as a market as
possible
 During the same year, Ambre Solaire, the sun protection oil was developed
and launched
 With 300 employed salesmen, L’Oreal was by far the country’s most
successful hair and skin-care company
 A French politician, André Bettencourt joined the business in 1938 and
François Dalle in 1941
 In 1942, they developed a mixing tower that embodied a new saponification
process which became the industry standard, improving the manufacture of
soap
 In 1951, the company had more than 100 chemists
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7.  During the same year, the first lightening tin, Imélda D was produced.
 In 1954, the company expanded its research capabilities in skin care.
 They signed a technical agreements with Vichy, owned by a cosmetologist
Georges Guerin.
 They used the Vichy Thermal Spa Water to treat a skin wound while staying
at the famous spa
 Subsequently developed a range of skin products all containing the magic
elixir
 In 1955, the first coloring shampoo, Colorette, was introduced
 In 1957, Eugène Schuller passed away and François Dalle was the next in line
as the new boss.
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8.  In 1957, hair products were launched onto the consumer market
 This took the science to a new level, thus, the establishment of a
Fundamental Research Unit
 Focused on developing a greater understanding of how skin and hair
actually function
 Focused on hair and skin care products and sold off the soap business
 The firm worked on enhancement of any hair and skin care brands with the
use of research capabilities in basic skin and hair physiology and function
 In 1964, Lancôme became the first major acquisition
 This took the company into the upscale perfume and make-up sectors
 The Kérastase brand was also launched, a cross between a hair treatment
and a spa experience
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9.  In 1965, Laboratoires Garnier was acquired, a manufacturer of hair care
products made with organic ingredients
 In 1970, another brand, Biotherm, was acquired.
 During the same year, L’Oreal was already employing 500 scientists and had
just acquired the mass-market Gemey brand of makeup
 In 1973, a majority stake was taken in the pharmaceutical company,
Synthélabo
 In 1979, the company bought the pharma company, Metabio-Joullie, and
substantial strakes in both Marie Claire and Interedi-Cosmopolitan
 By 1980, the merging of Synthélabo and Metabio-Joullie took place
 Gesparal, a new French holding company, was formed owned 51% by Liliane
and 49% by Nestlé.
 It provided L’Oréal a strong defense against hostile takeover
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10.  For Nestlé, it was an excellent investment into a category that was growing
faster and had higher profit margins than most of their core businesses
 The idea of the business with Nestlé is that it protect the company from the
short-term demands of the stock market
 The partnership enabled them to take a longer-term perspective to business
strategy
 Cacharel was also invested in.
 This was where the Parfums et Beauté International expertise was
applied to
 The perfume arm of Cacharel and Anaïs Anaïs was taken control of
 Designed to be the first perfume bought by or for teenage girls
 In 1981, a new state-of-the-art dermatological research facility, Laboratoires
Dermatalogiques Galderma, was opened
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11.  Another tangible benefit from their Nestlé shareholder, a 50:50 joint venture
between the two companies
 For the Ambre Solaire brand, the company patented an ultra-powerful, anti-
UVA ingredient, Mexoril SX
 It kept abreast of the changing nature of the sun cream market - away from
bronzing to protection
 The company was convinced it could revive Helena Rubinstein while
benefiting from its attractive stable of brands
 The brand, along with Estée Lauder, was one of the Grande Dames who
dominated the early cosmetics industry
 The US arm of Helena Rubinstein’s company grossed $22 million a year
 By 1972, the company was sold out to Colgate-Palmolive for $146
million
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12.  In 1983, Helena Rubinstein Inc.’s Japanese and South American business
units were bought
 By 1984, 45% of the main business had been purchased
 Come 1986, the high-end Lancôme launched the market’s first anti-ageing
cream, Niosôme
 In 1988, the company gained full control of the brand and business they had
long coveted (Helena Rubinstein Inc.) and L’Oréal became the largest
cosmetics company in the world
 It was making a profit of over a billion francs a year
 It made Madame Liliane, the largest individual shareholder, the richest
woman in France.
 In 1988, a 42-year-old, Welsh-born L’Oréal lifer, Lindsay Owen-Jones
became the company’s third CEO. Owen-Jones’ governance would make
Liliane the richest woman in the world.
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13.  In 1912, L’Oreal started selling their products in Holland, Italy and Austria
 In 1922, they opened an agency in Berlin but failed to prosper
 From 1936-1937, company subsidiaries were established in Italy, Belgium,
Denmark, UK, Algeria and Argentina
 In 1953, using a complex ownership arrangement, Cosmair was established
as the sole US licensee for L’Oréal products
 Most of the action was in mainstream cosmetics (market that grew at 10% a
year throughout the 1950s and 1960s)
 It was handled by Jacques Corrèze (slowly began to gain distribution for a
select few L’Oréal products)
 By the mid 1970’s, they were busy gaining foothold in Uruguay, Peru,
Algeria, Mexico, Canada, Japan, Australia, New Zealand and Hong Kong
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14.  By 1976, a joint venture was set up: L’Oreal with the Soviet chemical
company, Mosbytchim, to gain a toehold into the Soviet Union
 The company was generating an annual turnover of about $350 million
 By 1984, Cosmair doubled its size and acquired Warner Cosmetics from
Warner Communications, with the help of Nestle
 In 1985, Biotherm was launched into the US market to add further impetus
 In 1989, Plénitude was launched with a $35 million advertising blitz
 The success of Giorgio Armani men’s fragrance, Helena Rubinstein’s brand
gave Cosmair another step change in the size of its US and global operation
 In 1990, L’Oréal ranked second only to Unilever due to the acquisition of
Armani and Ralph Lauren brand franchises
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15.  The year after, L’Oréal was turning over $1 billion in sales
 They were also dubbed as the sixth largest marketer of cosmetics in the
United States
 It had 3,600 employees in a company laboratory located in Clark, New Jersey
 In 1994, L’Oréal became the first foreign company to obtain authorization
from the Indian government to establish a 100% owned subsidiary
 By 1996, the company had acquired the mass-market makeup giant,
Maybelline.
 This propelled L’Oréal into the number two slot in US cosmetics, behind
Proctor & Gamble
 They distributed the product as a range of low-priced makeup aimed at
teenagers
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16.  Come 1997, L’Oréal China was formed as part of a multi-divisional Asian
zone structure
 By 1998, Maybelline brand was launched to spearhead their charge in China.
 Soft Sheen, leader in ethnic hair care, was also acquired in the US
 By 2000, Carson was acquired, a leading beauty products business, aimed at
the African American sector
 L’Oréal transformed its position with the acquisition of the sector’s leading
brand, Matrix Essentials, followed by Kiehl’s
 In 2001, L’Oréal acquired a 35% share of the Japanese firm, Shu Uemura
Cosmetics, Inc.
 Redken was acquired in 2003
 Cosmair was purchased by L’Oréal to be a 100% owned subsidiary which
Nestlé has 70%; Liliane Bettencourt 26% and L'Oréal only 4%.
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17.  L’Oréal has had such a consistent strategy over time that has resulted in very
little internal disruption due to re-organisations.
 The McKinsey recommended divisional structure from 1969 was tweaked in
1985 when Parfum’s et Beauté division became unwieldy
 By 2004, the structure re-arranged as follows:
 Professional Products - Key brands: L’Oréal Professional; Redken; Matrix,
distributed through hair salons
 Consumer Products - Key brands: L’Oréal Paris; Garnier; Maybelline;
SoftSheen-Carson, distributed through mass-market channels, including
hypermarkets, supermarkets and drug stores
 Luxury Products – Key brands: Lancôme; Biotherm; Helena Rubinstein;
Giorgio Armani; Ralph Lauren; Cacharel; Kiehl’s since 1851; Shu Uemura
 Active Cosmetics – Key brands: Vichy; La Roche-Posey, distributed
through pharmacies and dermatologists
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18.  L’Oréal acquired Body Shop which was set up as the fifth division.
 In 2009, Kérastase had been added to Professional Products; Yves Saint
Laurent and Diesel to Luxury Products and Innéov and Skinceuticals were
added to Active Cosmetics
 The Gasparal Holding Company, which had been set up to facilitate the
selling of family shares to Nestlé, was merged with L’Oréal to create a more
normalized shareholding arrangement
 Nestlé’s 49% stake in Gasparal became a 26.4% direct holding in L’Oréal, with
Liliane Bettencourt, taking 27.5%
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19. 1995
 L’Oréal reached an annual turnover of over 8 billion Euros
 Sales were significantly boosted by the 1990 launch of Lancôme’s Trésor, the world’s
best-selling perfume
1996
 Garnier Fructus was launched, offering a range of affordable hair products
 Acqua di Gio, the world’s best-selling men’s fragrance, was likewise launched
 Merger between their 57%-owned Synthélabo pharma unit and Elf Aquitaine’s Sanofi
2001
 L’Oréal sold its stakes in Lanvin and Marie Claire
 L’Oréal bought Revlon’s Colorama make-up brand
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20. 2003
 L’Oréal announced its 19th consecutive year of double-digit growth in
operating profits
 Sales reached14.5 billion euros
2004
 3.6% sales increase, primarily driven by a sluggish European market which
accounted for half the company’s sales
 Launch of L’Oréal’s ReFinish, Kérastase’s Réflection and Innéov Hair Mass
 Growth on the Professional Products (up 7.6% like-for-like) and Active
Cosmetics (up 165% like-for-like).
 Shift in consumer spending patterns between price bands
 L’Oréal opened stores for Lancôme and Biotherm
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21.  U.S. Growth was still building sales (up 8.1% like-for-like to break the $4
billion barrier) and share in the largest cosmetics market in the world
 Sales in Asia grew 17% (Sales in China almost doubled through organic
growth), while in Eastern Europe by 29% (Vichy, up 37% in Eastern Europe,
and had become Russia’s leading skincare brand and was launched in India
in the year)
2005
 The sales increase almost doubled to 6.5%
 Sales in North America, grew by 8.3% after launching Garnier Fructus
 The first year in which two significant shifts in the business crossed key
thresholds: No longer a Western European-dominated company and no
longer a haircare-dominated company
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22.  R&D labs continued to fuel product innovation with 2,900 researchers.
 Invested 496 million euros, registering a staggering 529 patents (70 of them
on packaging developments)
 Put increased emphasis on men:
 In 1990, 4% of European men used a skincare product and will increased
to 20% by 2003.
 In Japan, 30% of men under 30 were skincare users and over 80% in
South Korea
 Vichy had been ahead of the game
 Launched Basic Homme in 1986
 L’Oréal Men Expert was launched into mass-market channels
 Shu Uemura brand was launched on the US West Coast
 Matrix was expanding from America into markets such as Brazil, India, China
and Eastern Europe
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23. 2006
 Fourth L’Oréal CEO: Jean-Paul Agon announced some tweaks to their
strategy
 Invested on a new product, Age Recharge by Kérastase, with a budget of 533
million euros.
 The product contains Pro-Xylane, a revolutionary anti-ageing compound for
mature skin made using green technology which was being sold on
Seniors/older people
 Lancôme, Vichy and La Roche-Posay, all launched products containing Pro-
Xylane
 Acquiring the Body Shop during the year, marked a new direction
 They opened its first store in India and began online shopping in Germany
 Signed license with Diesel
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24.  In the Active Cosmetics division, L’Oréal acquired Sanflore
 The global market share increased from 15% to 15.6%
2007
 Sales increased by over 8% to over 17 billion euros
 Every division grew like-for-like by at least 7.5%
 Business segment perfumes and skincare both grew by double digits
 Both Western Europe and North America grew a respectable 4%
 Signed an agreement with Light BioScience
 US Professional Products division was strengthened with three acquisitions:
Luxury haircare brand, PureOlogy, and two regional salon distributors, Beauty
Alliance and Maly’s West
 The Body Shop delivered a healthy 5.7% like-for-like growth
 Russia delivered the highest absolute sales growth of any country
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25.  Brazil and China were already top five world markets for cosmetics
 L’Oréal increased its focus on what it called the “Next 12” countries
 Sales went up in Argentina by 37%, Columbia 27%, Czech Republic, Dubai,
Indonesia by 21%, Philippines and Poland 16%, South Africa and Thailand
22%, Turkey, Ukraine (already the third-largest Eastern European subsidiary,
after only three years in existence) and Vietnam, where a subsidiary was
established.
2008
 Advertising and promotional spends were maintained
 Third-largest advertiser in the world
 Increased share of voice
 Research and development budget was increased by nearly 4%
 Increased the department employee count by 6%
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26.  Selling, and general and administrative costs came down as part of a policy
of “permanent restructuring”
 Acquired the following: Yves Saint Laurent Beauté, Boucheron, Stella
McCartney, Zegna, Roger & Gallet and Oscar de la Renta
 Strengthened its American route to market and had acquired Columbia
Beauty Supply, a third salon distributor
2009
 A sales decline of 0.4%, given a heavy influence by retail inventory reduction
on a massive scale
 The Body Shop held steady
 Dermatology JV grew by over 10%
 Action was taken in the poorly performing regions and sectors
 Lower-priced Garnier Essentials range priced at under 5 euros helped the
brand grow 26

27.  Luxury Products division introduced small format perfume bottles and entry-level-
priced skincare products
 Kiehl’s was promoted to pillar brand status
 Total sales growth, up by 28%
 Yves Saint Laurent brand grew by 17% in the US
 Notable year for making official that it’s primary goal was to reorient the
company decisively towards developing and emerging markets
 The company set the goal of recruiting an extra billion consumers
 Two new strategic changes to facilitate this shift:
 Further ramping up of R&D capabilities and investment
 Transformation of company culture and structures
 A new product was developed, the Innovative Renewal Lash Serum
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28. 2010
 Sales were up a very impressive 11.6% to just under 20 billion euros
 Global retail monitoring calculated theirs at $24 billion
 Efficiency measures had driven the operating profit margin in New Markets
up to 16.9%
 Consolidated its three Asian research centres into a new Asian division of
R&D
 Increase the focus on products relevant for Asian skin and hair needs
 Professional Products grew by 4%, having added 35,000 salons
 Luxury Products growing by 7% due to the growth of Génifique, Kiehl’s,
Yves Saint Laurent and Lancôme
 Maybelline was spearheading the drive exemplified by Falsies Mascara and
became the best-selling mascara in North America and Western Europe
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29.  First factory in Russia opened its doors, to service the countries of the old
Soviet Union
 Essie nail care brand was purchased by the North American unit
2011
 Sales breached the $20 billion Euros mark
 Sales in New Markets came within 20 million euros
 Luxury products grew by 7.7%
 Best-performance of the cosmetics divisions
 Lancôme Visionnaire became the first ever-fundamental skin corrector on the
market
 Acquired Clarisonic, the market leader in sonic skincare technology
 The Body Shop finally showed like-for-like growth just over 4% with around
16 online stores
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30.  Competitors can easily predict what the company will do, but it is extremely
difficult to pre-empt them, copy them or stop them from doing it
 Built a unique business model with a well-entrenched company culture
 Their superior research function has enabled them to grow and develop
virtually every brand they have acquired
 Commitment to the centrality of core research into skin and hair has been
passionate, prolonged and ongoing
 By focusing their research into skin and hair, rather than any specific
production technologies, their research has always been solution neutral
 L’Oréal is unbeatable at their business
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31.  Two factors combined for longer timescales:
 Consistency of management
o Has had just four CEO’s in a century
o Keeping it in the family – both personal and corporate – became a
key part of the company’s future success
 Consistency of ownership
 150 years of L’Oréal service
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32.  The combination of the following has led to consistent success over a long
period of time
 Scientific Capabilities
 Acquisition Strategy
 Regional Expansion
 Nestlé buying L’Oréal outright would be deciding factor in 2014
 Restrictions on either Nestlé or the Bettencourt family selling to outside
parties are lifted
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33. Website: www.loreal.com/default.aspx
LinkedIn: www.linkedin.com/company/loreal
Facebook: www.facebook.com/beautyforallbyloreal
Twitter: twitter.com/LOrealParisUSA
Instagram: instagram.com/beautyforallbyloreal
Youtube: www.youtube.com/user/lorealparisnyc
Google+: plus.google.com/u/0/110853080416846743402/about
Pinterest: www.pinterest.com/lorealparisfr/
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