 "Jean-Christophe Letellier")
In India, we want to become champions of market transformation, moving consumption from the current 'hygiene' type to that of 'care', Jean-Christophe Letellier tells The Strategist
Growth in the Indian cosmetic industry slowed down to 7 per cent last year. When compared to market maturity globally, where do you place the Indian beauty market? How has the changing retail environment in India shaped current trends?
The Indian beauty market is a large, diverse one; we estimate it to be around Rs 350 billion. The reality is that growth has slowed down and we still have a long way to go. But at 7-8 per cent, the growth rate is still significant compared to the worldwide market growth of 3.5 per cent.
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Three factors are contributing to the India beauty market growth story. The first is the rise of the middle-class, particularly the lower middle-class. Second is the young demographic dividend of India - the 13-18-year-olds, who are digital natives, and more eager risk-takers. The third driver is, even though India has predominant traditional retail formats, the explosion in digital will take things forward - e-commerce is one and there is also a whole different level of consumers engaging with brands on digital media.
Where is L'Oreal India's growth coming from really - urban metros or smaller towns that display increasing disposable incomes and high aspirations? Which markets do you believe are crucial, considering L'Oreal commands a price premium?
It is true that our growth comes from metros - and we still have a lot to do there. When we started in 1994, we were very premium - we helped shape department stores and modern trade. Over the last years, we wanted to embrace the rising middle class in all cities. Today we have 700,000 doors where a L'Oreal product will be present. We still have a higher representation of the upper socio-economic classification, but more and more we source our growth from the SEC C and D type of consumers (the lower middle class), where our product catalogue hasn't been too deep. In India, we want to become champions of market transformation, moving consumption from the current 'hygiene' type to that of 'care'.
How is your 'make in India' approach helping you achieve cost-efficiency in this market?
'Make in India' is a lovely programme and we integrated this concept much before the term was coined - 90 per cent of our portfolio is sourced and produced locally. Over the last two years, besides manufacturing, we have also invested in two R&D centres (Mumbai and Bengaluru) with 110 researchers, specialised development teams to invent for India, and localised sourcing centres. Only to the exception of a certain level of luxury products, which are more universal and sourced from our international factories, most of our efforts are already in line with 'Make in India'.
Unbranded products still have a stronghold on the hinterland of India, and even in metros. With your plans of greater affordability, how does L'Oreal India plan to counter this type of competition?
The market is moving towards an upgradation - from soap to facewash, from shampoo to treatment, from hair oil only to conditioners, from basic makeup to more sophisticated makeup. Even unbranded products are making efforts to improve. In that sequence, we have to bring the best of efficacy, quality and safety to a larger number of consumers beyond the top-end.
In India, there is a trend towards premiumisation through smaller formats, like sachets. This is interesting because a sachet doesn't mean low quality. We are making a huge effort to be more affordable through different formats.
Which beauty segment is the promising for L'Oreal India? Do you see the male grooming segment contributing significantly in the coming years?
Makeup, facewashes, male-grooming and deodorants are growing very fast… all products that have a relationship with youth. In makeup, we have a growth rate of above 30 per cent, both with L'Oreal Paris and Maybelline. We have introduced kajals and 'Baby Lips' - the 'my first lipstick', targeted at teenagers at a Rs 125 price point. We have made a lot of effort to democratise makeup.
We have a 25 per cent market share for male-care products. This category still gives a single digit contribution to the overall market but is growing significantly - there are more men than women here, so I see no reason why it won't grow!
Is it really a fight for market share in India, or is it more a battle to grow the sector itself?
We are a distant number two against the market leader, but at the same time, the market is still nascent. We have our strengths: For instance, we brought in hair colour in a creme format in India as opposed to powder or henna as was historically prevalent before that. We have around 50 per cent market share of this segment.
In terms of consumer aspirations, India is very comparable to the rest of Asia. But what is different is the retail environment - modern retail here is not growing as fast as, say, China, Indonesia or Brazil. What also makes India unique is that it is rooted in beauty traditions, which you don't find so much elsewhere in the world - like the kajal or hair oil usage. Our role in India is to build a bridge between traditional recipes and products to modern cosmetics.
