+12%

9,874 $m

FMCG

For more than 100 years, L’Oréal has maintained a tenacious focus on pushing the boundaries of beauty innovation. Carrying out its mission of beauty for all, it leverages diversity, staying relevant to a variety of markets. For the first time ever, L’Oréal’s New Markets division is the company’s number one sales zone, now representing about 40 percent of total cosmetics sales. The brand opened offices in the Middle East and Africa and plans to open the L’Oréal Professional African Salon Institute in South Africa later this year, following the opening of facilities in India, China, and Brazil. The focus on innovation was evident in 2012 through a USD $1.05 billion R&D investment and 611 registered patents with a focus on customizing products in tune with local markets. Viego ranked the brand among the world’s most responsible, a clear sign of L’Oréal’s commitment to global sustainability. The UNESCO/L’Oréal prize “For Women in Science” is also a relevant illustration of its commitment to Corporate Citizenship. L’Oréal has stayed true to its mission throughout the years of offering all women and men across the globe the best of cosmetics innovation in terms of quality, efficacy, and safety. The outlook for L’Oréal seems strong with growth continuing in the New Markets division. The future will tell how the brand will continue to leverage all these innovations, building on its heritage and global presence expansion.

L’Oréal S.A.

Type	Société Anonyme
Industry	Personal care
Founded	1909
Founder(s)	Eugène Schueller
Headquarters	Clichy, Hauts-de-Seine, France
Area served	Worldwide
Key people	Jean-Paul Agon (Chairman andCEO), Liliane Bettencourt (Non-executive director and major shareholder)
Products	Cosmetics and beauty products
Revenue	€22.46 billion (2012)[1]
Operating income	€3.697 billion (2012)[1]
Profit	€2.868 billion (2012)[1]
Total assets	€29.53 billion (end 2012)[1]
Total equity	€20.94 billion (end 2012)[1]
Employees	72,640 (end 2012)[1]
Subsidiaries	The Body Shop
Website	loreal.com

The L’Oréal Group is the world’s largest cosmetics and beauty company.^[2] With its registered office in Paris and head office in the Paris suburb of Clichy, Hauts-de-Seine, France,^[3] it has developed activities in the field of cosmetics. Concentrating on hair colour,skin care, sun protection, make-up, perfumes and hair care, the company is active in the dermatological, tissue engineering andpharmaceutical fields and is the top nanotechnology patent-holder in the United States.

History[edit]

In 1907, Eugène Schueller, a young French chemist, developed a hair dye formula called Auréale. Schueller formulated and manufactured his own products, which he then sold toParisian hairdressers.

On 31 July 1919, Schueller registered his company, the Société Française de Teintures Inoffensives pour Cheveux (Safe Hair Dye Company of France). The guiding principles of the company, which eventually became L’Oréal, were research and innovation in the field of beauty.

In 1920, the company employed three chemists. By 1950, the teams were 100 strong; that number reached 1,000 by 1984 and is nearly 2,000 today.

L’Oréal got its start in the hair-color business, but the company soon branched out into other cleansing and beauty products. L’Oréal currently markets over 500 brands and many thousands of individual products in all sectors of the beauty business: hair colour, permanents, hair styling, body and skin care, cleansers, makeup and fragrances. The company’s products are found in a wide variety of distribution channels, from hair salons and perfumeries to hyper – and supermarkets, health/beauty outlets, pharmacies and direct mail.

L’Oréal has six worldwide research and development centres: two in France: Aulnay and Chevilly; one in the U.S.: Clark, New Jersey; one in Japan: Kawasaki, Kanagawa Prefecture; in 2005 one was established in Shanghai, China, and one in India. A future facility in the US will be in Berkeley Heights, New Jersey.

From 1988 to 1989, L’Oréal controlled the film company Paravision, whose properties included the Filmation and De Laurentiis libraries. StudioCanal acquired the Paravision properties in 1994.

L’Oréal purchased Synthélabo in 1973 to pursue its ambitions in the pharmaceutical field. Synthélabo merged with Sanofi in 1999 to become Sanofi-Synthélabo. Sanofi-Synthélabo merged with Aventis in 2004 to become Sanofi-Aventis.

On 17 March 2006, L’Oréal purchased cosmetics company The Body Shop for £562 million.

L’Oréal’s famous advertising slogan is “Because I’m worth it”. In the mid 2000s, this was replaced by “Because you’re worth it”. In late 2009, the slogan was changed again to “Because we’re worth it” following motivation analysis and work into consumer psychology of Dr. Maxim Titorenko. The shift to “we” was made to create stronger consumer involvement in L’Oréal philosophy and lifestyle and provide more consumer satisfaction with L’Oréal products. L’Oréal also owns a Hair and Body products line for kids called L’Oréal Kids, the slogan for which is “Because we’re worth it too”.

In 1987, L’Oréal and 3 Suisses founded Le Club des Créateurs de Beauté specialising in mail order sales of cosmetic products. In March 2008, L’Oréal acquired 3 Suisse’s stake, taking sole control of the company.^[5]

In November 2012, L’Oréal inaugurated the largest factory in the Jababeka Industrial Park, Cikarang, Indonesia, with a total investment of US$100 million.^[6] The production will be absorbed 25 percent by domestic market and the rest will be exported. In 2010 significant growth occurred at Indonesia with 61 percent increase of unit sales or 28 percent of net sales.^[7]

Business[edit]

Corporate governance[edit]

Board of directors[edit]

Current members of the board of directors of L’Oréal^[8] are:

Management committee[edit]

The management committee includes:^[9]

Stockholders[edit]

As at year end 2012:^[1]

• Breakdown of share ownership: 30.5% by the Bettencourt family, 29.3% by Nestlé, 24.5% by international institutional investors, 8.3% by French institutional investors, 5% by individual shareholders, 1.7% treasury stock and 0.7% by employees.

Sales, profits, etc.[edit]

In 2003, L’Oréal announced its 19th consecutive year of double-digit growth. Its consolidated sales was €14.029 bn and net profit was €1.653 bn. 96.7% of sales derived from cosmetic activities and 2.5% from dermatological activities. L’Oréal has operations in over 130 countries, employing 50,500 people, 24% of which work in France. 3.3% of consolidated sales is invested in research and development, which accounts for 2,900 of its employees. In 2003, it applied for 515 patents. It operates 42 manufacturing plants throughout the world, which employ 14,000 people.

• Cosmetics sales by division breakdown: 54.8% from consumer products at €7.506 bn, 25.1% from luxury products at €3.441 bn, 13.9% from professional products at €1.9 bn, and 5.5% from active cosmetics at €0.749 bn.

• Cosmetic sales by geographic zone breakdown: 52.7% from Western Europe at €7.221 bn, 27.6% from North America at €3.784 bn, 19.7% from rest of the world at €2.699 bn.

In 2007, L’Oréal was ranked 353 in the Fortune Global 500.^[10] The company had earned $2,585 million on sales of $19,811 million. There were 60,850 employees.^[10]

Joint ventures and minority interests[edit]

L’Oréal holds 10.41% of the shares of Sanofi-Aventis, the world’s number three and Europe’s number one pharmaceutical company. The Laboratoires Innéov is a joint venture in nutritional cosmetics between L’Oréal and Nestlé; they draw on L’Oréal’s knowledge in the fields of nutrition and food safety. Galderma is another joint venture in dermatology between L’Oréal and Nestlé.

Corporate Social Responsibility[edit]

Sustainable Development[edit]

In 2009, L’Oréal declared their intention to cut greenhouse gas emissions, water consumption and waste by 50% over the period 2005-2015 ^[11] – a reduction in carbon dioxide emissions that is to be in part achieved by the use of solar panels, biogas and electricity and hot water produced from the combustion of methane gas recovered from agricultural waste.^[12] In 2012, the company announced a -37.1% reduction in C02 Emissions, a 24% reduction in water consumption and a -22% reduction in transportable waste, and was named a sector leader by Climate Counts for its practices and achievements in the management of carbon emissions.^[13]

Position on animal testing[edit]

In 1993, L’Oréal was faced with problems due to animal rights activists who protested about the use of animal testing by the company.

Though protest group Naturewatch states that L’Oréal continues to test new ingredients on animals,^[14] the company has clarified that no animal testing for finished products has taken place since 1989, that L’Oreal has invested significantly in alternative methods for chemical safety testing,^[15][16] and that tests on new ingredients make up less than 1% of all safety tests.^[17]

Following L’Oréal’s purchase of The Body Shop, who continue to be against animal testing, The Body Shop founder Dame Anita Roddick was forced to defend herself against allegations of abandoning her principles over L’Oréal’s track record on animal testing. Calls were made for shoppers to boycott The Body Shop.^[18]

However, since the 80’s, L’Oréal has invested €900 million in researching alternatives to animal tests, using methods such as reconstructed skin models at their research centers in Gerland, France, and Pudong, China.^[19]

Nevertheless, this is complicated by markets such as China,^[17] where animal testing of all cosmetics for human use is obligatory.^[20] Cosmetics by brands such as The Body Shop, which refuses to do animal tests, are thus not available on the Chinese market.

In 2013, L’Oréal was part of a consortium calling on the EU to invest more in research on alternatives to animal testing.^[21]

Community involvement and awards[edit]

In 2008, L’Oréal was named Europe’s top business employer by The European Student Barometer,^[22] a survey conducted by Trendence that covers 20 European countries and incorporates the responses of over 91,000 students.

The L’Oréal-UNESCO Awards for Women in Science was established to improve the position of women in science by recognizing outstanding women researchers who have contributed to scientific progress.

The awards are a result of a partnership between the French cosmetics company L’Oréal and the United Nations Educational, Scientific and Cultural Organization (UNESCO) and carry a grant of $100,000 USD for each laureate. [1]

The same partnership awards the UNESCO-L’Oréal International Fellowships, providing up to $40,000 USD in funding over two years to fifteen young women scientists engaged in exemplary and promising research projects.^[23]

L’Oréal organises every year the L’Oréal Brandstorm, an acknowledged business game for students in 43 countries. The game is related to marketing and has a first prize of $10,000, a second prize of $5,000 and a third prize of $2500.

L’Oréal is also involved in the “Look Good…Feel Better”- project which is a Beauty Industry Charity which was formed over 16 years ago to help woman combat the visible side effects of their cancer treatment of which L’Oréal is a founder member.

Research and innovation[edit]

The aim for L’Oréal is to produce products that cater to their diverse customers specifically, in the emerging markets that currently account for 53% of the entire global beauty market.^[24] Through these research methods L’Oréal aims to tap into one billion new consumers ^[24] in these markets in the upcoming years.

In 2003, the L’Oréal Institute for Ethnic Hair & Skin Research was inaugurated in Chicago to continue their research on African American hair and skin among other ethnicities.^[25]The L’Oréal Group opened the Predictive Evaluation Center in Lyon, France in 2011. This centre is devoted to evaluating the quality of the products without testing on animals.^[26]Additionally, L’Oréal built an international “Consumer Insights” division as well as, regional Research and Innovation centres in six countries: Japan, China, India, the United States,Brazil, and France.^[27] The aim of these centres’ is to collect information on their diverse consumers in order to develop products according to their various needs. In 2011, L’Oréal announced its intention to build a Research and Innovation Center in Bom Jesus Island Rio de Janeiro, Brazil. Estimated at 30 million euros (70,000,000 reals), this project is expected to create about 150 jobs by 2015.^[28]

Litigation[edit]

Advertising[edit]

In May 2007, L’Oréal was one of several cosmetic manufacturers (Clinique, Estee Lauder, Payot, Lancôme)^[29] ordered by the Therapeutic Goods Administration in Australia to withdraw advertising regarding the wrinkle removal capabilities of their products.^[30]

In the UK, L’Oréal has faced criticism from OFCOM regarding the truth of their advertising and marketing campaigns concerning the product performance of one of their mascara brands. In July 2007, the British Advertising Standards Authority attacked L’Oréal for a television advert on its “Telescopic” mascara, featuring Penélope Cruz, stating “it will make your eyelashes 60% longer.” In fact, it only made the lashes look 60% bigger, by separating and thickening at the roots and by thickening the tips of the lashes. They also failed to state that the model was wearing false eyelashes.^[31]

In July 2011, the British Advertising Standards Authority took action against L’Oréal, banning two airbrushed Lancôme advertisements in the UK featuring actress Julia Roberts and supermodel Christy Turlington. The agency issued the ban after British politician Jo Swinson argued that the two ads misrepresented reality and added to the self-image problem amongst females in the UK. L’Oréal acknowledged that the photos had been airbrushed but argued that the two cosmetic products could actually produce the results depicted in the ads and that the results of the products had been scientifically proven.^[32]

Human resources[edit]

On 11 August 2005, the Supreme Court of California ruled that former L’Oréal sales manager Elyse Yanowitz had adequately pleaded a cause of action for retaliatory termination under the California Fair Employment and Housing Act, and remanded the case for trial.^[33] The case arose out of a 1997 incident in which Jack Wiswall, then the general manager for designer fragrances, allegedly told Yanowitz to fire a dark-skinned sales associate despite the associate’s good performance. When Yanowitz refused, Wiswall pointed to a “sexy” blonde-haired woman and said “God damn it, get me one that looks like that.” Wiswall retired as president of the luxury products division of L’Oréal USA at the end of 2006.^[33]

The company has recently faced discrimination lawsuits in France related to the hiring of spokesmodels and institutional racism. In July 2007, the Garnier division and an external employment agency were fined €30,000 for recruitment practices that intentionally excluded non-white women from promoting its shampoo, “Fructis Style”.^[34] L’Oréal is reported as saying the decision was “incomprehensible”,^[35] and would challenge the measure in court.

World War II controversy[edit]

Eugène Schueller, the company’s founder, was an alleged Nazi sympathizer.^[36] L’Oréal concedes that Schueller was an anti-Semitic fascist.^[37] He was also a member of La Cagoule, which supported the Vichy regime, and was a violent, pro-fascist and anti-communist organization. Eugène bankrolled La Cagoule and some meetings of La Cagoule were held at L’Oréal headquarters. Some of the criminal activities perpetrated by La Cagoule include firearms transportation, assassinating a former minister, and firebombing six Synagogues.^[38][39]

Other controversy arose when Jean Frydman, a shareholder and board member of Paravision, a film subsidiary of L’Oréal, was fired. He claims that he was let go because L’Oréal wanted to avoid an Arab boycott of businesses associated with Jews. In turn, Frydman decided to expose the past of L’Oréal executives. André Bettencourt who married Schueller’s daughter, Liliane Bettencourt, and became deputy chairman for L’Oréal, wrote 60 articles for La Terre Française. La Terre Française was an anti-Semitic Nazi propaganda sheet. André has admitted ownership of the propaganda but claimed he was poisoned by the Vichy regime and said, “I have repeatedly expressed my regrets concerning them in public and will always beg the Jewish community to forgive me for them.”^[38] André Bettencourt also sheltered Schueller and several collaborators from the French Resistance after Liberation.^[39] It was also revealed that Eugène Schueller hired Jacques Correze, who as of 2001, was the honorary head of L’Oréal’s U.S. affiliate, Cosmair, and was involved withLa Cagoule.^[37]

Further controversy arose when it was revealed that L’Oréal had its German headquarters for over 30 years, before being sold in 1991, on land confiscated from Jews during World War II. The Jewish family has been battling for restitution from the company for three generations, the latest of which is Edith Rosenfelder, a Holocaust survivor. Fritz Rosenfelder, was forced to sell the house to a Nazi official, of which the family never received the proceeds of the sale. Instead, the family was deported. The Allies passed Jewish restitution legislation which says that transactions with Nazi’s, even if appearing to be with the owner’s consent, can be considered invalid. As the land was sold to an offshoot of L’Oréal, which was later bought out in 1961 by L’Oréal, the company claims that it is not responsible for anything that happened before then. The basis for Rosenfelder’s argument is that since the original sale was illegal, all subsequent sales are equally unlawful. There was restitution paid in 1951 to the Jewish Restitution Successor Organization, though this was done without the family’s consent and none of the money ever reached the family. A book by Monica Waitzfelder, daughter of Edith Rosenfelder, published in French as L’Oréal a pris ma maison and in English as L’Oréal stole my house!, details how L’Oréal, took over the Waitzfelder home in the German city of Karlsruhe (after the Nazis had engineered the removal of the family) to make it its German headquarters.^[40] Monica Waitzfelder is quoted as saying, “All the other businesses which took Jewish property have since returned it, without any great debate. I don’t understand why L’Oréal should be any different from the others.” A case was brought before the Supreme Court in France, but the public prosecutor ruled that there could be no trial. As of 2007, she is bringing the case to the European Court of Human Rights.^[39][40]

Brands[edit]

Brands are generally categorized by their targeted markets, such as the mass, professional, luxury, and active cosmetics markets. The Body Shop and Galderma are directly attached to the head office. L’Oréal also owns interests in various activities such as fine chemicals, health, finance, design, advertising, insurance.^[41]

Social marketing[edit]

L’Oréal has a staff of 400 people who post content on Facebook every day, according to Marc Menesguen, the company’s chief marketing officer.^[42]

Spokesmodels[edit]

Following are current spokesmodels for the L’Oreal cosmetics brand around the world.^{[43][44][45][46][47][48]}

Spokeswomen[edit]

Spokesmen[edit]

Head office[edit]

L’Oréal Group has its head office in the Centre Eugène Schueller in Clichy, Hauts-de-Seine, near Paris.^[49] The building, constructed in the 1970s from brick and steel, replaced the former Monsavon factory, and employees moved into the facility in 1978. 1,400 employees work in the building.^[50] In 2005, Nils Klawitter of Der Spiegel said “the building, with its brown glazed façade of windows, is every bit as ugly as its neighbourhood.” Klawitter added that the facility “gives the impression of a high-security zone” due to the CCTV cameras and security equipment. The world’s largest hair salon is located inside the head office building. As of 2005, 90 hairdressers served 300 women, including retirees, students, and unemployed people, per day; the customers are used as test subjects for new hair colours.^[51]

L’Oréal USA has its headquarters in New York City;^[52] its New Jersey headquarters is in Berkeley Heights.^[53]