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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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 Auréole3

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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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 5

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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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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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 experience8

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 9

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 opened10

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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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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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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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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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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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%. 16

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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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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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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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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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 21

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 22

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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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 country24

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%25

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

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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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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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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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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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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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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