28% GST looks like a penalty on the common woman: L'Oréal India's Jean-Christophe Letellier

The MD of cosmetics and beauty products for the luxury brand hopes the government will reconsider the tax rate

I love a good story, be it through advertisements, movies or an entrepreneur who dared to think differently. I believe in bringing in fresh perspectives -- to a corporate profile or a Facebook post -- like new wine in an even newer bottle. I graduated with a journalism degree from the Xavier Institute of Communications. My weekend rituals involve watching Bollywood movies and reading up on style trends.

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Jean-Christophe Letellier wants the GST rate slashed to 18 percent
Image: Mexy Xavier

In an interview with Forbes India, Jean-Christophe Letellier, managing director, cosmetics and beauty products, L’Oréal India, discusses the company’s journey in India, its growth strategy and the impact of the Goods & Services Tax (GST). Edited excerpts:

Q. What has been L’Oréal’s growth strategy since entering India in 1994?
The strategy has always been about innovation and transformation. We didn’t start by launching the most obvious products, like hair oil or shampoo. Instead, we created a new category with Ultra Doux conditioners under our brand Garnier. Similarly, we launched the first anti-ageing cream, BB Cream, cream-based hair colour, kajal in pencil form and men’s face wash.

Twenty-three years later, L’Oréal has become the second-largest player in the Indian beauty market and operates 14 brands [L’Oreal Paris, Garnier, Maybelline, Matrix and Kérastase to name a few]. Ninety percent of our products are made in India.

Q. Do you plan to enter new product categories?
We always look to enter categories where we can bring added value. We don’t operate in soaps and oil. At the end of the day, oil is natural coconut and there is little transformation we can bring about. Hair colour, haircare, skincare, fragrance and makeup are our focus categories globally and in India.

Q. What percentage of L’Oréal’s total revenue comes from India?
In India, we have been growing at a compound annual growth rate of 16 percent over the last four years, which is two times faster than the market rate. We don’t disclose revenues. But today we are the No 2 player in India [Unilever is No 1], and hold a 10 percent market share. In terms of the beauty market globally, India ranks 14th and will be among the top six positions in the next 10 years.

Q. How have demonetisation and GST impacted sales?
Demonetisation has impacted our industry like any other. Not so much in consumer offtake, but more on the trade side, and brought short-term disruption. GST is the largest reform and we support it. While it has brought disruption in the short-term, consumption has been strong. The disruption is on the trade side. Retail stocks thinned because of many rules being unclear. In the long term, it will be beneficial.

Q. What are your views on coming under the 28 percent GST slab?

That is the only big cloud. We don’t feel 28 percent is fair to the consumer. It was 22-23 percent, on an average, earlier. Beauty is not for a few and it is not a luxury. It touches the lives of everyone. We don’t find a single country in the world with more than 20 percent tax. Also, soap and oil is taxed at 18 percent while being in the same category as beauty. It is unfair. We do hope that along the way, the government will bring it down to 18 percent.

Q. Have you hiked prices to offset the tax burden?

We are still observing. The reality is it will impact the industry because it increases the overall tax burden. At 28 percent, the level of tax is high and it may lead to an increase in fake products and illegal imports. My only humble request is to reduce the taxation because 28 percent looks like a penalty on the common woman who wants access to the best at an affordable price.

(This story appears in the 29 September, 2017 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)

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