Q. You did your first acquisition in India last year and there were various reports about your aggressive growth plans. Can you actually achieve the Rs 7,000-crore topline target by 2017? [L’Oreal aims to close this fiscal at Rs 2,200 crore]
We are quite bullish about India. [It] is true that market growth has slowed down along with a slowing economy. The beauty market which used to grow at 17-20 percent on an average, and was the fastest-growing market in the world, has slowed down to single digit growth.Today, we estimate it is growing at 5-7 percent.
Our projection of this market is still optimistic, and we believe growth will gradually recover. This will take the Indian beauty market, which is number 17 in the world, to the top five. Our plan is to beat market growth by two to three times [and] grow by 25-30 percent a year taking us to Rs 7,000 crore in the year 2017.
Q. But if you compound at 25 percent, you double revenues every three years. How will you reach Rs 7,000 crore then?
We will also make acquisitions like the one we made last year [Cheryl’s Cosmeceuticals]. Let me say [that we will reach] Rs 7,000 crore by 2020. We know we can build it with our own brand, and this number is exclusive of any large scale acquisitions.
Q. In the last couple of years, inflation has hit both companies and consumers. How much of these cost increases have you been able to pass on to the consumer?
We have had an average price increase of only 3-4 percent. Our desire now is to be more affordable to consumers. Most of this comes from design improvements and localisation. We have more synergies on media buying also.
Q. How would you compare the Indian market to Indonesia, where you were previously-based?
The two countries have a lot of similarities. They are two very optimistic countries. India always used to be the number one emerging market but in the last couple of years, Indonesia came ahead while India slipped from its ranking with rising inflation and low economic growth.
Indonesia, in terms of GDP per capita, is much more advanced and so, in terms of conversion, it is easier to get people to spend on personal care.
India is still weak, and is an unsophisticated market as far as personal care is concerned. But it is a market that is expected to shape up very well. Luxury in India is still marginal. So, our role in both India and Indonesia is similar, and that is to accompany the transformation of the market.
Q. Many multinationals wait for per capital levels to rise rather than make products for emerging markets. Is that the way L’Oreal also wants to operate in India?
I will not talk generally. But, for L’Oreal we have a clear vision on who we are and how we want to attract customers. We are not a company that tries to get to the bottom of the pyramid. We first build aspirations. The way we operate in the market is to create these aspirations. It takes a lot of time to establish aspirational brands, and for us in India, it took over 20 years to shape our brand and values. In that sense, when we launched in India we started with hair colourations, and not shampoos. Today, we are by far the market leaders.
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(This story appears in the 03 October, 2014 issue of Forbes India. To visit our Archives, click here.)
As an Ex Employee of Loreal like to correct the statement that,Loreal in India Started with Ultra Doux Range of Shampoo and Hair Color Range is launched after few yearson Sep 29, 2014
A wish:If these products incorporate the Indian Ayurvedic formulations, they will have no side effects and will be acceptable globallyon Sep 20, 2014