Here’s How L’Oreal Stands To Gain From The Growing Cosmeceuticals Market

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A recent report by Research and Markets forecasts that the global cosmeceutical market, comprising of cosmetics having the benefits of pharmaceutical products, is expected to grow at a CAGR of 5.95% between 2017 to 2021. L’Oreal is a market leader in the cosmeceutical segment (the company calls it Active Cosmetics).

What Are The Reasons for The Cosmeceutical Market Growth?

  • The consumer’s preference and faith on physician recommended cosmetics. The brand names recommended by physicians are well known and beauty users tend to put a greater faith in such products.
  • The rising demand for skincare products for the matured skin by the aging population. In fact, taking a cue on the rising demand for cosmeceutical products, even smaller companies have started making these.
  • The beauty and personal care market is seeing a rising demand for premium products and most of the cosmeceuticals are priced at a higher range.
  • The global beauty and personal care industry is expected to become double its current size over the next decade to decade and a half. The cosmeceutical market will reap the benefits of this growth since it is one of the most rapidly growing segments in the beauty and personal care market.  The biggest markets are expected to be the US, China, Brazil, Japan, and India.

How Does L’Oreal Stand To Gain?

L’Oreal’s Active Cosmetics segment, comprising of cosmeceuticals, is the fastest growing segment for the company and L’Oreal is also one of the global market leaders for this segment. Last year, the Active Cosmetics division–pertaining to sensitive skin or dermatological conditions– had demonstrated the highest year-on-year sales growth of around 8% (like-for-like). All of L’Oreal’s geographies showed growth with Latin America, Brazil, Asia and Africa, and the Middle East achieving two-digit growth for 2015.

active cosmetics

(Source: L’Oreal’s Annual Report)

How Is L’Oreal Strengthening Its Position In This Market?

  • L’Oreal’s long term and robust partnerships with healthcare professionals aids the company to innovate and provide more effective products in this segment. For example, The company’s Global Summit of Pharmacy Leaders brought together 300 pharmacists, and pharmacy and drugstore chains, in order to train pharmacists to develop the active cosmetics business and also help them to provide digital sales and skincare solutions.
  • L’Oreal’s distribution channel is one of the best in the industry. For this segment, the company implements a multi-channel approach and digital tools to reach a wider client base. The concept of health combined with beauty is an attractive one which L’Oreal effectively sells through channels including dermacenters, online, and through travel retail.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for L’Oreal
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