Global cosmetic firms are turning to emerging markets in thehunt for sales, but they face a challenge tailoring their beauty products tosuit new customers in India, China and elsewhere.
The Euromonitor research group forecasts global growth worth$64 billion within five years, including $26 billion in the Asia-Pacific regionand $22 billion in Latin America.
“If you want to get a piece of the action, then you have tobe present," Oru Mohiuddin, an analyst from London-based Euromonitor, toldAFP. “We see that growth in emerging markets is enormous.”
L'Oreal, one of the world's largest cosmetics makers, hasset up research centres and factories in countries such as India, Mexico andIndonesia, and is adapting marketing and sales strategies to adapt to localconsumer habits.
The French company estimates that by 2025 annual spendingper head on beauty products will have grown in India from three euros to 10euros (four dollars to 13 dollars) and in China from 12 euros to 57 euros.
"Most groups continue to strengthen their regional andlocal structures (in emerging markets)," said Laurent Dusollier, ananalyst in Paris for Roland Berger consultants.
"Having established research and development centres,they have created specific products and marketing approaches, and strengthenedtheir management teams."
One of the key tests for firms trying to tap into newconsumer tastes among India's 1.2 billion population is to understand that mostpeople shop in small neighbourhood outlets rather than at supermarkets.
"There is a challenge of distribution and productavailability, especially as there is no modern-style trading," saidDusollier.
L'Oreal has experimented with selling products in cheap,individual sachets for a few rupees, and says 750,000 small shops now offer itsgoods nationwide.
The company has also used Garnier, which it owns, to developa special range of products that use Indian ingredients, and is testing make-upproducts to expand beyond hair and skincare sales.
"Our ambition is to become the number-one beautycompany in Asia-Pacific and the number one among emerging upper and middleclass consumers," L'Oreal's regional managing director Jochen Zaumseilsaid in Mumbai last week.
"We expect strong growth in the next decade," hesaid, adding the company wanted to make products "more accessible"and that it was considering mergers and acquisitions.
India's economic growth has slowed sharply from nearly 10percent four years ago to 5.5 percent in the latest quarterly figures -- butZaumseil says that in 2011 L'Oreal grew by 25 percent in the country.
The company sees the high-end section of the market as themost attractive target, as it believes at least 60 percent of wealthy Indianscurrently buy luxury goods while travelling abroad.
The rapid emergence of sleek new shopping malls in citieslike New Delhi, Mumbai and Bangalore points to a solid future for L'Oreal'selite brands including Lancome, Yves Saint Laurent and Kiehl.
"This is a long-term game and a very new market,"said Dinesh Dayal, chief operating officer for L'Oreal India.
