Sorry, L'Oréal Paris is not sufficiently penetrating into the lower-end market.

Text | He Zhexin

Editor | Qiao Qian

If one wants to choose a gift to honor their mother, few people would think of L’oreal Paris.

This year's Spring Festival marketing campaign, L’oreal Paris was unusually high-profile. Between the golden and bright red backdrop, L’oreal Paris gift boxes cleverly appeared in every glorious moment in history, accompanied by the advertising slogan "When going back to hometown for the New Year, give L’oreal as a gift" - When the post-90s generation has grown to the age where they can buy gifts for their parents, this emotional card is played very timely and quite down-to-earth.

In the fiscal year 2024, L’oreal Group's North Asian market continued to shrink, and the Chinese market experienced its first negative growth on record. In the financial report, L’oreal Group described the Chinese market as "showing only a small single-digit decline in sales", stating that the performance of the luxury cosmetics, skin beauty, and professional product divisions "is better than the overall market", with the exception of the Consumer Products Division, which includes the L’oreal Paris brand..

It seems that this Spring Festival marketing campaign with a strong "sinking" flavor is not a whim, but a new solution for the L’oreal Paris brand to deal with the lack of growth momentum.

Will it work?

The Only Self-Created Brand

L’oreal Paris is the first and only non-acquired brand of L’oreal Group. In 1997, L’oreal set up its first office in Shanghai, and the first skin care product was the Revitalift series of L’oreal Paris, with Gong Li as the spokesperson.

Isn't the phrase "You're worth it" a tactful expression of today's "emotional economy"?

In the 1990s in China, the per capita disposable income in urban areas was less than 5,000 yuan. A skin care gift box priced at several hundred yuan and endorsed by a celebrity was undoubtedly a luxury and an excellent gift.

After the popularization of television in the new millennium, L’oreal Paris, which closely followed the mass media, continued to be popular. In 2012, L’oreal Paris' annual sales in China accounted for almost half of L’oreal China's total annual sales that year.

Entering the second decade of the new millennium, the rapid growth of the national income level gave birth to a more luxurious skin care market, and the popularization of mobile payment and e-commerce accelerated this process. In 2016, the domestic high-end cosmetics market growth rate suddenly soared, and in 2019, three years later, the market share surpassed that of mass cosmetics for the first time. In the first two years after the epidemic, the domestic high-end beauty market continued to grow, and people were enthusiastic about the ingredient formulas, as if the secret to eternal youth was hidden in the beautifully packaged translucent jars.

During the same period, L’oreal Group's focus obviously shifted to the luxury beauty division represented by brands such as Lancôme and YSL, gradually narrowing the gap with Estée Lauder. The two "old rivals" were in a fierce competition at every distribution point. Ma Xiaoyu, the current vice president of L’oreal Group, was once the head of the high-end beauty department and led Lancôme to expand in China. Ma Xiaoyu once described to 36Kr that a few years ago, Lancôme's competition for department store counters in first-tier cities reached an "either-or" degree with its rivals.

During this period, although L’oreal Paris also successfully completed its brand upgrade, the price range of 200 - 400 yuan still seemed affordable and lovely compared to the anti-aging cream wars with prices often in the thousands. For a long time, in the eyes of consumers, L’oreal Paris was even a "dupe" for other brands of the group. In the opinion of industry analysts, L’oreal Paris has always been "positioned in the mid-to-high end", targeting the business of young people in their 20s.

Both L’oreal Youth Code and Lancôme Advanced Genifique use hyaluronic acid as the active ingredient, but the price is almost five times different.

But the change in the wind came suddenly. Under the influence of various factors, the trend of luxury beauty came to an abrupt end in 2023. Although the newly renamed Skin Science Beauty Division has a strong momentum, its share is still small. L’oreal Paris has become the fire chief, and it has lived up to expectations - In the fiscal year 2023, the growth rate of the Consumer Products Division where L’oreal Paris is located picked up, and its scale returned to the first.

Sinking, But Not Enough

It is worth noting that the Consumer Products Division, where 10 brands such as L’oreal Paris, Garnier, Maybelline, NYX, 3CE, and Magic are located, has always been the largest division of L’oreal China. In 2014, Garnier withdrew from the Chinese market due to continuous losses, and L’oreal China described it as a "non-mainstream" brand in the email to dealers; In 2024, the open-shelf makeup brand NYX officially withdrew from China, and the relevant personnel were internally transferred - Now, L’oreal Paris and Maybelline contribute almost all the income of this division in China.

However, the L’oreal Paris with a price range of 200 - 400 is obviously not attractive enough to the masses.

Last year, the prices of cosmetics on almost all online platforms were falling. Taking the Taobao transaction in May 2024 as an example, according to Star Map Data, the average selling price of skin care products was only 136 yuan, a decrease of 9%; the average selling price of makeup was 53 yuan, a decrease of 7%. Thus, L’oreal Paris, which was still on the broad road of high-endization in the previous two years, turned around and rushed to try to regain its lost ground. Of course, this also takes some time - Even the seemingly down-to-earth "Melatonin"-style Spring Festival blockbuster, because the shooting location is in Shanghai, has an exquisite and stylish tone.

At the end of last year, L’oreal Group also acquired the Korean affordable skin care brand Dr.G and included it in the Consumer Products Division. The statement mentioned that Dr.G will meet the growing consumer demand for K-beauty and efficient, affordable skin care products. In addition, Dr.G's business in the Pan-Asian region continues to grow and has the potential for global expansion. The brand claims to provide "clinical-level" solutions for sun-damaged and sensitive skin, and its products are priced between 100 - 200 yuan on the official website in Taiwan.

In addition to the mass division, other divisions of L’oreal Group also have "sinking" preferred options. For example, CeraVe of the Skin Science Beauty Division may be more in line with the current consumption trend. Vox, the brand's marketing director, revealed to 36Kr that in the future, CeraVe will increase its activities on university campuses to attract young consumers. "Moreover, the production of CeraVe is mainly concentrated in China, with low costs and competitive pricing." 

It is understood that some product lines of CeraVe have not yet entered the Chinese market, including the purple-packaged anti-aging series. As we all know, anti-aging is usually the key function for skin care products to sell at a premium. When asked whether the price of this series will increase after entering China, Xiao V replied: "It won't increase much, and it won't exceed 100 yuan."