“Whenever we see a small company with a good idea, we are on the fire”: How do you keep the integration, purchase and innovation operations L’oréal in global beauty

Dibaea seems to be a case study in the business school about the disorder, which is the type that does not end well for disruption. However, L’oréal had no moment Kodak. Instead, despite intense competition, it has constantly outperformed the global cosmetic market of 290 billion euros, which continues to grow by itself by about 4.5 % in 2024.

Today, L’Oréal is still one of the jewelry in the crown of French companies, where it sells 37 brands that sells a confusing group of doses, creams, disinfectants, vaccines, dyes, refreshments, mascara, cosmetics and more than 150 countries. The group rotation rate, which costs approximately $ 47 billion, was in 2014, comfortably exceeding Estée Lauder or Beresdorf during the same period, and is still tall over the next generation of competitors. What do you do right?

Innovation in the heart

“Beauty is an endless endeavor for humans, and this is why the market is always developing,” says Barbara Lavirus, Deputy CEO of L’oréal. Customer expectations are also evolving – who wants to have old wrinkle cream? – But in many cases the company has continued these expectations. “At the end of the day, what works in beauty is really good products,” says Lavernus.

There is a reason for the 116 -year -old L’oréal wealth The most innovative European company Earlier this year. In fact, the rise in the 2021 in Lavernos from the Executive Vice President of Operations to the Deputy CEO, as it supervises research, innovation and technology, is a measure of the group’s level ahead of the innovation of products in a market -dependent market. The company launched 3,636 forms in 2024 alone.

Of course, everyone wants to be innovative. L’oréal mostly succeeds. “L’oréal invests greatly to ensure that they can use new technologies to better identify customer needs; for example, with a social media content analysis, or to provide a better formulation to meet a specific need. They do this over and over again with new technologies,” explains Mark Mazodier, professor of marketing and beauty chair at ESSEC.

And the investment of L’oréal is great. The group’s research and innovation budget is larger than those in its next three competitors combined, with an amount of 1.3 billion euros in 2024, or about 3 % of net sales. It tends more than most of them towards difficult sciences, as more than 4000 world researchers work to understand better than acne to aging, and even the pioneer that was rebuilt human skin 40 years ago, to eliminate animal test.

“You have to understand that L’Oréal is born from a chemical mind,” says Lavernus, referring to Eugene Schoiler, who founded the company in 1909 with an early hair dye sold to Parisian salons. “Science, since the flamor of the company, has been the soul and the beating heart in our group.”

To the Mazodier point, investment patterns change. Last year, for the first time, the company spent more technology than pure research and development, led by artificial intelligence. You can see it in things like the L’oréal Betiq system, which improves the customization of the resources for advertising and promotions. Nicolas Hieronimus CEO has recently said that Betiq has improved the return on investment by 10 % to 15 %, and now covers more than 40 % of L’oréal ads 13 billion euros.

Read more: “Ultimately, the population composition must win.”.

Technology also makes its way to the laboratory. L’Oréal scientists have been able to benefit from a 17300 -style beauty database to create digital twins for different types of frizzy or sparkling hair, allowing silico research to test responses for different particles, which Lavernus says can be 100 times from the traditional experimental track. This discovery directly led to new high -performance products, including RedKen, the first bonding process without sulfate, specially designed for frizzy hair.

“Technology is in fact the change in the game in my career. I have worked here 35 years old, and I have never imagined, in the brain of an engineer, the way we work and interact and sell products to consumers today. I have no idea what it will be after 10 years from now, because the new innovation happens every week.”

Long -term play

Lavernos profession that lasted for decades is not unusual at all in L’oréal. The length of the service is De Rigueur in the group; Hieronimus internally is known as “L’oréal”, who is only the sixth CEO of his history. This is a company that plays the long game, which has become easier through its ownership structure: L’oréal is still owned by the majority by the founder’s family, Bettencourt Meyers, and the Swiss bloc Nestle, who bought a stake in 1974.

“Imagine my role in research or technology,” Lavirneus says. “But since we are also on the stock exchange, we are facing a challenge as if we were not owned by the family, so we can honestly say it’s the best in the two worlds.”

Besides enabling technological and research investments, you can see the long term in work in the disciplined and strategic approach of L’oréal for integration operations, with winning investments since 2014 in the likes of NYX, Cereve, AESOP and Dr. G.

“They choose companies that can add to their wallet. So Dr. J allows them to reach this prosperous Korean trend. But they take the brand and use the huge marketing budget for l’oréal, the supply chain structure, and scientific progress, which gives these smaller companies, it is very smart, because they do not try to pick up these smaller companies in excitement.”

In fact, many consumers did not realize that brands such as La Rocheposay, Skinceuticals, Maybelline, Lancôme, Kiehl, Pureology and Garnier were part of the same group, because they have such distinct identities and work at different ends of cosmetics, skin care, makeup, and decreased hair.

The same applies to profitable licensing partnerships in perfumes with luxurious brands such as Prada, YSL and Armani: profitable proposals for both sides that allow brands to access the retail range and their experiences in L’oréal, with L’oréal to benefit from the attractiveness of the current brand. It has been paid: The last deals signed with Miu Miu and Jacqueemus helped the luxury section of 15 billion euros in obtaining the total global leadership in beauty (luxury) for the first time.

(Sources: Organizational Deposits; S & P Global.

“The commercial property rights are a treasure. It is very easy to develop a brand quickly, but then you will not make sure that you can protect commercial property rights,” says Lavernus. Instead the idea is to take care of the brand over time: “Imagine a family in which you adopt your sons and daughters. You welcome them in the family.”

Toru Hanai – Ploomberg/Getty Images

Lavernos describes a recent visit by the founders of the British brand for Medik8, where L’Oréal took the majority share in June, to L’Oreal laboratories in France: “Imagine joy for me to note that some scientists note between these two scientists and our team. Investing, in financing, in all jobs.

The power is widening

The result of the M&A approach is a distinctive, complementary, complementary and broad wallet that reaches all geography, category, price point and demographic sector.

It protects the power in the breadth of the group from decline in certain markets: unlike Unilever, Procter & Gamble, and Estée Lauder, L’oréal is exposed to both collective beauty and standing, as well as a fast frontal skin care market, and professional hair care. When one is bad, others tend to compensate, with customer trading in Prestige in a pinch, for example. In China, where the global beauty brands market decreased sharply since 2022, amid economic slowdown and increased local competition, L’Oréal witnessed a shrinkage, but it was relatively supported by focusing on the position products there, which was less affected by the comprehensive market.

However, diversification is not just a defensive. It also provided great opportunities in the market as there is still a lot of growth. L’oréal has an excellent record of discovering these opportunities and then adhering to resources to benefit, by capturing the share and planting the total category more. “A good example is face masks, which come from Korean beauty. L’Oreal is the only Western company that has already acquired its share of Korean companies, and in many markets is actually a pioneer in that category,” explains UdomsilPa.

With the permission of L’Oreal

Geographically, L’Oréal has allowed the achievement of special impressive results in Africa and Asia (outside China, Japan and Korea): similar sales in these regions increased by 12.3 % in 2024. But growth was also strong in its traditional markets such as Europe (by 8.2 %) and North America (by 5.5 %).

Lavernos notes only the expansion of the category, such as Kérastase Night Night for Hair (“I love it, use it every day”), but also to the demographic expansion to help explain this. She notes that the men of Pomer are a consumer sector but are growing quickly.

Can this growth continue indefinitely, though?

“Be from the inventory of the warriors in this company, I know what is necessary to stay in our place. Being a pioneer in the market is the most challenging position, by definition,” says Lavernus. “I learned during my first week here that I must adopt a rational way of anxiety and healthy attention … (so) What do I fear for the future? Disabled reversing game cards in a completely different way. If you see fictional scientific films, then you sometimes see ways to manage your very different beauty.”

Immediate, automated, personal, à la GatesNot yet. But the L’oréal culture of healthy interest was clear when Hieronimus announced the “beauty motivation” plan last year. Despite another year of standard sales, there have been challenges in some markets outside China, such as the American collective market makeup, where Elf Beauty and others have gained its share in the market, which prompted L’oréal to intensify the launch of new products, in all groups, but it is particularly targeted for Gen Z users and social media users.

Lavernos is awake but upward. “Why should I be confident of the future? Because of the firm quality and spirit that we have in this company, confronting ideas, and has different views,” she says. “Whenever we see a small company that has a good idea on social media, or a good product, we are on fire. We are competitors. We often get to reach more when we see others achieve great things.”

In other words, he has no intention to rest on her glories. He intends to continue to change with the changing market, so that it can remain at the forefront.

–With additional reports before Praithna Prakash