L'Oreal stresses significance of Eastern European market

By Louise Prance

- Last updated on GMT

Related tags Eastern european market Cosmetics Russia European union Eastern europe

L'Oreal has laid heavy emphasis on the growing significance of
emerging markets in its future plans to continue strong sales
growth and to further consolidate its place as the worlds leading
cosmetics manufacturer.

Its latest financial results saw the company reporting that Eastern Europe had the largest sales growth in the fourth quarter and overall in 2006.

Climbing a massive 25 per cent in the fourth quarter to reach €247mn and 24.8 per cent to reach €850mn for the overall year Eastern Europe was by far the fastest developing market for the company, as opposed to the 3.7 per cent increase for Western Europe.

Due to this huge climb, the company said they would continue to focus on Eastern Europe in order to establish itself further in markets that are beginning to profit from cosmetics sales.

Mr Jean-Paul Agon, Chief Executive Officer of L'Oréal said, " the success of the product innovations, the strength of our brands and the rapid pace of our geographic expansion have once again enabled us to improve our worldwide positions."

Likewise, many other large cosmetic manufacturers are also tapping into this growth trend, creating marketing plans and products that are directly targeted and launched in these areas.

Direct sales agents, Avon this month said in Central and Eastern Europe, Russia was the main driving force behind a 17 per cent jump in sales for the fourth quarter of 2006, to reach $456.6m. Similarly, as an example of a company trying to push into the Eastern European market, Beiersdorf, the makers of Nivea, has recently launched a new skin care line in the Czech Republic, Eucerin, as part of its bid to complete its aim to attain a 5.5 per cent slice of the global market for personal care products by 2010.

Indeed, the annual global beauty event Intercharm, this year being held in Moscow, is predominately highlighting the continued growth and potential of the Russian cosmetics market.

The main feature of the show will be a wide business concurrent programme to showcase the market opportunities in Russia to the many decision makers that attend the event.

The current market growth rate for the Russian cosmetics industry is expected to be around 10-12 per cent, hitting $7.8bn in 2006 and has huge potential for further expansion due to its significant population size and undeveloped infrastructure.

Moreover, a clear indication of the market development comes from specialised cosmetic retail chains, actively proliferating in the regions.

Such chains are reporting 25-40 per cent annual growth - with imminent legislation changes expected to further stimulate market consolidation.

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