Anti-aging products key to success for L’Oreal in the US market

By Simon Pitman

- Last updated on GMT

Related tags: Skin care, Skin, Procter & gamble

Future growth for L’Oreal in the US market will be heavily dependent on the success of its anti-aging skin care lines, according to financial information provider Trefis.

Alongside the naturals and organic segment, anti-aging skin care products have consistently provided market leading growth in the US, even during the past two years when sales have been hit by economic hardships and a shrinking consumer spend.

Currently L’Oreal is one of four dominant players in the US skin care market and is estimated to have a yearly sales turnover of approximately $4.5bn.This figure represents around 5 percent of a total global market that is valued at $90bn, of which L’Oreal is estimated to have a 10 percent share.

Skin care continues to be a highly competitive segment

The research team believes that because of the extremely competitive nature of the skin care segment, L’Oreal is likely to maintain its share of the skin care market at around 13.5 percent in the coming years.

This estimate takes into account the fact that innovation and aggressive marketing is continuing to drive this market on the part of all the main players.

Currently this global market for skin care is estimated to be growing at 5 per cent year, and much of this growth is attributed to the 40 percent share of the market derived from the sale of anti-aging products.

Anti-aging products drive growth

“We expect anti-aging products to continue to show robust growth in excess of 7.3 percent year-on-year and so is an important area of focus for L’Oreal,”​ Trefis research notes state.

The Trefis research team believes that L’Oreal has a strong stable of skin care products and is also particularly well represented in the anti-aging category.

These factors give the researchers reason to believe that the company will continue to maintain its share of the US and global skin care market, given the strength of leading anti-aging brands such as RevitaLift, Skin Genesis and Age Perfect.

Keeping up with the competition

However, the researchers also note that the anti-aging market in the US and worldwide is ultra competitive, so L’Oreal will have to stay on its toes if it is going to compete with other leading brands, including Avon’s Anew​, Estee Lauder’s Idealist​ and ResiliencePerfectionist​ and Procter & Gamble’s Olay Regenerist​ and Olay Total Effects.

The researchers note that if the company fails to keep up with the competition, its share of global skin care market could slip to around 10 percent by 2017, which would affect its bottom line significantly.

Last month L’Oreal published its financial results for the first nine months, showing that its operations in North America were contributing to solid sales growth for the group in the face of more difficult conditions in Europe.

Group sales for the period grew by 11.6 per cent to €14.52bn on a reported basis, which represented growth of 6.2 percent, based on a comparable structure with identical exchange rates.

Related topics: Business & Financial

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