Sees inside the Dermatological Beauty at L’Oreal
- Chaileedo Press
- Apr 24, 2023
- 7 min read
CHAILEEDO found that Dermatological Beauty at L’Oreal Group achieved steady growth in five consecutive years.
(Credit: Angie MA, Vice President of L’Oréal China and General Manager of L’Oréal China Dermatological Beauty Division)
Recently, beauty giant L'Oréal Group reported its results for the first quarter of 2023. The company reported sales of about €10.38 billion ($11.4 billion), up 13% year-on-year.
The results showed that in the first quarter of 2023, L'Oréal Professional Products, Consumer Products, Luxe and Dermatological Beauty (formerly Active Cosmetics) achieved sales of 8.63 billion euros ($9.5 billion), 28.83 billion euros ($31.7 billion), 28.14 billion euros ($30.9 billion) and 12.72 billion euros ($14 billion) respectively, with all four divisions achieving year-on-year growth.
Notably, Dermatological Beauty was the fastest-growing division in the L'Oréal Group in the first quarter of 2023 with an increase of over 30.6% compared to 2022. LA ROCHE-POSAY was the main contributor to the division's growth. SkinCeuticals, CeraVe, the L'Oréal Group's recently acquired brand SkinBetter Science achieved outstanding performance.
As Angie MA, Vice President of L’Oréal China and General Manager of L’Oréal China Dermatological Beauty Division, said at L'Oréal China's 2023 Annual Results Press Meeting on April 21, "In 2022, we are even continuing to pick up the pearl of China's number one dermatology-grade skincare group with a rapid growth rate of six times the market growth."
Five consecutive years of steady growth
In the 2022 financial report disclosed by L'Oréal in January this year, sales of Active Cosmetics were €5.125 billion ($5.6 billion), an increase of 30.6% year-on-year. The brand LA ROCHE-POSAY and CeraVe performed brilliantly. LA ROCHE-POSAY became the number one brand in the division, driven by its main CICAPLAST and Effaclar series.
CHAILEEDO analyzed L'Oréal Dermatological Beauty's sales over the last five years and found that the division has been growing rapidly for five years. In particular, in 2020, the L'Oréal Group recorded only 27.99 billion euros ($30.8 billion), down 4.1% year-on-year. Three of its four divisions experienced a collective decline in sales, except for the Active Cosmetics division, which recorded double-digit positive growth.
According to Grand View Research, the global dermocosmetics skin care products market size was valued at $52.12 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 7.5% from 2022 to 2030. In L’Oreal’s 2022 results, the Active Cosmetics division recorded year-on-year growth of 21.9%, which L'Oréal Group said was twice the growth rate of the dermocosmetics market.
What is the "secret" of the division's growth?
The L'Oréal Dermatological Beauty division is said to include six brands: LA ROCHE-POSAY, Vichy, CeraVe, SkinCeuticals, Decleor and Skinbetter Science.
So why is the division growing steadily?
Firstly, technological renewal of products + focus on repair
LA ROCHE-POSAY is the number one brand in the division. L'Oréal refers to LA ROCHE-POSAY's outstanding performance in its earnings report, "LA ROCHE-POSAY driven by the success of the UVMune 400 breakthrough innovation in sun protection." The sunscreen product here refers to the patented LA ROCHE-POSAY UVMune 400, which was launched by LA ROCHE-POSAY in October last year. CHAILEEDO found that the product's efficacy focuses on two popular sectors: sun protection + skin repair.
L'Oréal says that UVMune 400 sunscreen technology is its first major breakthrough innovation in sun protection in almost 30 years. It claims that effectively protects the skin against ultra-long-wave UVA radiation. With this patented technology, L'Oréal said it can help consumers effectively prevent this major public health problem: deep skin damage caused by solar radiation.
Meanwhile, the division's other iconic brand, CeraVe, focuses on skin repairing and is also poised to perform well in 2022. L'Oréal's financial report says that CeraVe makes the same contribution to the division as LA ROCHE-POSAY. It is said that the CeraVe focuses on skin barrier repair.
In recent years, skin barrier damage has become a growing concern. In the Chinese market, for example, 40% to 56% of Asian women have sensitive skin, according to data from the Chinese Journal of Dermatology and Venereology's Expert Consensus on the Diagnosis and Treatment of Sensitive Skin in China. Data from Tmall Innovation Center shows that the search popularity of "repair" skin care products in 2021-2022 is as high as 160,000+, and the visit popularity of "barrier" in 2022 has reached 1.7 times of "sensitive". In 2022, "barrier" was 1.7 times more popular than "sensitive".
In response to this trend, CeraVe Moisturising Lotion, which focuses on the active ingredient ceramide and claims to be effective in repairing the barrier, has been well received by consumers. In the flagship shop of CeraVe on Chinese e-commerce platform Tmall, some consumers said, "I searched a lot on this cream + sharkane oil to raise the skin barrier. I came to review it after using it for a few days. I felt very comfortable using it." "The absorption is very good and I haven't had an allergic reaction yet. Very moist." "My face has been a bit sensitive lately, so I feel really comfortable using this, my face doesn't sting as much after a few days". The product is priced at 98 yuan ($14.2)/85g and sells 10,000+ units per month.
Secondly, endorsement by the dermatologist
CBNData research found that consumers become more rational and objective when choosing skincare products after the pandemic. The key consideration in choosing skincare products has changed from "product efficacy" to "product safety", achieving a shift from efficacy-led to safety-first.
At the same time, consumers' trust in skincare information channels has also changed: trust in dermatologists has increased from 35% before the epidemic to 56% after the epidemic. Trust in expert opinion has increased from 34% to 50%. Trust in recommendations from friends and family, beauty bloggers and beauty guides has decreased. In the post-epidemic era, professionals are more likely to be trusted by consumers than word-of-mouth or recommendation by influencers. In the reviews of the aforementioned CeraVe Moisturising Lotion in its flagship shop, many consumers also said, "This is super recommended by dermatologists" and "It's right to listen to dermatologists".
In February this year, Myriam Cohen-Welgryn, President of L’Oréal Dermatological Beauty Division, posted a message on LinkedIn saying that the former L'Oréal Active Health Cosmetics division officially changed its name to L'Oréal Dermatological Beauty. Myriam Cohen-Welgryn said that the fact that people are now increasingly conscious of their appearance and look to medical professionals for ways to become healthy and beautiful is the reason for the name change of L'Oréal Active Cosmetics and that the division will form a community of 7,500 passionate experts - dedicated to transforming people's lives and increasing access to skin health for everyone, everywhere.
The division's brands are also deeply involved in dermatology. CeraVe was created by American dermatologist Hensby Christopher. In October 2022, together with Professor Yang Sen, a member of the Standing Committee of the Chinese Society of Medical Aesthetics and Head of the Laser Aesthetics Group, and Zhang Xuejun, Chairman of the Committee on Psoriasis of the Chinese Society of Dermatology and Venereology, CeraVe launched the 2022 Blue Book of Skin Barrier Health.
At the beginning of January 2023, LA ROCHE-POSAY released the first documentary on caring for the skin health of tumour patients, Under the Skin. It showed the real life of tumour patients and made the public aware of the physical and psychological impact of adverse skin reactions on tumour patients. In doing so, it called for the attention of the whole society. The brand philosophy of "Skin Science, Changing Lives" has been further reinforced by LA ROCHE-POSAY in China and it focused on the special needs of oncology patients over the years.
Acquired by L'Oréal in September 2022, Skinbetter Science was co-founded by pharmaceutical industry professionals Jonah Shacknai, Justin Smith and Seth Rodner in 2016, according to public information. According to L'Oréal, it is now one of the fastest-growing medical skincare brands in the U.S. Skinbetter Science's products are primarily available through a network of leading dermatology, plastic surgery and medical aesthetics practices in the U.S.
The Chinese market remains a focus of the division
In its Q1 2023 earnings report, L'Oréal said that in North Asia, the Dermatological Beauty division maintained strong growth in the region.
As the largest organ of the human body, the health of the skin has a significant impact on a person's quality of life and physical and mental health. The L'Oréal Group has high expectations and strategic upgrades for its dermatological and aesthetic business units. At the 2023 Annual Results Press Meeting of L’Oreal held on 21 April, Fabrice MEGARBANE, President of L’Oréal North Asia and CEO of L’Oréal China said: "The beauty industry can play a greater role in supporting the achievement of the 'Healthy China 2030' goal, bringing people's A better and happier life. Driven by this vision, L'Oréal China has launched the 'Beauty for Health' initiative, hoping to pioneer open innovation with more partners in the health ecosystem." "We expect Dermatological Beauty to be the pioneering division to drive this initiative, to seize the strategic opportunity of upgrading health consumption, and to inject 'new momentum of beauty' with innovation for a healthy mindset, a healthy ecosystem and a healthy life that moves the world."
(Credit: Fabrice MEGARBANE, President of L’Oréal North Asia and CEO of L’Oréal China)
During the meeting, L'Oréal also unveiled its strategic plans for the future of the division. Angie MA said, "In the face of more specialized and segmented market needs, we will continue to solve the problem with a multi-layered strategy of solid growth, innovative investments and increased scale. The renamed Dermatological Beauty will also aim to be a strong driver of L'Oréal's 'Beauty & Wellness' ecosystem by creating more sustainable, life-changing beauty solutions in partnership with experts in the health sector, with dermatology as its foundation."
According to Euromonitor, the dermatology-grade skincare market in China will be approximately 28.59 billion yuan ($4.14 billion) in 2022. In the Chinese market, while L'Oréal's brands such as LA ROCHE-POSAY and VICHY have occupied consumers' minds earlier, Chinese brands such as Winona have also emerged in the Chinese market in the last two years. According to the financial report, Winona's parent company, BTN, generated revenue of 5.014 billion yuan ($726.7 million) in 2022, an increase of 24.65% year-on-year.
Speaking at the strategy session, Angie MA said, "Against the backdrop of a time when consumers are more rational and knowledgeable about the mechanisms of skincare, we believe we have a more competitive advantage as a scientific skincare brand." Whether L'Oréal can maintain steady growth in the increasingly competitive dermatological-grade skincare sector is yet to be tested by consumers.
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