AUS DEM SPIEGEL
Ausgabe 10/2005

The Beauty Business: L'Oréal's Great Bluff

By Nils Klawitter

L'Oréal is the world's largest and most profitable cosmetics company -- and also its most secretive. There is one reason behind the secrecy: The dismal reality evident at the company's Paris chemical production facility would only mar the dreamy world invoked in L'Oréal's advertising campaigns, on which the company spends billions.

L'Oreal headquarters in a posh Paris suburb.
DPA

L'Oreal headquarters in a posh Paris suburb.

Clichy is a suburb in the northwest corner of Paris, barely visible on the edge of maps of the French capital. There are no postcards depicting Clichy, where low-income housing, warehouses and eight-lane highways are hardly the stuff of tourist brochures.

L'Oréal, the world's largest cosmetics company, has its headquarters in the center of Clichy. Though referred to as the "Beauty Factory," the building, with its brown glazed façade of windows, is every bit as ugly as its neighborhood.

In some ways, the building gives the impression of a high-security zone. Seven cameras are installed around the parking garage entrance alone. Inside, security personnel enforce a strict ban on photography. The concept of un-retouched reality seems to trigger allergic reactions at L'Oréal. The world's largest hair salon is located in the basement of the headquarters building. Here, 90 hairdressers provide free hairstyles to 300 women a day, students, the unemployed and retirees willing to let L'Oréal use them as guinea pigs for new hair colors. The women spend hours waiting for various coloring regimens to take effect. Their faces give the impression of hard labor -- not surprising, given the poor air quality in the windowless room.

Quality, at L'Oréal, seems to be inexorably linked to suffering. On the eleventh floor of the building, the walls are clad in wood and the carpets the color of apricots. This is where Béatrice Dautresme, L'Oréal's director of development, has her office. The only photos available of Dautresme are glamour shots taken by a few carefully selected photographers. She's 58, but she looks to be in her early forties. "The world would be a drearier place without L'Oréal," she says.

Dautresme, who in 2001 became the first and thus far only woman on the company's management board, is something akin to L'Oréal's supreme oracle. Her job is to predict fashion trends and figure out, at just the right time, what fashionable young Chinese women want their lips to look like, or how much wax mascara should contain to produce just the right degree of eyelash curvature.

She has to be familiar with cultural differences and be able to modify products accordingly. Shampoos for the Indian market should contain more oil than those intended for sale in Europe, and Japanese lipstick can't contain any perfumes. To help Chinese women understand why they should pay a premium for face cream sold under L'Oréal's Vichy house brand, it's labeled "Dr. Vichy" in China.

"We have an important mission," says Madame Dautresme, quite seriously. "Cosmetics represent freedom." Dautresme says one of the most important aspects of her products is their natural look. "Our products create self-confidence," she says, "and are a fantastic tool for finding one's own identity." She adds that the company believes in promoting tolerance and does its part to make a multicultural world a reality. Of course, L'Oréal's products also help combat feelings of isolation in the elderly.

When it comes to the elderly, L'Oréal's German spokeswoman, Monika Riemke, has even come up with an unusual theory about causal relationships: "Old people get up, stand up straight and no longer fall down as often when they use our products." As with almost everything at L'Oréal, there's even a study to support her theory. It's called "Look Good, Feel Better."

The company has come a long way with such formulas for happiness. What began in a small Paris apartment, where young chemist Eugène Schueller concocted the first synthetic hair dyes in 1907, has turned into a global conglomerate with more than €14 billion in sales. L'Oréal, whose profits have been consistently on the rise for the past 20 years, is a veritable hothouse when it comes to making money. The company's board only recently announced a record profit of €2.1 billion. The principle beneficiary of L'Oréal's success is Liliane Bettencourt, Schueller's only daughter, the majority shareholder in the company and France's richest woman. The 82-year-old heiress' fortune is estimated at €16.6 billion, and it seems unlikely that the well will be drying up anytime soon.

The group routinely floods retailers' shelves with its 17 brands, hundreds of items and ever-shortening cycles of innovation. It holds a 15-percent share of the global cosmetics market and sells 130 products a second. Innovations that initially appear in luxury brands like Helena Rubinstein and Lancôme are later passed on to mass-market labels like Ambre Solaire and Garnier.

L'Oreal is trying to conquer a fresh new market in China.
DPA

L'Oreal is trying to conquer a fresh new market in China.

In the late 1990s, when it became apparent that the European market was saturated, CEO Lindsay Owen-Jones restructured the group to a more global orientation. L'Oréal's British-born chief executive was especially interested in gaining new customers in newly industrialized countries like China, India and South Africa. He acquired brands, like the Chinese skincare series Mininurse and US brands Softsheen and Carson, which blanket the African American market with ethnic cosmetics such as skin lighteners and hair relaxers. As a result of the company's change in direction, the share of L'Oréal sales achieved in newly industrialized countries has increased from 9 to 20 percent in the past decade. The sale of the aura of beauty has long since boomed in the developing world.

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