Industryweek 5919 Loreal 1

Luxury Sales Drop Causes L'Oreal to Halt Sale of Garnier Brand in China

Jan. 8, 2014
Sales growth of beauty and personal health products in China slid to 10% in 2013 compared to the 15% registered in 2012.

PARIS --French cosmetics group L'Oreal (IW 1000/155) said Wednesday it was halting the sale of its Garnier brand in China, the latest Western company to get cold feet over a chill in luxury sales.

In order to reinforce its leading position on the Chinese cosmetics market "...the decision was taken to halt the commercialization of the Garnier brand in China," the company said.

L'Oreal said it would now focus on its L'Oreal Paris and Maybelline New York mass market brands in China, which have been enjoyed better sales there than Garnier.

The Garnier brand accounted for only slightly more than 1% of the 1.5 billion euros (US$2 billion) in sales that the L'Oreal group recorded in China in 2012, which made the French company the top player on the Chinese market with a 17% share.

Western companies believe that the beauty and personal health products market in China, which accounted for more than a quarter of luxury goods sales there, still has enormous potential. However the sector has recently felt the chilling effect of a Chinese government clampdown on corruption, which often takes the form of bribes with luxury goods.

Sales growth of beauty and personal health products in China slid to 10% in 2013 compared to the 15% registered in 2012.

L'Oreal has not been the only company to reposition itself on the market, with its Revlon announcing at the end of the year that it was shutting down operations in China.

Copyright Agence France-Presse, 2014

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