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L’Oréal India has made its first acquisition in the domestic beauty market by taking over the assets of Mumbai-based Cheryl’s Cosmeceuticals.
French cosmetics and beauty major L'Oreal has acquired salon brand Cheryl's Cosmeceuticals for an undisclosed amount. This is L’Oreal’s first acquisition in the Indian market, which will help the company strengthen its position in the highly competitive Indian salon market which has players such as Lakme, Schwarzkopf , Wella and several other domestic brands such as Shahnaz Hussain. According to the Indian Salon Report 2013, the market is pegged at Rs 12,000 crore and is expected to touch Rs 21,000 crore by 2015.
Cheryl's Cosmeceuticals, founded in 1986 by Oscar and Cheryl Pereira, has a distribution network spanning over 10,000 salons in India and a turnover of approximately Rs 20 crore. L’Oreal had recently announced that it will invest Rs 1000 crore in the Indian market over the next five years to expand its supply chain, reinforce production facilities and fund research and innovation and drive inorganic growth.
Strengthen portfolio
Jean-Christophe Letellier, Managing Director, L’Oreal India, said that the acquisition will not only broaden the company’s product offering in the Professional Products Division segment but also strengthen its skincare products and services portfolio. The French major already has a strong presence in about 40,000 salons in the country with its brands-L’Oréal Professionnel, Matrix, and Kerastase. With the acquisition, it will widen its reach to another 10,000 salons.
“The Indian salon market is growing faster than the consumer beauty products market. It is expected to grow 30 per cent annually for the next three years while the consumer brands will witness a slowdown. The demand is already tapering off and is expected to grow at 10-15 per cent,” Letellier told Business Line . He further added that L’Oreal will outperform the market in both the segments by two to three times.
L'Oreal, present in the country as a wholly-owned subsidiary of L'Oreal SA since 1994, has over 16 brands both in the professional and consumer products division. It derives 20 per cent of its Rs 1,580-crore turnover from the professional products division. It is expecting 23 per cent growth in terms of revenues this year
On further acquisitions, Letellier said that the company is keen on companies that complement its products and services as well such as consumer products and luxury and cosmetics. However, the company wants to drive growth organically.
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