L'Oréal Group CFO: Luxury Cosmetics Accounts for an "Extremely High" Nearly 60% Share in China

From September 8 to 10, the 19th Barclays Annual Global Consumer Staples Conference was held in Boston, USA.

French beauty giant L'Oréal Group Chief Financial Officer Christophe Babule delivered a speech at the opening conference, reviewing the group's performance in the first half of the year and engaging in a conversation with Barclays Research analyst Warren Ackerman.

Christophe Babule (pictured below) shared his observations on the fragrance market. He said that over the past few years, the fragrance market has indeed grown at a very high rate, reaching double-digit growth. It has slowed recently, but it remains a very dynamic market, maintaining a growth level of 5%-6%, performing far ahead of the global beauty market overall.

He observed that the market is polarizing. "On one side are affordable fragrances, which is also why we launched fragrance mist products to reach new customer groups looking for more affordable fragrances; on the other side are ultra-premium fragrances, extremely high-positioned, extremely expensive top-luxury fragrances, and the Creed brand in our acquisition portfolio plays a role in this segment."

He then mentioned the hair care market, saying it is also very active. L'Oréal Group's hair care business grew 15.6% in the first half of the year. He cited several factors driving market growth, including the global trend of women wearing their hair long, and consumers generally placing greater emphasis on care efficacy, opening up space for innovation upgrades and product premiumization.

The color cosmetics business is the most volatile, performing slightly below the overall market, and Christophe Babule said the group is "not satisfied" with this. Because this business is highly dependent on fashion and color trends, and in the digital era, trends change faster and faster.

Within the group, polarization in the color cosmetics business has also been observed: mass color cosmetics have strong momentum — in the US market, Maybelline is still visible, and NYX is performing especially well. Luxury color cosmetics, however, grew weakly, at only about 2.5%. He said that in the second half, the group will focus on the latter, bringing more innovation, and more new products will be launched in 2027.

From a regional market perspective, Christophe Babule said that China is a crucial market for the group, contributing about 17% of sales. In the first half of 2026, the group achieved double-digit growth in the Chinese market, outperforming the local beauty market by nearly three times.

Unlike the European and American markets, L'Oréal's luxury cosmetics business accounts for an extremely high share in China, reaching nearly 60%, followed by the mass cosmetics business; the dermatological beauty business is growing rapidly, while the professional hair products business remains relatively small.

He mentioned another characteristic of the Chinese market: China has the highest e-commerce penetration rate in the world, and more than 65% of L'Oréal Group's sales in the Chinese market come from online. Moreover, channels are continuously shifting, with Douyin rising rapidly. Based on the results of the 618 shopping festival, L'Oréal's Douyin channel grew by about 55%.

Regarding the strategically core US market, Christophe Babule predicted that there will be 10-20 million new mass beauty consumers in the future, while one-third of the world's high-net-worth individuals are in the US, which is also significant for the luxury cosmetics division. Nearly half of L'Oréal's sales in the US market come from American local brands.

On M&A strategy, he said the group's M&A strategy is very clear, namely seeking targets with differentiation and long-term growth potential. He discussed the integration of the beauty business of Italian luxury brand Gucci, saying the company's team has mature capabilities in successfully transforming fashion brands into beauty brands, namely mining the brand DNA and fully transplanting it into beauty products. The team has spent months deeply studying Gucci's brand characteristics, and new products will be launched after 18 months.

Regarding the increasingly blurred boundaries between dermatological skincare, efficacy skincare, longevity and anti-aging, and beauty, Christophe Babule affirmed the group's core philosophy — beauty only, but covering all beauty segments. He believes that over the past 5-10 years, the medical aesthetics skincare trend has undergone significant changes — more affordable, faster-acting, less invasive, and with reduced social stigma — and more and more consumers are willing to try it. He judges that this trend will continue upward, and the group will continue to evaluate opportunities.