Featuring on the front cover of Reflets Mag #154, Nicolas Hieronimus (E85) explains how L’Oréal Group achieves an annual turnover exceeding €40 billion, despite sky-rocketing production costs and without compromising its commitment to French-made goods, nor on social and environmental goals. Here’s a free extract of the article. If you’d like to read the next editions, sign up now! 

Reflets Magazine: With a record turnover of €41.2 billion in 2023, up 11%, and a 7.3% increase for the first half-year, despite the more challenging context, can you tell us, in a few words, the secrets to L’Oréal’s continued success?

Nicolas Hieronimus: The main reason why L’Oréal outperforms year after year, strengthening its position as world leader on the beauty market, is its powerful multipolar model. Our presence on 150 markets throughout the world’s major regions and across all distribution channels (large retailers, specialist retailers, e-commerce, pharmacies, businesses) protects us from cyclical fluctuations. Furthermore, our success relies on our constantly renewed capacity to innovate and the inventiveness of our staff. Our entrepreneurial spirit and our drive to conquer markets remain intact!

RM: What are L’Oréal’s strategy model and corporate culture?

N. Hieronimus: We base our model on a decision to focus on a single sector: beauty and nothing but…but beauty in all its facets. Our experience in cosmetics goes back more than a hundred years and this, along with our staff’s talent and our profound knowledge of consumer expectations, gives us a considerable competitive advantage. But L’Oréal’s strength lies above all in innovation, the main driver behind its very identity. L’Oréal has always remained loyal to that identity, of a company conceived by a scientist and born of innovation. The beauty market being one in which supply is driven by innovation, L’Oréal holds a unique position with its 4,000 researchers, its beauty tech experts and its research and innovation (R&I) investments of €1.3 billion, which is more than our three biggest competitors combined. Naturally, our corporate culture is all about innovation and creativity. It is a core culture that transcends generations. It is embodied in aphorisms such as “Seize upcoming trends”, that we owe to one of L’Oréal’s iconic leaders, François Dalle. It is about keeping alive the pioneering spirit that has made L’Oréal such an agile company, always at the forefront.

RM: How do you manage to be so highly competitive despite producing in France?

N. Hieronimus: It isn’t a contradiction, quite the opposite; being a French company is a considerable advantage. France is the embodiment of beauty, which has been a true French passion for centuries. L’Oréal maintains the ‘made in France’ legacy and the values of innovation, expertise and excellence that come with it, boosted by an outstanding industrial base. Incidentally, the group has never stopped investing here since the company was created in Paris, 115 years ago. Our country remains our flagship asset. It is a land of savoir-faire in which we have 11 factories, representing a quarter of our global production. In France, L’Oréal employs 15,000 people directly and our activity generates a further 100,000 full-time equivalents. France also benefits from 70% of our global R&I investments and boasts more than half of our 4,000 researchers.  

RM: How has your group handled the increase in the cost of raw materials and energy?

N. Hieronimus: In 2022 and 2023, like all businesses, we were indeed confronted with the inflation of input costs, due to the rising cost of energy and many of our raw materials. But we decided to absorb these increases in large part. When we did increase our sale prices, we did it in a targeted way, focusing on the launch of new, innovative products with properties and purposes that justified their higher price.

RM: In such an uncertain economic environment, how can strong commitments be upheld in terms of ecological transformation and carbon footprint reduction?

N. Hieronimus: In reality, these factors are not mutually exclusive, but mutually dependent. For nearly 10 years now, our environmental responsibility has been a cornerstone of our two-fold performance strategy - economic/financial and social/environmental - and we are convinced that these two aspects are stronger together. We have set some ambitious targets, including short-term ones, for 2025 and 2030. We are progressing towards 100% renewable energy at all our sites, and 100% recycled or bio-sourced plastic. And we are as rigorous and determined in achieving all our goals, be they financial or extra-financial. L’Oréal is actually the only company in the world to have received an AAA rating from the Carbon Disclosure Project (CDP) for 8 years running. Furthermore, because this environmental transition needs to happen across the entire industry if it is to have the required impact, we are rallying our ecosystem, our partners and, in some cases, even our competitors in order to implement measures collectively. For example, we launched along with 70 other companies in our sector, the EcoBeauty Score, a shared system that rates the environmental impact of cosmetics. But we also intend to contribute to meeting environmental and social challenges through impact investing as well as solidarity, prevention and reconstruction initiatives. Our action includes measures such as funds in support of the circular economy and the climate emergency.

RM: How does a century-old company like L’Oréal cope with the technology revolution and continue to innovate?

N. Hieronimus: It’s actually our capacity to embrace any technological revolution that explains how we’ve been able to innovate and flourish for 115 years! So scientific research and technology are at the core of L’Oréal’s structure and strategy. We were among the first companies to carry out our digital transformation and get involved in beauty tech, a field that we lead, with the promise of a more customised, more inclusive and more sustainable approach to beauty. L’Oréal employs more than 8,000 tech and data specialists, headed by Barbara Lavernos, Deputy CEO in charge of Research, Innovation and Technology, with whom I was proud to open the 2024 CES in Las Vegas. In just a few years, we’ve developed breakthrough innovations such as L’Oréal Water Saver, a shower head based on micro-ionised water droplets colliding under high pressure, to reduce water consumption in hair salons by up to 65%. Another example is SpotScan+ by La Roche-Posay, an AI-based tool that analyses acne-prone skin and suggests bespoke treatment routines. These are innovations that change people’s lives, provide services that increasingly meet the endless diversity of specific cosmetic needs, and contribute to creating a more inclusive, more sustainable world.

RM: What role does AI play in your activity, generative AI in particular?

N. Hieronimus: [Article to be continued in Reflets Magazine #154]

Interview by François de Guillebon, Chief Editor at Reflets Magazine

Translation of an excerpt of an article published in Reflets Magazine #154. Read a preview. Get the next issues  (in French).

Picture: © Stéphane de Bourgies / L’Oréal