L'ORÉAL'S WINNING FORMULA: MASTERING THE COMPETITION TO LEAD THE BEAUTY WORLD

A DECADE AGO, while L'Oréal stood as the clear global leader in beauty, a new set of independent brands was beginning to gain traction. Despite their at first comparatively microscopic scale, digital natives Glossier and e.l.f. Beauty, celebrity challengers such as Fenty (Rihanna) and Kylie Cosmetics (Kylie Jenner), and the jostling ranks of Korean beauty brands all had a key advantage. While L'Oréal and the other big players had marketing models based on traditional media and sales models based on brick-and-mortar retail, these competitors were perfectly adapted for the new age of social media, influencers, and e-commerce.

- BY ADAM GALE

It sounds like the preamble to a business-school case study on disruption, the kind that doesn't end well for the disrupted. Yet L'Oréal didn't have its Kodak moment. Instead, despite the intensifying competition, it has consistently outperformed the $450 billion global beauty market, which itself continues to grow at 4% to 5% annually.

Today, L'Oréal remains one of the jewels in the French corporate crown, its 37 brands selling a bewildering array of potions, creams, cleansers, serums, dyes, moisturizers, mascaras, beauty devices, and more, across more than 150 countries. The group's $47 billion turnover is nearly double what it was in 2014, comfortably outpacing the likes of Estée Lauder or Beiersdorf over the same period, and still towering above the next generation of competitors. What is it doing right?

INNOVATION AT THE CORE

"Beauty is an endless quest for humans, which is why the market is always evolving," says L'Oréal deputy CEO Barbara Lavernos. Customer expectations evolve, too—who wants obsolete wrinkle cream?— but the company has kept up with and in many cases exceeded those expectations. "At the end of the day, what works in beauty is really good products," Lavernos says.

There's a reason 116-year-old L'Oréal was named Fortune's most innovative European company earlier this year. Indeed, Lavernos's own 2021 elevation from executive vice president of operations to deputy CEO, where she oversees innovation, tech, and research, is a measure of how centrally the group views product innovation in an offer-driven market. The company launched 3,636 formulas in 2024 alone.