(AOF) – Bold, L’Oréal’s venture capital fund, today announced a minority investment in Debut, becoming the only beauty industry player investing in the company. The investment will enable US biotech Debut to rapidly scale its manufacturing platform and meet growing demand for innovative ingredients for use in cosmetics, skincare and packaging.
This investment builds on L’Oréal and Debut’s joint development programs, leveraging Debut’s intellectual property portfolio that helps create more than 7,000 ingredients to bring high-value ingredients to market faster and more durable.
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Key points
– World leader in cosmetics, created in 1909;
– Group organized into 5 divisions generating €38.3 billion in sales: luxury for 38%, consumer products for 37%, active cosmetics for 13% and professional products;
– Powerful international position, with 35 global brands and balanced revenues between Europe (30%), North Asia (30%), North America (27%) and the rest of the world;
– Business model based on 5 pillars: high R&D around 800 M€, innovation contributing to 15% of annual sales, release of new products between 15 and 20% per year, positioning in “premium” products, brands global and focus on e-commerce;
– Capital characterized by the strong positions of the Bettancourt and Meyers families -34.7%- and of Nestlé -20%-, Jean-Paul Agon chairs the board of directors of 16 members, Nicolas Hieronimus being managing director;
– Healthy balance sheet with €27.2 billion in equity and less than $5 billion in debt.
Challenges
– Average annual growth of more than 5% of the world beauty market, driven by the enrichment of the populations of emerging countries and their aging in the OECD;
– Innovation strategy aimed at making the group the leader in “Beauty Tech”;
– 3% of income invested in research & innovation, approximately 500 patents filed per year by 21 research centers,
– focus on digital, reinforced by acquisitions (ModiFace, leader in augmented reality and artificial intelligence), by equity investments in start-ups with the BOLD fund and partnerships with GAFAM, Alibaba and Tencent , Verily (skin aging),
– integration of sustainability criteria into products;
– “L’Oréal for the future” environmental strategy:
– carbon neutrality of sites by 2025 (North Asia, United States and Brazil since 2022) and, by 2030, all plastic packaging of recycled or biosourced origin and 50% reduction in CO2 emissions vs. 2018 for each finished product,
– display of the social and environmental impact of products;
– Ability to generate high operational self-financing -€5.6 billion;
– Integration of the Americans Youth to the people and Skin BetterScience;
– History of sales growth above the market for 14 years and reinforced by digital, at 29% of turnover.
Challenges
– Long-term evolution of the 8% stake in Sanofi;
– Expectation of a recovery in sales in China from the second quarter;
– 2023 objective of market outperformance and growth in sales and profit;
– 2022 dividend of €6, up 25%.
Learn more about the luxury sector
Market boom for several more years
According to Bain & Company, the global luxury market (fashion, cars, hotels, wines and spirits, cruises, etc.) will have recorded a 21% jump in sales in 2022, to 1,384 billion euros. The luxury personal products segment (jewellery, clothing, watches, leather goods, etc.) should grow by 22% and again grow by 3% to 8% in 2023 despite the expected economic slowdown. Growth should continue in the following years, with an increase that should reach 60% by 2030! According to Bain, spending by Americans in Europe has more than doubled between 2019 and 2022. This development is largely explained by a strong dollar. The Chinese market, on the other hand, is at half mast due to the “zero Covid” policy and strict confinements.