L'Oreal's R&D and acquisition strategy to drive innovation in the beauty industry
Pamela has over 35 years experience working in the beauty industry at the large brand houses and incubating innovation with small start ups. She started her career at Estee Lauder in 1981 and enjoyed 23 years at the company where she grew to become President of Specialty Group. During her time at Lauder, Pamela negotiated and signed Lauder’s first license agreement in 1994 with Tommy Hilfiger and she led the acquisition of La Mer in 1995 and Jo Malone in 1999. In 2004, Pamela was recruited by Bernard Arnault at LVMH as President / CEO of Beauty Brands where she was responsible for Dior, Guerlain, Givenchy, and Acqua di Parma. Pamela left LVMH in 2016 to start her own beauty incubator which helps bring new beauty products and businesses to life.
Well, I think L’Oréal, historically, has been at the forefront of it. They were the first ones to jump on creating a separate team to run the Founders Factory in 2016. They're ahead of the game, in terms of looking at the big ones. However, L’Oréal historically has spent more on R&D than any of the other big companies. They're very proud of the fact that they spend like 3.5% on R&D. While if you look at what Lauder spent, I think it's like 1.5% of their revenue. So I would say, L’Oréal has done the best job of jumping on this trend and of finding founders and building businesses, either internally or with new founders, but the race is on. It's 2019, and this all just started three years ago so anything could happen.
I think investing in R&D for innovation is key to L’Oréal’s success. They have always invested the most of all the beauty companies, in their own internal R&D, whether it's in tech or whether it's in new product formulations, gestures, or ingredients. They're pretty much at the top of their game, in terms of what they commit to R&D as being a super important piece of them and their growth. They have also made some very smart acquisitions. They bought IT Cosmetics, which has global appeal, because it's science-backed positioning as well as problem solution-oriented. It speaks well to every part of the globe, because of its positioning.
Also Kiehl’s was a great one for them to buy. It's genderless, especially now with everybody going genderless. It's also perfectly positioned for today's consumer, is perfectly priced, and has been growing quite nicely, especially with the boom in skincare in the US. Those two acquisitions alone are over billion-dollar opportunities for them. They continue to grow their other brands nicely and are performing really well in China. I think all of the global brands rely on the Asian market, particularly in skincare, for exponential growth. That's not going to stop for the next, probably three to five years. So they're well-positioned. I think, in their case, they put their money where their mouth is in terms of R&D.
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Pamela has over 35 years experience working in the beauty industry at the large brand houses and incubating innovation with small start ups. She started her career at Estee Lauder in 1981 and enjoyed 23 years at the company where she grew to become President of Specialty Group. During her time at Lauder, Pamela negotiated and signed Lauder’s first license agreement in 1994 with Tommy Hilfiger and she led the acquisition of La Mer in 1995 and Jo Malone in 1999. In 2004, Pamela was recruited by Bernard Arnault at LVMH as President / CEO of Beauty Brands where she was responsible for Dior, Guerlain, Givenchy, and Acqua di Parma. Pamela left LVMH in 2016 to start her own beauty incubator which helps bring new beauty products and businesses to life.