L’Oreal Operations in Russia

For the first time after the economic crisis that shook Russia in 1998, L’Oreal is back in country’s market with massive launch of make-up products and has taken over the distribution of Luxury Products Division brands previously handled by local agents. During the first six moths, sales in Russia’s emerging market increased till +47%. At the moment results are +65%. Most of the company’s brand names are well known to Russian consumers; for example, the hair care products of L’Oreal have been in Russian market since 1920, and still dominate the cosmetics business. L’Oreal in Russia is establishing its production facilities, because it’s goal is to move the production nearer to customers, to have cheaper labour in workforce, to take the opportunity to reduce shipping costs and customs duties, and to be able quickly respond to market changes. L’Oreal in Russia is based on marketing and market focused strategy of acquisitions, aggressively seeking new markets and building up existing markets, which results in steady, dynamic and strong organic, internal growth. The cosmetics industry is fast-growing market and L’Oreal has spent almost 4 billion euros, creating product lines that its competitors can not match. The products are much the same – shampoos, creams, lotions. The difference today is that cosmetics are affordable to almost everyone, and with outstanding financial performance L’Oreal becomes the main player in Russian cosmetics market. The product distribution in Russia are divided among L’Oreal’s subsidiaries, which focus on a specific part of cosmetic’s market. ZAO Rusbel, one of the company’s subsidiaries, was established in 1992, and currently distributes L’Oreal’s leading international brand names in the Russian market, including L’Oreal Paris, Maybelline, Vichy and La Roche Posay. L’Oreal is so good at improving products and coming up with new ones, that it is able to update about half of its product line every third year, due to the heavily investment in research and development. Now in Russia, company concentrates on its core brands and builds stable market share in this fast–growing, new economy.…