Picking a gift for your mum? L’Oreal Paris probably wouldn’t be the first brand that comes to mind.
But this year, the beauty giant took an unusually bold approach to its Lunar New Year campaign. Against a backdrop of red and gold, L’Oreal Paris’ gift boxes appeared in iconic moments throughout history, accompanied by a tagline urging consumers to “bring L’Oreal Paris” home for the holidays. As millennials reach an age where they can afford to buy gifts for their parents, this nostalgia-infused campaign struck a chord—emotionally resonant while keeping the message down-to-earth.
The timing is critical. L’Oreal’s struggles in North Asia continued in fiscal 2024, with its China business posting its first-ever revenue decline. The company framed the drop as a single-digit decrease, highlighting the strong performance of its luxury cosmetics, dermatological beauty, and professional products divisions. The weak spot? Its mass market beauty business—including L’Oreal Paris.
This campaign wasn’t just a seasonal gimmick, signaling a strategic shift as L’Oreal Paris looks to reignite growth. But will it work?
The brand that started it all
L’Oreal Paris isn’t just the group’s flagship brand. It’s the only one it ever built from scratch.
When L’Oreal entered China in 1997, its first skincare launch was L’Oreal Paris Revitalift, endorsed by actress Gong Li. At the time, urban disposable income barely exceeded RMB 5,000 (USD 700) per year. A celebrity-endorsed skincare set costing a few hundred RMB was undeniably a luxury—and a perfect gift.
The 2000s brought the rise of television, and L’Oreal Paris capitalized on the shift. By 2012, the brand accounted for nearly half of L’Oreal’s total annual sales in China.
Then came the e-commerce boom. As incomes rose and mobile payments took off, China’s luxury skincare market exploded. By 2019, premium beauty products outsold mass-market options for the first time.
L’Oreal pivoted, prioritizing high-end brands like Lancome and YSL Beauty, competing fiercely with Estee Lauder for prime retail space. Xiaoyu Ma, now L’Oreal China’s vice president, once led Lancome’s aggressive expansion in China, recalling how securing top department store counters became a winner-takes-all battle between rivals.
L’Oreal Paris, meanwhile, underwent its own premiumization. But in an era where anti-aging creams routinely cost RMB 1,000 and up, its RMB 200–400 (USD 28–56) price range still made it feel accessible—so much so that some consumers began seeing it as an affordable alternative to L’Oreal’s luxury lines.
For years, analysts categorized L’Oreal Paris as a masstige brand, targeting consumers in their 20s. Then suddenly, the market shifted.
Luxury beauty’s dominance faltered in 2023. Meanwhile, L’Oreal’s newly rebranded dermatological beauty division gained traction—but remained a niche player.
L’Oreal Paris stepped in as the company’s emergency responder. In 2023, the brand’s division led the rebound, reclaiming its position as L’Oreal China’s largest segment.
Reclaiming the mass market, but not quite there yet
L’Oreal Paris belongs to the company’s consumer products division, alongside Maybelline, Garnier, NYX, 3CE, and MG. Historically, this division has been L’Oreal China’s biggest revenue driver.
But not all brands thrived. Garnier pulled out of China in 2014, with L’Oreal internally dismissing it as a non-mainstream brand. A decade later, NYX exited as well, with staff reassigned internally.
Today, L’Oreal Paris and Maybelline account for nearly all of the division’s revenue in China. Yet, even RMB 200–400 (USD 28–56) is considered expensive by mass market standards.
Across major e-commerce platforms, beauty prices trended downward in 2024. In May, Tmall data from Syntun showed that the average price of skincare products fell 9% to RMB 136 (USD 19), while cosmetics prices dropped 7% to RMB 53 (USD 7).
Faced with this shift, L’Oreal Paris made a sharp U-turn. The brand that once aspired to go upmarket is now racing back to reclaim the mass market. But shifting gears takes time.
Beyond L’Oreal Paris, the company has been expanding its affordable skincare portfolio.
In late 2023, it acquired Dr.G, a budget-friendly South Korean skincare brand. In its announcement, L’Oreal emphasized that Dr.G’s clinical-grade products are “positioned to meet the rising demand for K-Beauty and scientifically developed, effective yet affordable skincare solutions.” The brand is already gaining traction across Asia and holds global expansion potential. In Taiwan, Dr.G’s price range hovers around RMB 100–200 (USD 14–28).
L’Oreal’s dermatological beauty division is also doubling down on affordability.
CeraVe, a key brand in this unit, is now targeting college students. According to Vox, a L’Oreal market executive, the brand plans to increase campus promotions to attract younger consumers.
“Plus, CeraVe is made in China, so its production costs are low,” Vox added. “That allows us to keep pricing competitive.”
Despite its success overseas, CeraVe has yet to introduce some of its global bestsellers to China—including its purple-packaged anti-aging line.
Anti-aging is one of the biggest drivers of premium skincare pricing.
But even if CeraVe’s anti-aging range enters China, it won’t carry a premium price tag.
“There’s a ceiling to how much we can charge,” Vox said. “Everything will stay under RMB 100 (USD 14).”
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by He Zhexin for 36Kr.