WEBVTT - L'Oreal CEO Nicolas Hieronimus Talks Earnings, Consumer Demand 0:00:02.560 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.600 --> 0:00:10.840 Nicola Ionimus, thank you so much for joining us on Bloomberg. 0:00:10.880 --> 0:00:13.240 When you look at the trends from now until the 0:00:13.280 --> 0:00:15.040 end of the year, what are you most excited about. 0:00:15.080 --> 0:00:18.240 I know you've worked on innovation. The economy is what 0:00:18.320 --> 0:00:20.480 it is. Do people buy beauty differently? 0:00:21.800 --> 0:00:23.120 Well, I think people buy beauty. 0:00:23.200 --> 0:00:25.400 Which is the most important thing for me is that 0:00:25.720 --> 0:00:29.080 beauty is a very dynamic category and it shows once 0:00:29.080 --> 0:00:31.800 again it's resilience in times of trouble, and we call 0:00:31.880 --> 0:00:34.080 it whether you call it the lipstick effect or the 0:00:34.120 --> 0:00:37.680 dopamine effect of beauty. The market's growing, It has accelerated 0:00:37.680 --> 0:00:40.440 a bit in Q two, and people are going for 0:00:40.640 --> 0:00:45.040 new or innovation for quality. And that's probably the reason 0:00:45.440 --> 0:00:49.800 behind our great first half at plus six point five percent, 0:00:49.880 --> 0:00:52.360 way above the market growth, is that we brought a 0:00:52.400 --> 0:00:55.480 lot of innovation and of superior quality into the market. 0:00:57.200 --> 0:00:59.639 Is there a section of the market because you really 0:00:59.680 --> 0:01:02.760 expects to, you know, some of the very high end 0:01:02.760 --> 0:01:05.039 brands and some of the more mass market. Is there 0:01:05.080 --> 0:01:08.920 a section of those that actually doing better than expected? 0:01:10.000 --> 0:01:14.560 Well, the overalls what's great this year is that and 0:01:14.600 --> 0:01:17.200 that's probably the strength of our portfolio. The breadth of 0:01:17.200 --> 0:01:20.840 our portfolio, which goes from products at four or five 0:01:20.880 --> 0:01:23.520 euros to product at three hundred, is that all our 0:01:23.560 --> 0:01:26.480 divisions and brands are contributing. If I look at the 0:01:26.520 --> 0:01:28.840 top four brands that are contributing to my growth, you 0:01:28.880 --> 0:01:32.000 have Lorel Paris, you have Cari Stars, you have Lauge 0:01:32.040 --> 0:01:36.120 pos a luxury brand, a dumb brand, a mass market brand, 0:01:36.120 --> 0:01:39.200 and a professional brand. And that shows that you have 0:01:39.240 --> 0:01:42.160 to have beauty for everyone. Now, if we look at 0:01:43.200 --> 0:01:46.399 the categories or the or the type of products that 0:01:46.440 --> 0:01:49.400 are flying the most, you've got two categories that are really. 0:01:49.240 --> 0:01:53.080 Driving the growth is headcare and fragrance. 0:01:53.280 --> 0:01:56.120 And as far as market is concerned, you continue to 0:01:56.120 --> 0:02:00.520 see the metaological beauty extremely dynamic because people want safe 0:02:00.560 --> 0:02:03.160 and efficacious product, which is what we provide with brands 0:02:03.240 --> 0:02:06.080 like Larageposeo Survey, which are doing phenomenon in the beginning 0:02:06.080 --> 0:02:06.480 of the year. 0:02:08.560 --> 0:02:11.280 Is there anything actually underlying that is boosting that growth. 0:02:11.360 --> 0:02:13.320 I know we talk a lot about GLP one's whether 0:02:13.400 --> 0:02:16.160 that changes our tastes, whether that changes our hair, or 0:02:16.200 --> 0:02:20.000 is it something more fundamental about beauty because of advertisement 0:02:20.160 --> 0:02:22.360 or influencers. 0:02:22.120 --> 0:02:25.120 Well, I think you know, beauty has always been a 0:02:25.200 --> 0:02:28.760 quest and everybody is trying to find their own their 0:02:28.760 --> 0:02:31.120 own ways. And as far as hair care is concerned, 0:02:31.120 --> 0:02:36.079 for example, you've got several driving forces. One you mentioned, 0:02:36.120 --> 0:02:38.040 it's not the major one, but it's an important one 0:02:38.360 --> 0:02:41.800 is the GLP one effect, which has both an impact 0:02:41.840 --> 0:02:45.320 on people wanting to buy products that protect the hair 0:02:45.480 --> 0:02:47.679 or help the hair regrow because they have some he 0:02:47.800 --> 0:02:51.040 lossis or some experience this. You also have a boom 0:02:51.080 --> 0:02:55.480 in skin care products that provide a firmness. By the way, 0:02:55.520 --> 0:02:58.400 we are launching right now new products on kills that's 0:02:58.440 --> 0:03:02.639 called color Shot that's particular clearly designed for GLP one users. 0:03:02.680 --> 0:03:07.079 But there's a much bigger underlying trend on hair care 0:03:07.160 --> 0:03:11.080 is that hair is longer and more diverse, which means 0:03:11.080 --> 0:03:16.080 that people need more care, more detangling products, and better 0:03:16.120 --> 0:03:18.600 products in general. That's why there's a boom in professional 0:03:18.600 --> 0:03:21.600 haircare products, which are growing even faster than the category. 0:03:22.520 --> 0:03:24.880 So it's part of demographics and in your right, there 0:03:24.880 --> 0:03:28.800 are trends such as GLP one which are impacting consumers habits. 0:03:28.800 --> 0:03:30.919 The good thing for us is that people under GLP 0:03:31.000 --> 0:03:34.000 one by more beauty than before, so that's great. 0:03:35.440 --> 0:03:37.680 Do your customers spend differently in the US than they 0:03:37.680 --> 0:03:38.760 do in Europe than they do in. 0:03:38.680 --> 0:03:42.840 Asia, Well, the markets are different. 0:03:43.200 --> 0:03:45.920 Asia is a skin care markets and the good thing 0:03:46.000 --> 0:03:49.040 about Asia is that it confirms that China is back 0:03:49.080 --> 0:03:52.000 to positive territory and it's driven by luxury. So there's 0:03:52.680 --> 0:03:56.800 I would say a stronger apbit right now for premium 0:03:55.960 --> 0:04:00.920 in China and a lot relocks division is that at 0:04:00.920 --> 0:04:04.200 plus ten after six months in China, which is very positive. 0:04:04.240 --> 0:04:06.040 So China is more about skincare. 0:04:07.520 --> 0:04:10.720 The US has always been a very strong makeup market 0:04:10.800 --> 0:04:14.240 and remain so. But it's true there's been really an 0:04:14.320 --> 0:04:19.040 acceleration of haircare a lot in the US. Overall consumption 0:04:19.200 --> 0:04:22.279 is pretty good in the US. Consumers are pretty resilient, 0:04:23.200 --> 0:04:25.880 and then we see all around the world, you know, 0:04:26.040 --> 0:04:30.400 the need for better skin care for UV protection, and 0:04:30.440 --> 0:04:32.880 that's also an area where some of our brand thrive, 0:04:32.920 --> 0:04:35.479 which is long service in some care, which is doing 0:04:35.520 --> 0:04:39.039 great too. So in the end, I think the the 0:04:39.200 --> 0:04:42.240 I know you're trying to find differences, but there's an 0:04:42.320 --> 0:04:46.200 over arching trends that people want duty and want innovation, 0:04:46.440 --> 0:04:48.920 and you know, one of the things we've done at 0:04:48.960 --> 0:04:53.560 Loreal is that we've more than doubled the weight of 0:04:53.600 --> 0:04:56.160 innovation in our business between this first half and last 0:04:56.240 --> 0:04:59.560 year's first half, which is also why we are gaining 0:04:59.640 --> 0:05:04.720 market because consumers are constantly tempted by new ideas, new 0:05:04.760 --> 0:05:07.400 products and your right to mention influencers that play a 0:05:07.440 --> 0:05:11.480 very important role in bringing these uh, these new products 0:05:11.480 --> 0:05:14.800 to life on techtalk or other channels, and it's and 0:05:14.839 --> 0:05:16.839 you have to be in that game and to be 0:05:16.920 --> 0:05:20.600 providing very exciting new products. And that's that's true all 0:05:20.640 --> 0:05:25.800 across the world, whether Asia and North America or even 0:05:25.800 --> 0:05:26.440 the Middle East. 0:05:27.680 --> 0:05:30.119 So how much does that innovation actually achieved through AI 0:05:30.400 --> 0:05:32.720 and is it through selling or is it actually some 0:05:32.839 --> 0:05:35.920 of the textures that you find which is helped by 0:05:35.960 --> 0:05:37.920 AI in research and development. 0:05:38.640 --> 0:05:41.320 Well, what AI allows us to do is really to 0:05:41.400 --> 0:05:45.320 accelerate the pace of innovation. You know, sometimes I say 0:05:45.440 --> 0:05:50.600 that AI is accelerated innovation because it allows my researchers 0:05:50.640 --> 0:05:55.120 to to really the divide by for the time to 0:05:55.200 --> 0:05:59.960 bring to market a new molecule with more than double 0:06:00.120 --> 0:06:05.080 the number of molecules we can we can you know, 0:06:05.240 --> 0:06:08.279 scan to find to find new products. 0:06:08.320 --> 0:06:10.280 So it's it's really that allows us. 0:06:10.279 --> 0:06:12.320 We have many brands, we have forty brands, so we 0:06:12.360 --> 0:06:15.839 need to have somehow an R and D on steroids 0:06:16.040 --> 0:06:16.800 and that's what. 0:06:16.680 --> 0:06:17.880 AI allows us to do. 0:06:17.960 --> 0:06:20.599 We still have to know how the data, but AI 0:06:20.720 --> 0:06:23.800 is what really allows us to go faster in terms 0:06:23.839 --> 0:06:24.960 of discoveries. 0:06:26.200 --> 0:06:28.280 As you mentioned, a good set of results. But there 0:06:28.360 --> 0:06:31.360 is a lot of pressure economically and on geopolitics. What's 0:06:31.360 --> 0:06:33.680 the hardest thing that you have to navigate, either in 0:06:33.720 --> 0:06:36.560 terms of tariffs, inflation or trade in general. 0:06:37.839 --> 0:06:41.359 Well, it's what's clear is that you have to be 0:06:41.440 --> 0:06:43.680 a gild and you have to be able to adapt, 0:06:43.760 --> 0:06:46.800 whether it's it's on tariffs, whether it's the price of 0:06:46.880 --> 0:06:50.119 oil which has an impact on the customer transportation, whether 0:06:50.160 --> 0:06:54.360 indeed it's the impact of the crisis in the Middle 0:06:54.400 --> 0:06:58.480 East on consumer behaviors as it relates to travel, retail 0:06:58.560 --> 0:06:59.240 for example. 0:07:00.160 --> 0:07:02.280 So it's it's a lot about agility. 0:07:02.760 --> 0:07:05.479 Of course, you know, currencies also have an impact, and 0:07:05.560 --> 0:07:07.800 we are happy for Lorel that the dollar is a 0:07:07.800 --> 0:07:08.560 bit better. 0:07:08.560 --> 0:07:09.440 Than it wished to be. 0:07:09.600 --> 0:07:14.920 So in the end, it's about seizing the ascending trends 0:07:14.960 --> 0:07:17.840 and trying to leverage what I think is unique at 0:07:17.880 --> 0:07:20.680 Lorel is the fact that we are very spread. 0:07:21.520 --> 0:07:23.080 We call that multipole a model. 0:07:23.360 --> 0:07:27.200 We are spread across regions and across price points and divisions. 0:07:27.200 --> 0:07:31.760 So whatever something is struggling a bit, we can bounce 0:07:31.800 --> 0:07:35.560 back in another area. And if I take this first half, 0:07:36.440 --> 0:07:39.640 Middle East was below expectations, even though not as much 0:07:39.640 --> 0:07:42.960 as with what it feared. But the fact that China, 0:07:43.720 --> 0:07:46.800 luxury in China is more positive kind of offsets it. 0:07:46.920 --> 0:07:51.520 So that that's how we navigate. And in the end, 0:07:52.240 --> 0:07:54.000 you know, going back to what I was saying earlier, 0:07:54.040 --> 0:07:56.400 I really see it's not that I feel I can 0:07:56.560 --> 0:08:01.520 observe that when the world's getting tough for people are 0:08:02.600 --> 0:08:08.160 really more inclined to indulge in pleasurable beauty products. There 0:08:08.160 --> 0:08:10.800 are people that want more indulgence others that want more 0:08:10.840 --> 0:08:13.320 health related products, and we have both. 0:08:13.480 --> 0:08:15.680 So that's how we navigate this crazy world. 0:08:17.240 --> 0:08:19.680 What's actually been the most surprising thing for you? Is 0:08:19.680 --> 0:08:22.160 it the way you know, is it the way that 0:08:22.200 --> 0:08:25.120 people are interested in perfume or how it tastes change, 0:08:25.240 --> 0:08:28.600 or is it that they're quite resilient given everything that 0:08:28.600 --> 0:08:30.240 we're saying on the economy. 0:08:30.360 --> 0:08:34.680 Well, as mentioned the one thing that has surprised me 0:08:34.720 --> 0:08:38.080 the most of the last year is the appetite for 0:08:38.160 --> 0:08:39.480 sophisticated hair care. 0:08:39.640 --> 0:08:41.360 You know, our professional. 0:08:40.800 --> 0:08:44.360 Division, which is is the smallest but was not the 0:08:44.400 --> 0:08:46.440 one that used to be the fastest growing, has been 0:08:46.720 --> 0:08:49.600 growing the fastest now for two years. And it's really 0:08:49.720 --> 0:08:56.000 driven by this number of consumers craving for deep treatments 0:08:56.000 --> 0:08:58.240 for their hair and high quality. Now there are lots 0:08:58.240 --> 0:09:01.720 of other surprising factors. A little anecdote which I read 0:09:03.080 --> 0:09:06.000 and I don't totally know whether it's true, but some 0:09:06.040 --> 0:09:09.640 people are saying that there's an increase in consumption of 0:09:09.679 --> 0:09:14.960 sweet fragrances because people who are on GLP one are 0:09:14.960 --> 0:09:18.720 deprived of sugar, so they like to buy, whether it's 0:09:18.720 --> 0:09:21.840 a bodycare or fragrances that are sweeter. And it's true 0:09:21.880 --> 0:09:24.079 that we have you know, we've launched a ysleve or 0:09:24.280 --> 0:09:28.520 very crush and our lavier bed vanilla and both are 0:09:28.640 --> 0:09:31.760 stundying successes. So it's possible that people that are deprived 0:09:31.760 --> 0:09:35.240 of sugar by their you know, desire to lose weight 0:09:35.480 --> 0:09:38.000 are buying more sweet fragrances. 0:09:38.840 --> 0:09:42.200 Yeah, let's calories. I guess in perfume you have been 0:09:42.280 --> 0:09:45.120 very acquisitive over the last couple of years. Is there 0:09:45.160 --> 0:09:48.000 anything else that you want in the next six months 0:09:48.120 --> 0:09:49.160 or twelve months. 0:09:49.640 --> 0:09:53.160 Well, first of all, I'd like to celebrate what we've acquired. 0:09:54.559 --> 0:09:56.520 First of all, what we've acquired last year. If I 0:09:56.559 --> 0:10:00.319 take a brand like Esop with eighteen months of it's 0:10:00.360 --> 0:10:03.840 going double digits. We are just in the beginning of 0:10:03.920 --> 0:10:06.560 rolling out Doctor g. You know, there's a Korean beauty 0:10:06.600 --> 0:10:08.760 trend and our Doctor GI's the number one skin care 0:10:08.800 --> 0:10:10.800 O bran Korea, so we're rolling it out. 0:10:11.240 --> 0:10:13.640 And which just made two big announcements. 0:10:13.760 --> 0:10:17.760 One is the anticipation by one year of the Gucci license, 0:10:17.800 --> 0:10:20.200 so it's a negotiation between carrying and COT but it 0:10:20.280 --> 0:10:24.480 means that we'll start selling Gucchip products from the first 0:10:24.480 --> 0:10:27.400 of July twenty seven, so it's very positive for our 0:10:27.440 --> 0:10:28.200 future growth. 0:10:28.640 --> 0:10:30.680 And we've just made this acquisition of. 0:10:32.280 --> 0:10:36.360 Innovist in India, which is both two brands and an 0:10:36.360 --> 0:10:39.880 e commerce platform. And one of the other factors that 0:10:40.000 --> 0:10:43.360 drives our growth is our e commerce domination. We are 0:10:43.360 --> 0:10:46.439 growing at plus eighteen on an e commerce so twice 0:10:46.480 --> 0:10:48.920 the market and in Novicet is going to be I 0:10:48.920 --> 0:10:51.679 think a great accelerator for US in India, which remains 0:10:51.679 --> 0:10:55.120 a small country for US in terms of weight of business, 0:10:55.200 --> 0:10:58.360 which which is really accelerating right now. So these two 0:10:58.400 --> 0:11:03.320 acquisitions are already to be confirmed or to be closed 0:11:03.320 --> 0:11:06.360 if I may, and that as far as the future, 0:11:06.480 --> 0:11:06.920 we'll see. 0:11:06.960 --> 0:11:09.480 As always we look at all opportunities. 0:11:09.520 --> 0:11:12.360 But I would say that we were beginning to have 0:11:12.400 --> 0:11:16.120 a pretty complete portfolio and a lot to do with it. 0:11:16.160 --> 0:11:19.040 In India, I know there's there was a huge growth 0:11:19.080 --> 0:11:21.720 actually for some of the local brands because the Indian 0:11:21.760 --> 0:11:24.160 market liked to buy Indian. Do you think that's changing. 0:11:25.760 --> 0:11:28.320 Well, you know, we have strong positions for some of 0:11:28.320 --> 0:11:31.040 our brands in India, but overall it was a small 0:11:31.280 --> 0:11:35.360 market for US and UH, and we've really accelerated with 0:11:35.400 --> 0:11:40.080 a combination of international brands. But I would say that 0:11:40.160 --> 0:11:43.480 have been more localized culturally in terms of advertising, in 0:11:43.600 --> 0:11:47.160 terms of the beauty rituals we promote closer to the 0:11:47.200 --> 0:11:52.280 Indian UH with the original recipes and and we're adding 0:11:52.600 --> 0:11:57.080 this local acquisition and you know, we're India has made 0:11:57.080 --> 0:12:00.000 it to the top eight of our goals contributing country 0:12:00.080 --> 0:12:03.000 country in the first half. We're growing at plus twenty 0:12:03.240 --> 0:12:05.040 in sellout in the market at plus ten, so it 0:12:05.080 --> 0:12:08.160 shows that and that's without innovists which will be part 0:12:08.200 --> 0:12:11.760 of Loreale only from QW three. So it means that 0:12:12.120 --> 0:12:16.120 with the right adaptation of our products, we can win 0:12:16.160 --> 0:12:16.640 in India. 0:12:16.679 --> 0:12:18.079 But it's still a lot to do. It's one of 0:12:18.120 --> 0:12:19.679 the countries where we have the lowest. 0:12:19.440 --> 0:12:22.600 Share, so I'm not happy yet, but I'm excited about 0:12:22.600 --> 0:12:24.720 the future prospects. 0:12:24.840 --> 0:12:26.880 Nicolai Eronymis, thank you so much for joining us.