L'OCCITANE
Profit and purpose
L’OCCITANE Group Managing Director Laurent Marteau on the company’s recent B Corp milestone, the factors that have led to its stellar performance both in travel retail and domestic markets, and his top priorities as the Group enters a new era of growth.
It has been a big year for L’OCCITANE Group, which recorded double-digit sales growth in 2022 against what it described as “a uniquely challenging macroeconomic backdrop”. In August, the company also achieved B Corp certification, marking a milestone in its sustainability journey.
Net sales grew +19.8% at reported rates to €2,134.7 million, exceeding the €2 billion mark for the first time. L’OCCITANE said an effective omnichannel strategy had driven a more balanced channel mix, with “dynamic growth” in travel retail and the development of newer brands contributing to strong sales growth of +50.9% in wholesale and other channels.
“We want to grow the business fast, but in a sustainable way always balancing profit and purpose” — Laurent Marteau
In travel retail, L’OCCITANE currently features the L’OCCITANE en Provence, ELEMIS, Grown Alchemist and Erborian brands, plus its latest acquisition, Sol de Janeiro, which is already making waves in the channel.
“This dynamic growth in travel retail is driven by our well-balanced portfolio of brands and distribution network. Our strategy depends on the markets and where we have been investing in our brands,” says Group Managing Director Laurent Marteau.
These digital-centric brands, particularly ELEMIS and Sol de Janeiro, supported a +4.8% growth in the online channel despite the recovery in offline sales. The brand’s appeal to Gen Z consumers has proven to be a major sales driver.
In September, L’OCCITANE partnered with China Duty Free Group (CDFG) to unveil the Immortelle Divine Youth animation at the cdf Haikou Mova Mall in Hainan
“Sol de Janeiro is a worldwide phenomenon,” he adds. “Wherever we launch the brand, we become number one in skincare, sometimes in fragrances, sometimes in total brand. Sol de Janeiro’s performance in the US is phenomenal, and something I haven’t seen in my 25 years in the industry. I’ve never seen such a sky-rocketing performance and clients being so proud to buy the brand and be part of the Sol de Janeiro community. I think this is because the brand effectively targets the Gen Z consumer, which everyone in travel retail wants to attract.
“ELEMIS is doing extremely well in the US and UK and we now have it in the Chinese local market. We are investing in growing the brand in Asia Pacific and the Middle East. Our strategy is more market specific. ELEMIS is currently the number one brand in the US in terms of earned media value. [Earned media value is an influencer marketing metric used to quantify the value of social media content -Ed]. For collagen it has become the number one franchise in the UK in terms of earned media value, targeting Gen Z consumers. In the US we have the top two earned media value brands in the form of Sol de Janeiro and ELEMIS, and that’s very rare for any group.”
L’OCCITANE Group’s momentum continued in the first quarter of 2023, where the group recorded a +20.2% year-on-year rise in sales.
The golden animation was described as a “rediscovery of elevated skincare education and experience”
The result was driven mainly by flagship brand L’OCCITANE en Provence growing +4.4%, marked by a recovering trend in China, and Sol de Janeiro continuing what the Group described as “stellar momentum” with a +171.0% increase in sales year-on-year. This growth, particularly for L’OCCITANE en Provence, is supported by significant investment in key markets.
“For L’OCCITANE en Provence, we have quintupled our investment,” Marteau adds. “We’re putting €100 million on the table to drive awareness for the brand in China, US, Europe and other key markets. We’ve launched major advertising campaigns, in airports and local markets, which are now aligned. This is not the case for most brands, but we really wanted to harmonise communications between travel retail and domestic markets for L’OCCITANE en Provence which makes a huge difference.
“We are focusing on categories where we have expertise: skincare, haircare and bodycare. We have the number one bodycare brand in the world with our hand creams, but we are also the number one premium haircare brand in Japan and number two in China. We are also focusing on skincare with the Immortelle Divine Cream and Youth Reset.
“We have fantastic formulas but are very humble and don’t communicate our expertise as a brand. If you come to our laboratory in Manosque, France it’s probably the best laboratory I’ve seen in my career. So, there is lots of excitement and lots to do,” he adds.
During its two-year journey towards B Corp, L’OCCITANE Group evaluated the impact of all its stakeholders, employees and global supply chain
In Q1 2023, other brands together showed healthy growth of +16.2% at constant rates, led by Erborian and Grown Alchemist with +51.9% and +53.1% gains respectively.
“Grown Alchemist is a younger brand, but we have completely reviewed, reformulated the products and relaunched the brand in an edgy ‘lab chic’ aesthetic,” comments Marteau. “We recently did a massive takeover of Sephora in China and they said that Grown Alchemist was their ‘biggest bet of the year’. We’re going to the do the same in Europe and the US and will enter travel retail depending on our local market strategy. We are very eager to roll out the brand in the channel.
“Erborian is number two on TikTok in France,” he adds. “We’re now the top three skincare brand in Sephora France. With Erborian we’re capitalising on a category that no one else has in the market, and that is BB creams and CC creams. We are more focused on the Middle East for this brand so it’s not going to have worldwide distribution, for now.”
The crackdown on the Daigou business, following well-documented Korean Customs Service pressure on the unofficial channel since late 2022, has caused important shifts in the travel retail beauty landscape, but Marteau says that these developments are a non-issue for L’OCCITANE Group.
“We have invested so heavily in China, multiplying our investments by five, and we’ve already seen a return on investment in both travel retail and local markets. As a Group, we’ve never been that dependent on the Daigou business so we’re not that affected by the ongoing uncertainties in that market.”
Marteau continues: “Adding to this, we have also introduced very successfully Sol de Janeiro, ELEMIS, Erborian, and Grown Alchemist, which have all contributed to the Group’s solid performance and growth in China.”
“Sustainability is front of mind in everything we do. It gives our employees a sense of pride. B Corp was a demanding, three-year process, but felt like the right and most logical thing to do.”
The B Corp milestone
L’OCCITANE Groupe’s recent B Corp milestone builds on a commitment to create positive change by empowering communities, protecting biodiversity, reducing waste and mitigating climate change.
B Corp certification (Benefit Certification) measures and verifies a company’s entire social and environmental performance, transparency and accountability. During its two-year journey towards B Corp, L’OCCITANE Group evaluated the impact of all its stakeholders, employees and global supply chain.
“This is very important for us because sustainability has been at the heart of L’OCCITANE en Provence since 1976,” Marteau explains. “Sustainability is front of mind in everything we do. It gives our employees a sense of pride. B Corp was a demanding, three-year process, but felt like the right and most logical thing to do.
“We are working hard to maintain our B Corp status and push our sustainability roadmap even further. For example, we are no longer doing air freight and only shipping by sea. We are investing a lot in our logistics globally to achieve that. We also want to be the first travel retail brand to not use air freight to deliver our stock to operators.”
ELEMIS is currently the number one brand in the US in terms of earned media value
Sol de Janeiro: bringing the Brazilian spirit to travel retail
In the first quarter of 2023, Sol de Janeiro continued its stellar momentum with a +171.0% increase in sales year-on-year. The Gen Z-favourite launched in style throughout the summer, even bringing Brazilian Carnival performers to Frankfurt International Airport.
As reported, the beauty brand has previously been showcased through a series of pop-up campaigns at key airports including Copenhagen, Barcelona, São Paulo, Geneva and Paris Orly, London Gatwick, Heathrow, New York John F. Kennedy International and Paris Charles De Gaulle.
“We want to be the most visible group in travel retail,” Marteau says. “You can do this through communication and advertising or through dynamic events and animations. In travel retail, everything is starting to look the same, so it is important to step out of the box. We don’t want to be static; we want to energise the stores and bring clients inside. With Sol de Janeiro, we are attracting customers through colours, animations and an empowered global community of supporters that are very loyal to the brand.
“When you smell the fragrance and try the texture, you cannot stay indifferent to it and this really resonates with our clients. You feel like you are being transported to Rio or to Carnival, bringing happiness and joy. We need to remember that we are in the airport to retail, animate stores and bring our brands to life. We take this very seriously and are ready to invest.”
As travel retail moves away from recovery and into growth, Marteau believes that the Trinity needs to find better ways to collaborate to achieve the shared goal of delighting passengers. “We need better alignment,” he says. “We need to stop competing for market share and instead focus on pleasing the consumer. Some people want a lot of margin, a lot of profits, bigger spaces, but we tend to forget the end consumer.
“The traveller is going to the airport not to shop but to travel. So, if we want the traveller to enter our stores then we need all to align. The airport needs to give the right space and locations to the retailers, the retailers need to see where the business is coming from and rethink space allocation, and brands need to come up with things that are interesting for the end client. We can’t just copy paste what we do everywhere.
“Brands need to be agile and look at the space allocation between more traditional brands and newness too,” explains Marteau. “Sometimes bringing new brands into the airport environment is like a game of Monopoly, due to limited space allocation. This is a difficult negotiation, but we shouldn’t have to negotiate to do better for clients.”
The Brazil-inspired premium beauty brand, in partnership with Gebr Heinemann, created a colourful spectacle featuring Brazilian dancers clad in glittering jewel-encrusted bikinis, colourful headdresses and feathered wings, and a music show on the Sol de Janeiro podium at Frankfurt Airport on 15 September.
Growth in investment and impact
L’OCCITANE Groupe’s momentum has shown no signs of slowing down with Q1 2023 sales reaching €502.2 million. The result was driven by flagship brand L’OCCITANE en Provence’s recovery in China, newcomer Sol de Janeiro continuing to build its sales year-on-year and Elemis recording double-digit growth, with sales increasing +23.6% at constant rates.
Looking ahead, Marteau outlines three key priorities for the Group. “First, I want to build the best team in the industry. I want our employees to be proud to be working for L’OCCITANE and increase the size of the team.
“We have doubled the travel retail team within a year, which shows the investment and impact we want to have in travel retail. When I joined the company, travel retail was a small part of the overall business at only 5%. We want that to be a double-digit number very soon, because we want travel retail to be a show window for our brands. We are targeting the clients that the operators want to target. We have the brands to do that and we are more agile than the bigger groups.
“Our second priority is to continue disrupting the travel retail market through our brands, animations, merchandising, digital and sustainable innovation. From a digital, disruption and animation perspective, we are ready to do things differently and try things that no one has tried before.
“Third, we want to continue to make a positive impact. With B Corp certification comes a responsibility to maintain our high standards of social and environmental impact in everything we do. We want to grow the business fast, but in a sustainable way always balancing profit and purpose.”
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The Moodie Davitt eZine
Issue 328 | 20 October 2023
The Moodie Davitt eZine is published 14 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail kristyn@moodiedavittreport.com