L'Oréal strengthened its position as the world’s leading beauty company in 2021, with an outstanding performance on financial, social and environmental fronts. Nicolas Hieronimus, Chief Executive Officer, shares the key drivers behind L’Oréal’s successful business model, looking back on a historic year and the way in which the Group embodied its purpose: create the beauty that moves the world.
2021 was a truly historic year for L’Oréal not just in terms of financial performance, but also in terms of social and environmental performance. L’Oréal is uniquely positioned to succeed in 2022 and beyond.
2021 in three key words?
Historic, balanced and responsible.
Historic: despite a challenging context, we had our highest growth in 33 years and outperformed the beauty market once again.
Balanced: we grew in all Zones, all Divisions, and all categories, showing the true power of our unique business model.
Responsible: our strong financial results enabled us to share our success with our employees and invest in our social and environmental commitments.
Why was 2021 such a historic year?
For many reasons.
First, our sales grew by +16.1% like-for-like, twice the growth of the beauty market. We outperformed the market in all Zones, Divisions, and categories—a true grand slam.
It was also a milestone year for each of our Divisions.
L’Oréal Luxe became the Group’s number one Division. Our Consumer Products Division accelerated quarter after quarter and outperformed its market. Our Professional Products Division continued its transformation and became a fully omnichannel business. And our Active Cosmetics Division achieved record growth of +31.8%, doubling its size in four years.
These strong results have allowed us to invest in our social commitments, in our environmental ambitions, and in innovations.
Starting with our employees, we continued to share our success with our teams through our generous profit-sharing programmes and we invested heavily in upskilling, with over three million hours of training.
We also created more than 18,000 opportunities for the under 30s through our new L’Oréal for Youth programme, and almost one million people benefitted from our brands’ engagements in support of social and environmental causes.
All 25 L’Oréal USA sites achieved carbon neutrality, four years ahead of schedule. Our continued efforts in sustainability have also been recognised externally. We were the only company to be given the highest possible score by CDP for the sixth year running, for our leadership in tackling climate change, protecting forests and ensuring water security.
And, when it comes to innovation, we continue to invent the future of beauty. L’Oréal won three official awards at this year’s Consumer Electronics Show and was featured in Time magazine’s top 100 best inventions of the year.
Finally, we also set up a new governance for the company, with Jean-Paul Agon as Chairman of the Board, and myself as the Group’s Chief Executive Officer. I'd like to thank Jean-Paul for the smooth transition, and for his constant support and guidance. I feel extremely proud and honoured to lead this great company that is so close to my heart.
Governance changes in 2021
What was behind the historic results in 2021?
2021 saw the beauty market bounce back to almost 2019 levels. As the world's leading beauty company, we continued to drive the market—in 2020 during the crisis and in 2021—with strong innovations to stimulate consumers’ desire in beauty.
One of the most interesting things to note is our balanced business model, in terms of Zones, in terms of Divisions and in terms of categories, combined with our unique portfolio of desirable brands.
Our success can also be explained by our virtuous growth model. Our high gross margins combined with good cost control enabled us to invest in our brands and in game-changing innovations, despite all the uncertainties of the market, fuelling more growth, while still delivering on profit.
In addition, we saw incredible agility from our teams across the organisation. Throughout 2021, they constantly adapted their plans and ways of working as a result of the changing sanitary conditions. They never took their eye off the ball and delivered outstanding results.
And we continued to leverage our digital edge. We accelerated in e-commerce, which now accounts for 29% of total sales optimised consumer engagement in the new O+O world and reinvented beauty experiences.
How are you approaching 2022?
First, I am confident in the continued growth of the beauty market. In the years to come, this growth will be further driven by expanding middle classes and increased premiumisation. At L'Oréal, we will continue to win market shares using the same recipes for success that allowed us to win in 2021.
Next is our transformation to become a Beauty Tech powerhouse. By harnessing the power of data, AI and strategic tech partnerships, we will redefine the future of beauty.
And let’s not forget our transformation towards Green Sciences. Already well underway, this approach will help us reconcile performance, safety and sustainability in our formulas, and meet our L’Oréal for the Future commitments.
What are you most proud of in 2021?
As a leader, I’ve always believed that with great power comes great responsibility. As the world’s number one beauty company, we take this responsibility very seriously. For many years, we have worked hard to have a positive impact on the world around us.
However, despite the recognition that we’ve had from several external experts, we have often struggled to make our consumers and stakeholders aware of the progress we’ve made.
In 2021, we launched our Sense of Purpose manifesto to create the beauty that moves the world. We brought our manifesto to life in our first global corporate campaign, outlining our commitments and achievements in areas such as biodiversity, climate change, elimination of plastics, diversity and gender equity.
The campaign has now been seen by over a quarter of a billion people in nearly thirty countries around the world. There’s still much work to do, but like many of my fellow employees, this campaign leaves me with a huge sense of pride in what we’ve achieved to date and gives me confidence in the journey ahead of us.
What does this image mean to you?
This picture is from Citizen Day 2021, when I joined over 16,000 L’Oréalians in 52 countries to support over 400 non-profit organisations. I don’t know if you can see, but I’m trying to put my cooking skills to work, chopping watermelon as part of food parcels for the underprivileged.
Citizen Day is an annual event, which started back in 2010. It gives all of our people the chance to roll up their sleeves and give back.
In 2021, there were many different projects, including preparing food parcels in France and the United States. In Lebanon, employees prepared hygiene kits for individuals in precarious situations. In China and Kenya, employees worked to preserve biodiversity, and in the Caribbean, employees were mobilised to collect waste.
This is just a small part of our efforts to make a positive contribution to society and the environment. Citizen Day is always a great day in the L’Oréal calendar and a great example of how we can work together to create the beauty that moves the world.