L'Oreal ends Garnier sales in China amid slowdown

SHANGHAI Wed Jan 8, 2014 11:35am IST

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SHANGHAI Jan 8 (Reuters) - French cosmetics giant L'Oreal SA has halted sales of Garnier beauty products in China to focus on other brands, a week after U.S. rival Revlon Inc pulled out completely from the slowing China market.

The firm will concentrate on its L'Oreal Paris and Maybelline New York product lines, a China-based spokeswoman said in an email to Reuters on Wednesday. Those brands have been performing more strongly in China.

China's $25.9 billion cosmetics market is the third biggest in the world. It is expected to grow 63 percent for the five years to 2015, according to consumer research firm Euromonitor.

"To strengthen our leading position, we have decided to discontinue the sales of Garnier products in China and focus our efforts on our two leading brands - L'Oreal Paris, the number one beauty brand, and Maybelline New York, the number one make-up brand in China," the spokeswoman said.

L'Oreal has said the China market, its third biggest where it has a market leading 17 percent market share according to Euromonitor, was "slowing, although still dynamic", according to its third quarter financial statement in October.

"As growth in China slows brands are starting to evaluate their portfolios in China and to focus on where they see the biggest growth," said Torsten Stocker, Hong Kong-based partner with consultancy firm AT Kearney.

Revlon, owner of the Almay cosmetics brand and Sinful Colors nail polish, plans to exit China where sales of its cosmetics have been falling, the U.S. firm said at the end of December. It will cut over 1,000 jobs as part of a move aimed to save about $11 million a year.

The Chinese market is full of potential for Western brands. The Chinese cosmetics sector more than doubled in size between 2008 and 2012, according to a report last year by Fung Group that cited the National Bureau of Statistics in China.

But China is also a complex market with many pitfalls for foreign companies, while a slowing economy and crackdown on extravagance has weighed on luxury brands sales.

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