Will L’Oréal’s acquisition spree pay off in APAC?

L’Oréal’s recent acquisition streak, including Borntostandout, Jacquemus, and Amouage, signals an aggressive push into the high-end fragrance and beauty sector. The French cosmetics giant is positioning itself to capture increasing global demand for luxury and niche brands. In 2024, L’Oréal generated sales of $45.1 billion, a 5.6% YoY increase on a reported basis. Despite this growth, the company faced challenges in the Chinese market — sales in North Asia declined 6.5% YoY in the third quarter of 2024. This downturn underscores the necessity for L’Oréal to diversify its market strategy and reduce reliance on any single region. Why niche fragrance is the next big bet in China L’Oréal’s acquisitions align with the surging demand for niche fragrances in China. Jacques Roizen, managing director of digital luxury group, market research and consulting agency for luxury brands, highlights the shifting landscape. “Over 30 international fragrance brands have entered China since 2020, with niche fragrances growing at twice the pace of established brands on Tmall,” he says. “With its strong marketing campaigns, Jacquemus should have an edge in capturing younger consumers’ attention.” Dao Nguyen, founder of boutique marketing agency Essenzia ByDao, echoes this sentiment: “As long as Jacquemus is able to bring an original vision — just like it did for fashion — it could spur the right level of desirability.” The brand must craft a unique fragrance identity to stand out in an increasingly crowded space. By expanding its portfolio with these niche brands, L'Oréal aims to strengthen its presence in the global luxury beauty market and mitigate the impact of regional market fluctuations. But will these strategic moves translate into sustained success? Borntostandout and the rise of ‘K-fragrances’ in APAC L’Oréal’s investment in Borntostandout, a South Korean luxury fragrance brand, aligns with the surging popularity of K-beauty. The brand’s bold and unconventional scents cater to consumers seeking unique olfactory experiences, mirroring the rise of niche fragrances in China. According to Roizen, “In Tmall, niche fragrances are growing at twice the pace of established brands (10% vs. 5%), indicating strong consumer interest in new and unique scents.” With China’s fragrance market still under-penetrated, Borntostandout’s avant-garde positioning may give L’Oréal a first-mover advantage. Meanwhile, Amouage, the Omani luxury fragrance house known for its opulent scents, brings an exotic, Middle Eastern touch to L’Oréal’s portfolio. This acquisition follows a broader industry trend of luxury players expanding into high-end perfumery, catering to consumers seeking exclusivity and craftsmanship. How L’Oréal plans to leverage Jacquemus’ viral power in China L’Oréal’s partnership with Jacquemus marks an intriguing extension of the latter’s identity beyond fashion. Simon Porte Jacquemus has built a strong Gen Z and millennial following, leveraging his brand’s playful and sun-soaked Mediterranean aesthetic. L’Oréal sees potential to tap into younger consumers’ growing preference for beauty as a form of self-expression with Jacquemus’ highly visual and viral marketing approach. “Fragrance is the perfect way for Jacquemus to expand its identity, and as Gen Z are definitely choosing fragrance to express themselves (rather than a sheer social marker), it paves the way for engagement,” says Nguyen. Lucas Nanini, Head of Europe and Asia at Good Face Project, a beauty product development platform, sees an even broader opportunity: “Fragrance is a big market driver these days, just look at all biggest company earning calls, and L’Oréal has made some strides there with To Summer, Amouage, and now Jacquemus. I wouldn’t be surprised if there is not just a color, but also a fragrance line.” While skincare may not align with Jacquemus’ core brand DNA, fragrance and color cosmetics offer a clear pathway to growth. However, scaling Jacquemus Beauty won’t be without challenges. The luxury beauty space is fiercely competitive, with established players like YSL, Prada, and Valentino expanding their beauty offerings. “The influx of international brands means that differentiation is crucial, but that should play to Jacquemus’ advantage,” Roizen says. “Chinese consumers tend to experiment with new brands, making it difficult to establish long-term loyalty.” China: The litmus test for L’Oréal’s strategy Despite a slowdown in China’s high-end beauty market, the country remains a crucial battleground. L’Oréal’s dominance in China’s luxury beauty sector has been challenged by a combination of economic headwinds and the rise of domestic brands. In 2024, for the first time in over a decade, L’Oréal’s China revenue declined slightly, highlighting the need for innovation and strategic acquisitions to sustain growth. Roizen sees significant potential for Jacquemus in China: “A Jacquemus Tmall flagship store should easily become the brand’s most visible touch point in the world, and a unique opportunity to introduce the brand in China. Jacquemus will certainly want to leverage its ability to create viral content on Xiaohongshu and Douyin, where it will resonate with Chinese consumers.” Nanini adds, “Jacquemus is trying to accelerate growth, and we know how beauty deals work: the beauty division ends up paying for the front covers of all magazines and online paid media, and the brand benefits from this additional advertising. That will for sure boost the brand and make it more appealing when negotiating a larger investment deal for the house.” Yet, the question remains: “Is this one of those brands that has mileage, or will it hit a plateau by going too quickly into beauty?” asks Nanini. L’Oréal’s APAC expansion playbook: Scaling niche brands without losing exclusivity L’Oréal’s broader APAC strategy hinges on diversifying its high-end fragrance portfolio and leveraging digital innovation. The region’s beauty consumers are increasingly gravitating toward niche and artisanal brands, making the acquisitions of Borntostandout, Jacquemus, and Amouage well-timed. “L’Oréal has a proven track record in expanding luxury beauty brands in APAC through digital innovation and strategic marketing,” says Roizen. “These acquisitions could solidify L’Oréal’s dominance in APAC’s luxury fragrance sector, particularly in China, where demand for niche and premium scents continues to grow.” For Jacquemus, South Korea presents another key opportunity. “Seeing some of the in-store executions of Jacquemus, they remind me a lot of what we could see in South Korea with Gentle Monster,” says Nanini. “I can see a lot of synergies for L’Oréal to learn about in-store experience and Jacquemus to push what they do in-store with fashion into fragrance (and maybe color).” Will L’Oréal’s acquisition spree pay off? L’Oréal’s strategic acquisitions align with key beauty trends shaping APAC. The push into niche fragrance, coupled with a high-profile partnership with Jacquemus, signals confidence in the long-term potential of these brands. But success will depend on execution — how well L'Oréal navigates the competitive Chinese market, sustains brand desirability, and ensures that Jacquemus’ beauty expansion enhances rather than dilutes its core fashion brand. “Nobody can know for sure, it still remains to be potentialized,” says Nguyen. “But the fragrance category is one that is growing and is resilient, so it makes sense to build a diversified portfolio that responds to the yearning for novelty and exploration.” As competition intensifies, L’Oréal’s ability to integrate these brands into its APAC strategy will determine whether this acquisition spree pays off — or becomes an expensive failure.

Will L’Oréal’s acquisition spree pay off in APAC?

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Published February 26, 2025

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Will L’Oréal’s acquisition spree pay off in APAC?