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P&G Targets Luxury Skincare in China, Perfume in Latin America

P&G Targets Luxury Skincare in China
P&G plans to roll out franchised Tide Dry Cleaners across the U.S. to boost revenue in the country and increase awareness around the detergent brand and its other products. Photographer: Ed Zurga/Bloomberg

Procter & Gamble Co. will focus on skincare in China and fragrances in Latin America as it looks to boost luxury beauty sales outside the U.S. and Europe.

P&G, whose products range from Tide detergent to Gucci perfume, plans to grow by expanding luxury skincare brands like SK-II and making acquisitions, the head of the company’s prestige business unit said in a Sept. 25 interview in Milan.

P&G, based in Cincinnati, and rival L’Oreal SA, the world’s largest cosmetics maker, are chasing growth in emerging markets, where the “appeal and relevance” of expensive beauty products are increasing as people become more wealthy, said Patrice Louvet, president of P&G global prestige products. P&G estimates the global market for luxury beauty will reach $90 billion by 2015 from $70 billion now, according to Louvet.

“The top international businesses make up only about half of the total business,” Louvet said. “So, I strongly believe we can all grow nicely and meet our objectives.”

About a third of P&G’s revenue last year came from developing markets and northeast Asia, according to Bloomberg data.

The world’s largest consumer-products company is looking for acquisitions to complete its prestige beauty portfolio, which also includes The Art of Shaving grooming, Louvet said. These will be brands “we can make available across the planet,” the Switzerland-based executive said, declining to identify candidates.

The priority, however, is expanding P&G’s existing prestige beauty portfolio geographically and in new categories, he said.

‘Play’ in Brazil

In Asia, particularly China, P&G is targeting skincare with brands like SK-II, Louvet said. Spending on face creams and other skin products has grown 21 percent in the country over four years, according to Pablo Zuanic, an analyst at Liberum Capital Ltd. P&G has 12 percent of the Chinese skincare market, less than leader L’Oreal’s 16 percent share, Zuanic estimates.

In Latin America, the focus is on fragrances, Louvet said. “Most of the players are local in Brazil and we believe there’s an opportunity for us to play there,” the executive said.

Louvet declined to say how P&G planned to challenge the dominance of direct sellers like Avon Products Inc. in Latin America.

“Ultimately, we want to find the best way to serve the consumers so we’ll work with the various options that are possible and available in Brazil to get to the consumer,” Louvet said.

P&G plans to roll out franchised Tide Dry Cleaners across the U.S. to boost revenue in the country and increase awareness around the detergent brand and its other products.

If there are similar licensing opportunities for prestige beauty services, such as more SK-II spas, “that may be an opportunity we look at in the future,” Louvet said. P&G currently operates “two or three” SK-II spas in Asia, he said.

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