L’Oréal Luxe President Cyril Chapuy has lifted the lid on what makes the Luxe division a success and the potential it sees in the luxury fragrance category going forward.
The seasoned L’Oréal executive revealed all in a new company webcast titled ‘Let’s Talk Beauty’ on 25 November, giving listeners an insight into how the French beauty giant’s luxury division works and how it looks to grow further.
New consumer targets and emerging markets will be strong areas of focus for the Luxe division going forward, while starting to plan how to build on the power of the group’s latest acquisitions – including Medik8 and Creed.
L’Oréal’s Luxe division comprises many owned-luxury brands like Aēsop, Carita and Lancôme, and licensing deals to develop fragrances for the likes of Maison Margiela, Viktor & Rolf and Yves Saint Laurent (YSL).
The division has been outperforming the market for 14 years in a row, and has a profitability of 22.3% before non-allocated items, reported the group on the webcast.
Although L’Oréal’s latest financial performance report is not out yet, Chapuy revealed that the division is “going to have yet another year of super performance versus the market”.
Talking about the Luxe division’s stellar history of growth, Chapuy added: “It has been a steady and progressive conquest.
“The division over the past ten years went from €7.2bn [in 2015] to €15.6bn [in 2024] – a CAGR of 9.3% versus the market at 6.3%.
“The division has more than doubled in size.”
When asked about the luxury beauty market more generally, Chapuy commented on its steady incline, which has helped the division to grow in turn.
“What matters to me is over the last ten years the number of [luxury] customers has increased 3%,” he said.
“Luxury, obviously, is driven by the younger generation, for example [with] trends, but luxury is also very much driven by Gen X and boomers in terms of purchasing power.
“Over the decade, the two most dynamic categories [in luxury beauty] were skin care and fragrance, but in the last five years, fragrance has taken over skin care in terms of dynamism.
“This is also linked to the geographical footprint, as when Asia slows down a bit, skin care slows down a bit.”
How L’Oréal Luxe plans to further its luxury fragrance growth
Chapuy revealed in the webcast that L’Oréal’s Luxe division benefits from all R&I discoveries first – “it is the famous strategy of cascading from our company,” he added – which puts it in a prime position to deliver further growth in its luxury fragrance brands.
Although the overall luxury fragrance market’s growth has stalled slightly in 2025 in comparison to previous years, it is still the category with the most potential, the executive argued.
“[Luxury fragrance] is still very dynamic, [it] will probably end the year at [around] 6% to 7% growth, so still a very dynamic category,” said Chapuy.
“OK, last year it was 9%, so it is a bit less dynamic, but still super dynamic.
“How many markets are as dynamic as that worldwide? Very few.
“[L’Oréal Luxe] overperforms systematically, [and] this year we will end way above the market.
“We are growing double-digit year to date, and, as you know, November and December [are] the peak season of fragrances, and with the quality of launches my team has crafted, we [will] land way above the market.”
Chapuy also revealed that he is confident in luxury fragrances' continued growth going forward for several reasons.
The first is new consumer targets, namely men, as “they used to be very classical consumers of fragrances, but the new generation layer. They are no longer attached to one fragrance,” explained Chapuy.
For his second reason, he cited the emerging world as it “is adopting fragrances at high speed”.
He added: “The level of growth in fragrances in North Asia, South Asia and Latin America is extremely impressive.”
Lastly, he cited the fact that luxury fragrances is a very “creative market”, which will help ensure its future growth.
Chapuy stated in the webcast that this is due to “a lot of surprises, new olfactions and new gestures”.
He added: “A great movement last year [was] towards mists, which is another way of using fragrances… which was successful.”
Although penetration rates are generally lower for fragrance in China at the moment, Chapuy commented that the region still has real potential.
“It is one of the most exciting fragrance markets in the world as the consumer is very demanding – the consumer likes original, high-quality, high creative fragrances, and is very playful,” he said.
“Historically, Chinese consumers were offering fragrances, it was a gift, but people were not wearing it, but the new generation loves wearing fragrance and changing [it].
“They do not wear the same juice of choice depending on the season, the day [or]... the social occasion. They consider fragrance as part of their signature.
“[This is why] only the best brands and technologies will win in China.”
What is L’Oréal Luxe’s secret sauce?
L’Oréal Luxe’s success lies in its “obsession to build exceptional products, which justify the price premium you have to pay,” claimed Chapuy on the webcast.
“Luxury beauty products are more expensive than other products from the mass and derma world, so we have to justify the price.”
He says the devil lies in the detail, which can be seen in all elements of product design, from the way a lipstick closes and feels in the hand, to the design of caps for fragrances.
“The cap says it all in terms of the quality,” said Chapuy.
“The way it closes, the texture – we spend hours working on the quality and working with the best vendors around the world.
“[These are the] details of quality which define luxury.
“You need to be more innovative, you need to disrupt.”
L’Oréal Luxe’s team are delivering double-digit levels of innovation on net sales, the executive claimed in the webcast, “and we need more than 10% of net sales in innovation in each of our three categories,’ he added.
Being “aggressive in acquisitions” is another reason cited for L’Oréal Luxe’s success, the most recent this year being British premium skin care brand Medik8 and Kering Beauté in a historic €4bn deal.
Kering Beauté includes luxury fragrance brand House of Creed, and the beauty and fragrance licenses of Houses of Kering.
This partnership also includes the rights to enter into a 50-year exclusive license for the creation, development, and distribution of fragrance and beauty products for Gucci when its current license with Coty expires.
“[Medik8] is the fastest-growing luxury skin care brand in the UK, and probably among the fastest-growing in the whole of Western Europe, a great addition to the division,” said Chapuy.
“[Creed] is a very beautiful brand – seven generations of perfumers – [and] a brand with an incredible DNA and incredible potential.
“[And] when [Gucci] becomes available, when the licence expires, it is part of the top four most famous fashion brands in the world, and has great potential… in beauty.
“The whole strategy is to potentialise this division, globalise these [brands] and we have a great global footprint – define very clear DNAs for each of them and potentialise these.
“And, yes, and have a great track record – under our management, YSL went from €300m in 2008 to more than €3bn last year, and this year it will keep going up.”
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