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At this spring's key beauty trade shows, the atmosphere was electric, the industry abuzz. On everyone's lips was chatter about the two leading beauty giants: L'Oreal and Procter & Gamble.
Over the past five years, the indisputable dominance of L'Oreal has slowly been challenged as P&G has made one major acquisition after another, first Clairol, then Wella and most recently Gillette. Their competition is the story of the decade: Just as L'Oreal's battle with the Estee Lauder Cos. dominated the Eighties, what's at stake is nothing less than the power to define beauty into the next decade.
L'Oreal, based in Clichy, France, is the largest beauty company in the world. Widely regarded as a classic cosmetics house, 2004 sales exceeded $18 billion, generated by products in four distribution channels: mass, luxury, professional hair care and active cosmetics. Mass consumer products fall under the L'Oreal Paris, Maybelline New York, Garnier and Soft Sheen-Carson brands. Luxury products are sold under the Lancome, Ralph Lauren fragrances, Giorgio Armani fragrances and cosmetics, Kiehl's Since 1851, Biotherm and Shu Uemura brands. Professional hair care is made up of the Matrix, L'Oreal Professionnel, Redken, Kerastase and Mizani brands. The Active brands comprise LaRoche-Posay, Vichy, Dermablend and Skinceuticals. L'Oreal's North American business, which is headquartered in New York, generated $4.69 billion in 2004.
Procter & Gamble, based in Cincinnati, generates approximately $16.3 billion in beauty sales, or 32 percent of overall company revenues, according to the company. P&G competes in many of the distribution channels its rival does: mass, prestige fragrances, luxury and professional hair care. Mass beauty products fall under the Olay, CoverGirl, Max Factor, Clairol, Pantene, Herbal Essences and Head & Shoulders brands, among others; its luxury brand is SK-II. Professional hair care brands are sold under the Wella and Clairol monikers. Prestige fragrances are sold under the Hugo Boss and Giorgio Beverly Hills brands, plus the Cosmopolitan Cosmetics subsidiary of Wella. P&G's U.S. business tallied up approximately $5.2 billion, or about 10 percent of global sales, according to the company.
Some industry pundits assert that L'Oreal's beauty-devoted brand portfolio gives it a lead over P&G, which markets everything from pet food to household cleaning products. L'Oreal, after all, can funnel technology and insights from its booming luxury business into...