November 18, 2013 / 4:45 PM / 4 years ago

LVMH eyes expansion in premium cosmetics market

ORLEANS, France, Nov 18 (Reuters) - LVMH underlined its aim to expand in the 77-billion-euro a year ($104 billion) global premium cosmetics market on Monday as it unveiled a new beauty products research centre near the French city of Orleans.

The world’s largest luxury group by sales remains on the lookout for acquisitions in skincare, where it sees growth potential in Asia, but said the priority was the Asian launch of U.S. beauty brand Fresh, which it has owned since 2000.

Asked if LVMH would be interested in family-owned skincare brand Clarins if it was up for sale, LVMH Managing Director Antonio Belloni said it favoured smaller businesses with more room to grow. Clarins’ annual sales exceed 1.2 billion euros.

“We remain open to acquisitions” in the field of cosmetics, Belloni told Reuters at the inauguration of the new centre. “But for now we are focused on rolling out Fresh in Asia.”

Fresh, which was founded in the United States in 1991, will also be rolled out in Europe over the next few years, LVMH said.

The new “Helios” research facility, complete with robots, powerful microscopes and scientific cameras, represents an investment of 30-40 million euros and will host up to 300 researchers in fields such as molecular biology, biochemistry and ethnobotany, LVMH said.

Designed to compete with similar facilities built by rivals Chanel, L‘Oreal and Clarins, the site will help create around 1,200 new beauty products a year accounting for 20-25 percent of annual sales at LVMH’s perfume and cosmetics unit, the luxury group said.

The centre will develop face creams, make-up and perfume formulas for several LVMH brands, including Christian Dior, Guerlain, Givenchy and Fresh.

Christian Dior Parfums head Claude Martinez said about half the 3.6 billion euros in revenue generated at LVMH’s perfume and cosmetics unit last year came from the Christian Dior brand, with around 20 percent from Guerlain and 10-15 percent from Givenchy.

Around 50 percent of sales at the Dior beauty brand came from perfume, 30 percent from make-up and 20 percent from perfume, Martinez said. Sister brand Guerlain generated 40 percent from perfume, 30 percent from skincare and 30 percent from make-up.

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