Louis Vuitton 2003 Annual Report Download - page 44

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42 LVMH ANNUAL
REPORT 2003
THE PERFUMES AND
COSMETICS BUSINESS GROUP
IS FOCUSING PRI MARILY
ON EXPANDING THOSE BRANDS
WHI CH MAKE UP THE FOUNDA-
TION OF ITS GROWTH AND
EARNINGS POTENTIAL.
Glamour, emotion,
elegance, pleasure,
excellence… From the
eternal image of French
luxury to the most
daring contemporary
products, the LVMH
perfume and cosmetics
brands are priceless
assets. In a market
in which the incredible
number of new products,
some of which are
redundant, can leave
the consumer weary
and confused, each
of our brands cultivates
the values that forge
its identity and designs
strategies to stand out
from the competition.
This means revitalizing
the great classics that
prolong their exceptional
success and reassert the
legitimacy of the brand.
It also means innova-
tions that provide real
added value, a strong
promotional policy,
and modernized
merchandising. By
focusing its investments
on growing its founda-
tion brands, the Perfu-
mes and Cosmetics
business group regularly
achieves greater-than-
market growth and
increases its profitability.
INNOVATION FUELED
BY SUBSTANTIAL RESEARCH
AND DEVELOPMENT RESOURCES
IS A KEY FACTOR I N THE LVMH
COSMETICS STRATEGY.
Research & Development
play a major role in this
strategy. The brand
teams in the perfume
and cosmetics group
are now working under
one roof at the LVMH
laboratories. This
concentration of resour-
ces and skills, in coordi-
nation with European,
US and Asian partners,
allows LVMH to conduct
in major applied
research that benefits all
our brands in this sector.
It gives each brand
a particular expertise,
such as product safety,
and provides a pool of
innovations that can
contribute to all projects.
In the area of skincare
products, research
products focus on anti-
aging, body care and
bleaching products much
favored by Asian custo-
mers. In the make-up
segment, research teams
are working on the inter-
actions between skin and
light, researching new
pigments and polymers
and new processes.
A large number of new
products generating
strong sales resulted
from these efforts.
ENTERING NEW HIGH-GROWTH
MARKETS GENERATES MAJOR
GROWTH DRIVERS.
The Asian markets
(Japan, China, Korea,
and Taiwan) are regions
in which the Perfumes
and Cosmetics business
group has posted strong
growth in the past
several years. A long-
standing presence in this
region of the world (for
example, Parfums
Christian Dior was one
of the first LVMH
brands to establish
a presence) has given
the brands an opportunity
to further promote their
image and adapt their
strategy to specific
consumer trends. Russia
is also a vector country
for the future, a market
in which the LVMH
brands have a solid mar-
ket share and are step-
ping up their activities.
STRATEGY AND OBJECTIVES
Higher growth thanks
to strong innovation and geographic
expansion
HIGHLIGHTS
■By concentrating
on developing its
strategic brands, the
Perfumes and Cosme-
tics business group is
outpacing its industry
in terms of sales and
sharply increasing its
operating margin.
■The US licenses
developed for desi-
gners Michael Kors,
Marc Jacobs and
Kenneth Cole were
sold in the first half
of 2003. In early
2004, LVMH has also
disposed of the Bliss
brand.
■The successful
launches in the second
half of the year of the
perfumes L’Instant
by Guerlain, Very
Irresistible Givenchy
and KenzoAir proved
to be one of the major
growth drivers in 2003.
■Parfums Christian
Dior unveiled its new
strategic skincare
approach under the
name DiorScience,
with the introduction
of Capture R60/80TM,
an anti-wrinkle product
that is extremely
successful.
■The American
brand BeneFit Cosme-
tics, with very strong
growth and a high
profitability, is confir-
ming its potential as
a rising star.
EUR million 2001 2002 2003
Net sales 2,231 2,336 2,181
I ncome from operations 149 161 178
ERFUMES
P
C
&
OSMETICS