Jean paul pleasure. Francine what happened to loreal in the last 10 years . Innovation . Your share price has grown. Was it exciting times . Jean paul very exciting. I started as ceo 10 years ago. It has been 10 years very exciting. Of course we had crisis in 2008 and 2009, but globally the business has been very good. We have been growing, acquiring brands, launching new products, gaining market share everywhere, in europe, usa, china, so very exciting, fantastic. Francine what has been the most fun . Jean paul the past 34 years. Thanks to digital revolution, everything has been transformed. As i tell my teams, i think this, i industry, our business, our company has more chance in the past three years than in the previous 30 years, so it is an amazing time, extremely exciting. Francine is this the way you sell or the way people look at makeup . Jean paul no, in fact it is the relationships between brands and consumers. In fact, digital has completely transformed the relationship between the two. Before that, you know, brands were talking to consumers, pushing to all them information or whatever, but but now the consumer has taken the power. The consumer decides how he wants to see the brands, what he wants to know, what he wants to discover. Digital creates relationship with something that didnt exist before. Francine isnt it difficult to control your brand . Jean paul yeah, but at the same time it is more exciting and it enriches the relationship. So now thanks to digital we can communicate the content of our brands, we can do tutorials to explain how the products work, how they should be used. We can have a personalized relationship with the consumers. It is a completely new dimension. It is much more rich and exciting. Francine so what sells that the moment . Is it the Luxury Brands or more the Consumer Brands . Jean paul this year, luxury has been booming everywhere, mostly with chinese consumers. You know chinese consumers are fantastic. They love beauty. They love luxury. They love our brands, and our business with chinese consumers everywhere has been booming. Francine loreals global reach stretches across 140 countries. About two thirds of its sales are generated outside europe. Much attention has shifted to china, where Strong Demand for high end lipstick and perfume is driving growth. [speaking chinese] francine in 2015, china surpassed france to become the groups secondbiggest market behind the united states. Some of the success is being attributed to selfies, with cameraconscious millennials buying more makeup than ever before to look good instantly. Have you had to adapt to the Chinese Market . Jean paul yeah, in fact the products we sell, not for all brands because Luxury Brands are the same all over the world of course, but brands like loreal, maybelline, and the products we sell in china are made in china and formulated by chinese in our chinese labs. Francine because of regulations . Jean paul not only. We want to create a product absolutely right for them, especially skincare, because their needs, their skin, their aspirations, are different, specific. We formulate in our chinese labs. We manufacture in chinese factories, and loreal paris is the number one beauty brand in china. Francine i have also been reading that one of the most popular products is actually a homemade range of cosmetics which is favored by the wife of president xi. Jean paul still the number one beauty brand in china, the preferred beauty brand by Chinese Women is loreal paris. They call it with the chinese name. It is beautiful, by the way. No, it is great, because loreal paris is the number one brand for chinese, for americans, for europeans, for russians, everywhere. So it is francine not bad. Jean paul yeah, not bad. Francine so tell me about your success in china. Is it through distribution, ads, through celebrities . What is the attraction for your brand by the chinese . Jean paul the reason for the success is always the same. It is number one quality. You know we, for all our brands our absolute priority is the quality and safety of our products, and it is something the chinese respect a lot. It is very important for them. Number one, innovation. Innovation is extremely important. It is an industry where you have to innovate a lot. You know that more than 15 of our products every year our new in order to keep innovation flowing very strongly. Of course it is the imagery of the brands, you know brands like Giorgio Armani and loreal paris, it is beautiful imagery, and chinese consumers are very sensitive to that. They like it. Francine is the u. S. A tough market . Jean paul the u. S. This year is a bit tougher, a bit softer, lets say, certainly softer than china, but it depends. Last year, the u. S. Was very good. So every year, it is funny, because every year the market roughly globally is more or less growing at 4 , but it is never made exactly the same way. Francine how difficult is it what will work and what will not . Why am i using this mascara, not the other mascara. Why am i using this foundation, not the other . Jean paul again, it is very, when you know well your consumers, when you understand the desires, when you can guess their dreams or expectations, then you can really create what they will love. Francine what will the next four years bring . Is that a specific market that you think will grow more . Is it, for example, mens cosmetics, or Something Else . Jean paul digital will be the most important element of transformation in the markets, so definitely we are going to see the ecommerce growing. For example, ecommerce in china is already more than 30 of our sales for our massmarket brands, so it is huge. So we are going to see digital growing. We will probably see new channels emerging like specialty stores, our own stores. We are very big, also a growing segment is travel retail, you know, the stores in the airports, because more and more people are traveling, so i think there will be new channels. In terms of the regions, the emerging markets are still growing. And our categories are growing too. Makeup has been booming for 23 years. I think it will keep booming. Skincare is growing too, so honestly i am very optimistic about the shortterm, mediumterm, longterm possibilities of this industry. Francine what do you think you spend most of your innovation on . Is it, for example, making lipstick that lasts longer . Is it kind of changing at a little bit . I know you have so many products. Jean paul and a few secrets. Francine but you can tell us. We are amongst friends. Francine we were talking about what the next four years will bring, and it is a lot more ecommerce. How do i choose my makeup online . It must be difficult to choose the right coloring. Jean paul now technologies are amazing. You can test online, on your cell phone for example, simulate the application of the makeup on your face. And then you see yourself with the lips covered with the lipstick you want, the shade you need, the powder, the mascaras. You know i did a demonstration of that to my board completely made up. It was, they were ecstatic. Francine was that for the launch of the app . Jean paul yeah. Francine fantastic. Jean paul i wanted to share with the board the fantastic progress of technology. It is amazing. Oh, it looks pure red. I know i dont have any on. It is like amy winehouse. I cant help looking at myself. Francine this is amazing because youre also been have to change your research and development. How much of the overall costs goes on actual Digital Products . Jean paul difficult to say because it is everywhere in every brand in every division, but what i can say is that now more in terms of media, one third of all of the media we do now goes on digital. In terms of ecommerce, 7 roughly of sales that we do are in ecommerce that we do for digital. It is growing 30 a year, so there is a shift happening, which is extremely fast and extremely strong. Francine the company that invented the platinum blonde is constantly innovating and developing new products as consumer demand changes. At its lab in paris, scientists have studied more than 7000 types of hair and are now experimenting with 3d printing. The hope is to one day help people suffering from hair loss. Loreal has already created fake skin to avoid testing products on animals, and invented a uv patch to monitor exposure to the suns rays. Jean paul we are the number one r d facility in the world. We are spending 3. 5 of sales and research and innovation, and obviously the most important are hair, skin. Hair is where we invent and create new formulations for hair care, hair color, all types of hair products. Francine you also have a patch . Jean paul a uv patch. Francine you put it on to see when you are over exposed to the sun. Jean paul it is a creation that was made two years ago that we presented it at a consumer show in vegas last year. And it is a uv patch. You put it on your skin. It is linked to your cell phone. And it calls you or it rings when your exposure to uv has been too high. It is a fantastic tool. Francine do think there will be more of a trend between the cosmetics and the health care . Jean paul yeah, absolutely, and also with internet. This triangle between beauty, health for the skin or hair, and the internet of things is creating new opportunities that are going to be very useful for consumers. Francine what to do like about your job the most . Jean paul i love understanding people. I think that one of my strengths is the capacity of empathy with consumers. So i have this capacity to understand, to feel, to guess what Consumers Want, what is their desires, sometimes their dreams, and then to be able to formulate products that will respond to these dreams. Francine do you believe you have to take risks to innovate . Jean paul yeah. Francine do you . Jean paul of course. Because every innovation by definition is a bet. Every launch is a bet. It is like a new film or a new movie or new music, you never know in advance, but that is the magic of it. Francine so what do you think you spend most of your innovation on . Is it, for example, making lipstick that lasts longer . Is it changing it a little bit . I know you have so many products. Jean paul and a few secrets. Francine and a few secrets, but you can tell us. We are amongst friends. Jean paul we are working on all categories. We are 3500 researchers from many, many different departments, and they are all working on all types of cosmetics, skin care, hair care, hair color, sun care. And because fundamentally as i told you we really believe first and foremost in terms of efficacy and quality. So the mission of the company, which is beauty for all is is also not only beautiful, but the best of beauty, the best quality, the best performance, the best efficacy, the best safety. And that keeps us busy. Francine 3500 researchers. Jean paul yeah. Francine how long does it take from, i dont know, who has a concept to the product being on the shelf for someone to buy . Jean paul it depends. It can be quick when the formulation is easy. It can take maybe six months, or when for example the marketing guy has as a vision, has as a dream, but the labs dont know exactly how to formulate it, it can take two years, three years. It really depends. Mega volume on top, mega volume on bottom. Share it with your friends and buy makeup instantly. Francine one of the criticisms of the Beauty Industry is that it is only for young people. Is there any truth in that . Jean paul no, of course not. It would be stupid. Because we are addressing all needs for all people, and look at our ambassadors. For example, jane fonda, helen mirren, they are not millennials, so, no, obviously not. Francine do you sell more to millennials or to people of a certain age . Jean paul we sell to everyone. Some of our brands like urban decay are more targeting young people. Biotherm or loreal paris may target other categories of consumers, but no, no, we cover the whole scope of consumers. And in terms of age, in terms of diversity, in terms of countries, chinese, brazilian, europeans, everyone. It is beautiful. Francine how do you sell to the emerging markets . Jean paul we adapt. We we adapt the products that we sell, of course. We make sure they are affordable and that people can buy them. Brazil for example is very interesting. Because brazil is the country in the world where the hair is completely unique. Because it is such a mixed country in terms of ethnic origins that the blend is completely amazing, and you have to create for brazilians haircare products that are completely specific. And, by the way, it is very interesting because sometimes they are the most demanding consumers, and so when you can create in brazil a product that is good for them, then you can make it for the world because it is going to be great for everyone. Francine do you think generation x cares more about this than millennials . Jean paul there is an urgency clearly. We are not talking anymore about a potential threat. There is a clear and present threat. Francine for jean paul agon, life at loreal began in sales 39 years ago. He quickly understood the power of advertising. Read my lips. I am worth it. Francine the company obviously thinks it is worth it, spending more than 8 billion a year selling and marketing its brands, a third of that on digital media. Jean paul when i was 20 years old, i was in Business School and at the end i knew i wanted to do marketing. And for me beauty is the supreme art of marketing, because it is marketing that is not only about understanding, but emotion, guessing, creation, so i think it is fantastic, marketing. There is no better marketing than beauty marketing. Francine from the 20yearold jean paul agon, what have you learned about yourself . Jean paul my god, a lot, because it was a long time ago. It took me many years to get where i am today, but i was always passionate. I think that the incredible part of loreal is that every day is a new adventure. Every day is a passion. It is the company made of really passionate people, and every new mission is an adventure. Francine so what are you like as a leader, micromanaging or overview . Jean paul you know, i like overview. From time to time, im tempted to do micromanagement, but when i do that, my chiefs say, you know, jean paul, you should not bother with that. Let us do it. Francine do you review though the end product every time . Or how does it work . Jean paul i am with all the brands, not all the time of course. I travel in many, many countries around the world, and i am just trying to help to make sure that we are going, taking the right directions, pushing the right innovations, understanding enough the consumers we are dealing with, trying to pilot the ship. Francine loreals sharing beauty with all program launched in 2013 was designed to transform the business. Jean paul agon was determined to make the company ethically and environmentally sustainable. It has been recognized for its efforts, awarded a aaa for water management, climate, and action against deforestation. Francine so when did you start thinking about sustainability . Jean paul a pretty long time ago, you know, especially when i came back from the usa and i took over as ceo. I really understood at that time that for Companies Like loreal, especially because we are the leader of the Beauty Industry, we had to make sure that also we would do the best and the most to make the planet beautiful place. Francine what started it . Is it because you say we sell so much so we have to make sure it does not go to waste . Or is it also because Consumers Want something sustainable . Or is it because the employees you hire want something sustainable . Jean paul very good, very good point. I think it is all of that. First, we have a moral duty. Secondly, it is what employees are asking for. Third, it is what Consumers Want. Four, because it is what society expects from a big company like us. So that is why we really went in this direction. Francine does it make a difference for the consumer . I remember you telling me maybe a couple of years ago that if a consumer has a choice of a sustainable shampoo or a shampoo that makes our hair better, we will always go for the shampoo that makes our hair better. Jean paul yeah, but now what we want to do is make a shampoo that makes her hair better and sustainable. In fact, you are right. Our vision is we have to find a way that is not opposite, that it goes in the same direction. And it is the same for economic performance. For example, the performance should not be opposite to the economic performance. In fact, we are able to prove that. In the past 10 years, we reduced our Carbon Emissions by 67 , while at the same time we were able to increase our production by 30 . Francine how do you do that . Jean paul we work a lot. We transform all our factories. We have now 10 sites that are carbon neutral. We completely transform the way also we engineer with water. We have what we call dry factories, that they dont use water at all. They recycled the totality of the water that they use. We eliminate waste. So it is a comprehensive effort on all fronts to transform completely the way we do business. Francine shareholders are behind you every step of the way for sustainability . Jean paul yeah, yeah, absolutely. I think our shareholders are proud of what we do. I cannot say that they are pushing us hard to do it, but they are happy and proud. Francine do think generation x cares more about this than millennials . The younger you are, the more you think about this . Jean paul i think that everybody now cares. I think it is very well understood that there is an urgency, clearly. We are not talking anymore about a potential threat. I mean there is a clear and present threat to the planet, and if we are not all doing the maximum in the very short term, it is going to be very difficult, so i think every generation now understands that. Francine if i speak to you in five years, what will be your story . Jean paul in five years, probably i will tell you that the most Important Mission has been the transmission, because of course i will not be ceo forever. I will be, by the way, very glad to pass the baton one day to my successor. Francine do you think a lot about succession . What kind of successor would you like, and what would you like your legacy to be . Jean paul i would be proud to have been able to adapt loreal to the new world. I think that we are living in a very special period. The world tomorrow will be different from the world we knew a few years ago, and my absolute priority right now is to adapt, transform, the company in order to make it as successful as a leader in the new world as it was before, and i am very confident about it because that is what we are doing. You know we are doing a cultural revolution, a digital revolution, a sustainability revolution, and so loreal will be a fantastic company. And then, someone else will take the baton and will drive the adventure further. Francine jean paul agon, thank you so much. Jean paul thank you very much. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. 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