In 2024, the global beauty tech market saw revenues reaching a staggering US$8.6 billion ($11.8 billion) according to Statista. This is projected to experience an annual growth rate of about 4.89% from 2024 to 2029.
While the US takes the top spot in terms of revenue generation, beauty powerhouse brand L’Oreal is eyeing the potential of the South Asia Pacific, Middle East and North Africa (SAPMENA) zone, with a population of three billion — as both a growth market and a source of innovation.
Within this geography, L’Oreal runs over a dozen entities across 35 markets. The company believes there is a lot of untapped potential in this region with growing affluence and rising sophistication among consumers. The brand expects revenue in the SAPMENA region to double by 2030, representing a CAGR of about 14% from 2023 to 2030.
L’Oreal expects 468 million new consumers in the SAPMENA space by 2030. Statistics from the World Digital Library show that the consumer and middle classes are increasing significantly in the region. The consumer class is expected to increase by 35% from 2024 to 2030.
The SAPMENA region has been the largest growing one for L’Oreal. In its sales figures at 9MFY2024 ended Sept 30, 2024, sales in SAPMENA gained 12.6% y-o-y, the highest growth among all the group’s regions. Latin America followed closely behind with a 12.3% increase, while Europe saw a 9.3% gain, North America a 6.9% growth, and North Asia a 3.0% decline. The growth in the SAPMENA space outpaced the group’s overall growth of just 6.0%.
Growth in the SAPMENA region was broad-based with all divisions (professional products, consumer products, luxe and dermatological beauty) and categories (fragrances, haircare, skincare and makeup) contributing — driven by a healthy combination of value, balanced between mix and price, and volume.
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By country, key growth contributors were the Australia-New Zealand cluster, Thailand, Saudi Arabia, India and Vietnam. The dermatological beauty division performed the best, while the luxe division kept a steady double-digit growth pace. Online remained particularly dynamic across the region, notably in Saudi Arabia, India and Southeast Asia.
Fragrances continued to be the fastest-growing category powered by new launches, while skincare progressed strongly thanks to dermatological beauty and consumer products; haircare was boosted by the continued premiumisation in both mass and professional.
Shares in L’Oreal, on the Euronext, traded at EUR341.35 ($478.87) as at Feb 11, about 20.4% down in the past 12 months, giving it a market capitalisation of about EUR181.6 billion. According to Bloomberg, the majority (51.6%) of the street have “buy” calls on L’Oreal, with an average target price of EUR394.29.
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JP Morgan is bullish on the SAPMENA and India regions for L’Oreal. Currently, these regions represent 8% of the group’s total sales and this is expected to grow about 15% CAGR in 2023–2030, with India growing between 15% and 20%. JP Morgan has an “underweight” rating on the stock with a target price of EUR290.00.
Barclays, too, is positive on L’Oreal’s prospects in the SAPMENA and India markets, with an “overweight” rating and target price of EUR442.00. L’Oreal noted that SAPMENA is 40% of the global population and 19% of global GDP in 2024, but looks set to be 27% in 2030, alongside rapid economic growth, as well as improving physical and digital infrastructure. However, the region is currently only 9% of the global beauty market. L’Oreal expects a 10% market CAGR out to 2030, with the market doubling in seven years, and aims to grow 1.5–2 times faster than the market.
The cosmetics market in SAPMENA is growing faster than it was before Covid-19, and L’Oreal is gaining share at a faster rate. The latter was attributed in part to the creation of a distinct SAPMENA region within L’Oreal (along with channel shift), which came with a greater focus on thinking strategically about the sequencing of brand launches. In addition, technology has enabled a shift to greater centralised production of marketing assets and service centres, which helped address previously subscale countries.
“The SAPMENA beauty market is 70% mass-market, and largely focused on skincare and haircare. Fragrance, makeup, luxury and derma are expected to be the fastest-growing parts of the market going forward, and L’Oreal over-indexes in these segments,” says Barclays.
Beauty tech trends
To better capture this growth potential, L’Oreal is keeping tabs on ongoing trends. The company recognises that the sophistication of the beauty retail landscape has increased consumer knowledge and demand for beauty products in the region. With the explosion of e-commerce, social commerce and live-stream shopping, consumers now have easier access to beauty education and influence, with the option to make purchases online.
Even so, L’Oreal still believes in the importance of brick-and-mortar stores, as beauty products like makeup can be highly personalised. For instance, consumers prefer to compare shades and compatibility of makeup products in person rather than online, where the products are often not exchangeable if a shade is wrong for the skin.
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Nonetheless, tech is becoming more important in the beauty world. In an interview with The Edge Singapore, Lex Bradshaw-Zanger, chief marketing & digital officer of L’Oreal SAPMENA, explains that technology is changing everything, not just beauty.
For example, L’Oreal is leveraging tech to blur the lines between online and offline retail. As mentioned, trying on makeup to compare shades is important for consumers before making a purchase, especially for the first time. Hence, L’Oreal in 2018 acquired ModiFace, founded by University of Toronto engineering professor Parham Aarabi. This solution quickly became a global market leader in augmented reality and artificial intelligence for the beauty industry.
ModiFace is developed with unique technologies to show real results in real time —with virtual makeup try-on, virtual hair colour try-on and augmented reality shopping for customers to virtually try products on anytime, anywhere.
Big Bang
In a bid to scour the market for relevant tech that could help boost L’Oreal’s business, it has launched the Big Bang Beauty Tech Innovation Programme, a start-up challenge for those in the beauty tech industry. Winners from the challenge will get the opportunity to work with L’Oreal and scale their products or ideas.
“The programme is still quite young in this region. Our objective is to look into the start-up ecosystem and find smaller organisations in lots of different spaces, whether it is in beauty, media or marketing. The idea is that innovation doesn’t just come from inside the organisation, and we need to find innovation wherever it is,” says Bradshaw-Zanger.
The SAPMENA region has a dynamic and competitive start-up ecosystem, boasting over 40,000 companies and over 180 unicorns, and a deal flow of US$20 billion in 2023 alone, according to L’Oreal.
The Big Bang Beauty Tech Innovation Programme is the biggest open innovation competition of this geographical scale and offers promising tech start-ups the opportunity to gain exposure in 35 markets across the SAPMENA region. These start-ups will be given the chance to further innovate their solutions in beauty tech for one of five challenge themes.
In the recent challenge, the themes were: consumer experience, content, media, new commerce and tech for good.
The top three winners of the challenge are given a L’Oreal-funded commercial pilot opportunity with one of the group’s 37 brands and a year-long mentorship programme with senior executives from L’Oreal and its programme partners — including Accenture, Google and Meta — to further innovate their solutions in beauty tech with L’Oréal. With L’Oreal SAPMENA as a launchpad, start-ups can tap into an extensive network of partners and market insights.
In the recent challenge, three start-ups from Singapore and India — Creatively Squared (Singapore), Live2.ai (India), and NeuralGarage (India) — emerged as winners.
Ng Wee Wei, senior managing director and Southeast Asia market unit lead of Accenture, says: “We’re incredibly proud and excited about our partnership with L’Oreal and the wider ecosystem to drive innovation, elevate consumer experiences, and redefine the standards of the beauty industry. Witnessing participants push the boundaries with bold, creative solutions that seamlessly merge human ingenuity with cutting-edge technology was truly inspiring, setting the stage for the future of beauty tech.”
Apart from start-up challenges, L’Oreal has also created a venture capital arm, Bold, that explores more long-term investments in start-ups. Through a case-by-case approach, Bold makes minority investments worldwide, ranging from seed stage to Series C. Bold offers start-ups both strategic monetary backing as well as collaborative benefits, tapping into L’Oreal’s 115 years of beauty heritage.
“At the end of the day, we want to identify a connection with start-ups and work together. These programmes can ... feed opportunities to our Bold team in Paris, but through these programmes we do not have monetary investment in the start-ups and only offer commercial opportunities,” says Bradshaw-Zanger.
More Big Bangs
Bradshaw-Zanger explains that the programme is a reflection of the ever-changing consumer trends in the market that L’Oreal aims to capitalise on while staying relevant.
He highlights two main trends that have contributed to the themes of the recent challenge — media influence and e-commerce.
“We realised how recommendation and influence plays a large role in a consumer’s purchase decision. This, combined with e-commerce, [gives us] the impact of live shopping, which TikTok is well-known for… Live shopping is exciting because it’s a combination of technology and how consumers are changing,” he says.
The winners of the recent challenge have offered solutions within the space of producing online content. Singapore’s Creatively Squared is a visual content production platform that enables brands to efficiently produce original digital photos and videos that are on-brand, high quality and effective. India’s Live2.ai is a SaaS platform offering interactive video solutions, focusing on shoppable video technology for Connected TV (CTV) and brands’ websites and apps. It enables businesses to create engaging videos where viewers can make purchases directly within the video content. NeuralGarage, also from India, uses Generative AI to solve the problem of awkward dubbing in entertainment, with technology that syncs actors’ lip movements with dubbed audio to create a natural viewing experience that preserves the cinematic feel of the original content.
The 2025 Big Bang Beauty Tech Innovation Programme across the SAPMENA region has just been launched and this year’s iteration will include Australia and New Zealand. Start-ups will address one of five challenge themes, including a new “science for beauty” theme introduced this year, alongside consumer experience, content & media, new commerce and tech for good.
Start-ups have until May 30 to indicate their interest. The regional semi-finals, which will be conducted online, will happen in August and September. The grand finale is expected to be held in Singapore on Nov 5.
“This is not a one-off programme and we intend to run this every year,” says Bradshaw-Zanger.
“The key thing about the programme is that it is a win-win situation. We want to give back to the start-ups as well and make sure they get the visibility and mentoring that they need to succeed,” he adds.
