L'Oréal says travel retail boom creates 'sixth continent'

PARIS, France - French cosmetics giant L'Oréal has created a new travel retail division to make the most of a 17-billion-euro ($23 billion) market that is booming as a new, moneyed middle class emerges from China to Brazil.

L'Oréal said the democratization of travel had created a new "sixth continent" of consumers ready to buy items such as high-end cosmetics during their journeys.

Sales of goods in airports, cruise ships and duty-free shops grew 9 percent last year to 55.8 billion euros and are set to reach more than 100 billion euros in the next ten years, according to market research firm Institut Generation.

Cosmetics such as perfume, skin creams and make-up were the biggest category, accounting for around 30 percent of travel retail revenue last year, or 17 billion euros.

L'Oréal dominated the travel retail market in 2012, with a market share of 21.6 percent, Institut Generation said.

Rivals are pushing hard to compete. The travel retail arm of luxury giant LVMH (LVMH.PA), whose Dior, Guerlain and Givenchy cosmetics products vie with L'Oréal's luxury brands, has been the fastest growing of all the group's businesses.

"This market, present around the world, could be considered as a 'sixth continent'," L'Oréal Chief Executive Jean-Paul Agon said in a statement on Thursday. "L'Oréal has high ambition for the future of the channel."

The new division will oversee the sale to travellers of L'Oréal's luxury products such as Lancome creams and Yves Saint Laurent make-up as well as brands such as La Roche Posay and L'Oréal creams and Kerastase shampoo.

Sales from LVMH's DFS travel retail network, which include Sephora cosmetics shops, another popular tourist destination, saw like-for-like growth of 19 percent in the nine months to September 30.

The boost included contributions from LVMH's new DFS concessions in Hong Kong.

In comparison, sales of LVMH's fashion and leather goods rose by only 4 percent during the period.