Today, we meet jean paul agon, chairman and ceo of loreal. Thank you so much. Jean paul pleasure. Francine innovation, your share price has grown, was it exciting times . Jean paul very exciting. I started has ceo 10 years ago. It has been 10 years very exciting. Of course we had crisis in 20082009, but globally as this very good. S has been we have been growing, acquiring brands, launching new products, gaining market share everywhere, very, china and exciting. 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 think this , i think this industry, our business, our company has more chance in the past three years previous 30 years, so it is an amazing time, extremely exciting. Francine is it the way you sell or the way people look at makeup . Jean paul 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, themng to all then information or whatever, but but now the consumer has taken power. The consumer decides how he wants to see the brands, what he wants to know. Digital creates a relationship. 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. With digital we can communicate the content of our brands, due do tutorials to explain how the products work, how they should be used, have a personalized relationship with the consumers. It is a completely new dimension. It is much more rich and exciting. Francine what sells that the moment, the Luxury Brands or 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. , and our our Brands Business with chinese consumers everywhere has been booming. Global reachreals 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. In 2015, china surpassed france to become the groups secondbiggest market behind the united states. Some of the success is being attributed to selfies, cameraconscious millennials buying more makeup than ever before to look good instantly. Have you adapted to the Chinese Market . Jean paul not for all brands. The Luxury Brands are the same all over the world of course, but brands like loreal, products weand the sell in china are made in china and formulated by 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, skin 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 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. Francine not bad. Jean paul not bad. Francine tell me about your success in china. Is it through distribution, ads, through celebrities . What is the attraction . Jean paul the reason for the success is always the same. It is number one quality. 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. 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 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, 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 the same way. Francine how difficult is it what will work and what will not . Why am i using this mascara, 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 will grow more . 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 ecommerce growing. For example, ecommerce and china is already more than 30 of our sales for our massmarket brands, so it is huge. So we will see digital growing. We will probably see new channels emerging like specialty stores, our own stores. A growingy big, also segment is travel retailing, 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, emerging markets are still growing. Makeup has been booming for 23 years. I think it will keep booming. Skincare is growing too, so 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 making lipstick that lasts longer . 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. 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 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 you 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 now more in terms of media, one third of all of the media we do now goes on digital. In ecommerce, 7 of sales 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 sun 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 the most important our 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 and we presented it at a consumer show in vegas last year. 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 is 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 absolutely. And also with internet. This triangle between beauty, health for the skin or hair, and creatingof things is new opportunities that are 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 are their desires, sometimes their dreams, and then to be able to formulate products that can 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. Every innovation is a bet. Every launch is a bet. It is like a new film, 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 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. Frome 3500 researchers many different departments are , and they are all working on all types of cosmetics, skin care, hair care, hair color, sun care. Fundamentally as i told you we believe first and foremost in terms of efficacy and quality. The mission of the company, which is beauty for all 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 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 how to formulate it. You can take two years, three years of it really depends. Mega volume on top, mega volume on bottom. Share it with your friends and makeup instantly. Francine one of the criticisms of the Beauty Industry is that it is only for young people. Is there any truth to that . Jean paul no, of course not. It would be stupid. We are addressing all needs for all people, and look at our ambassadors. For example, jane fonda, so , they are not millennials, so obviously not. Francine do you sell more to millennials or those of a certain age . Jean paul we sell to everyone. Some of our brands like urban youngare more targeting people. Biotherm or loreal paris may target other categories of we cover, but no, no, the whole scope of consumers. 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 the products of course. L, we make sure they are affordable and people can buy them. Brazil is 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 isgins that the blend 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, so when you can create in brazil a product that then you canhem, make it for the world. 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. Beauty is the supreme art of marketing, because it is marketing that is not only about understanding, but emotion, guessing, creation, so 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 a lot. 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 a 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, jean paul, you should not bother with that. Let us do it. Francine do you review though the end product every time . 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 in 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, especially when i came back from the usa and i took over as ceo. I really understood at the time that for Companies Like loreal, especially because we are the leader of the Beauty Industry, we had to make sure that we do 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 that we have to make sure it does not go to waste . Or is it because Consumers Want something sustainable . Or is it because the employees you hire want something sustainable . Jean paul very good point. I think it is all of that. First, we have a moral duty. Second, it is what employees are asking for. Third, it is what Consumers Want. Because it is what society expects from a big company like us. That is why we went in this direction. Francine does it make a difference for the consumer . You told me 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 would always go for the shampoo that makes our hair better. Jean paul we want to 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 goes in the same direction. And it is the same for economic performance. That performance should not be leaders with lacqua, be opposite to the economic performance. We should be able to improve that. In the past 10 years, we reduced our Carbon Emissions by 67 , while at the same time increasing 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 we also engineer with water. We have what we call try dry factories that dont use water at all. They recycle the water that they use. We eliminate waste. So on all fronts we transform completely the way we do business. Francine shareholders are behind you every step of the way for sustainability . Jean paul yeah, yeah, absolutely. 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 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 i of course i will not be ceo forever. I will be, by the way, very glad to pass the baton oneday 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 special period. The world tomorrow will be different from the world we knew a few years ago, and my absolute to adapt,ight now is transform, the company 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, 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. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. 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