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As part of a recent deal to buy back stock from Nestlé, L’Oréal announced it would give up its 50% of the partnership it had with Nestlé in the Galderma dermatology skin care brand, making Nestlé the sole owner of this brand. Euromonitor International’s Ildiko Szalai, a senior foods research analyst, discusses what this means for the global reach of Nestle in the video “Nestlé Commits to Skin Care with New Subsidiary.”
She explains, “Nestlé has announced the establishment of its first fully owned subsidiary in skin care, as part of the L’Oreal share buyback scheme. According to the agreement, L’Oréal will repurchase, at 8% of its share capital, as well as grant its 50% stake in its joint ventures. This means that Nestlé is going deeper into skin care, and this division is going to be of the reporting segment which is nutrition and health care. Today, Nestlé has reported 2013 financial results, and this division, this reporting segment, which will encompass the skin care division in the future, is already reporting the fastest growth across all divisions of Nestle, about 8% year-on-year. And although it’s still about 13% of the total group sales, it is already growing into a sizable platform for long-term profitable growth.”
Is the skin care industry ready to see this new investment from Nestlé and Galderma?