Breaking! One of L'Oréal's Brands is Rumored to Exit China

There are many skincare brands in France that are famous for "Thermal Spring Water", and most of them have been taken in by L'Oréal Group. Saint-Gervais Mont Blanc is one of them. Two years after entering the Chinese market, Saint-Gervais Mont Blanc was recently rumored to be withdrawing from the Chinese market.

Clearances, Big Giveaways, Social Media Accounts Not Updating. China is the Brand's First Overseas Market

Recently there has been some news that L'Oréal Group may plan to withdraw Saint-Gervais Mont Blanc from the Chinese market. L'Oréal China has not responded to confirm this rumor.

Cosmetics Business Online (CBO) reporter found that the Saint-Gervais Mont Blanc Tmall flagship store is operating normally, with “buy and receive free products” the discount of a single product is about 62% off. Customer service said they "did not receive any notice that the brand will exit from market.".

Belonging to the same Tao Bao family, Saint-Gervais Mont Blanc's China general distributor store has as high as 84% off for all products, and the large amount of “buy-and-receive free products” is shocking. At the same time, many Taobao stores are selling Saint-Gervais Mont Blanc products (close to expiration) at even lower prices, and the stores said the discounts are due to brand clearance.

For example, Saint-Gervais Mont Blanc Salicylic Acid Gel, which is regularly priced at 199 yuan, is currently on clearance sale at Taobao stores for only 18 yuan. Some skin care bloggers said: "This is the most tragic big name brand in history, leaving a bunch of 10-20 yuan products that no one wants.".

The Saint-Gervais Mont Blanc Jing Dong (Jd.com) flagship store is currently selling at regular prices, but only the facial spray, essence toner, cleanser and mask - 4 SKUs are remaining on the website.

Pinduoduo flagship store products selections are more complete, with almost no discount. For the exiting market rumors, the customer service said: “No notification has been received for the time being.”.

According to financial network caijing.com.cn, there is a Saint-Gervais Mont Blanc brand store having big sales, confirming to the caijing.com.cn reporter that the brand will withdraw from the Chinese market. The store said “We still have to finish selling our stock.”.

On the other hand, the official accounts of Saint-Gervais Mont Blanc on multiple social platforms, including Weibo, Xiaohongshu and WeChat public accounts, have stopped updating. Prior to this the frequency of its updates varied from every other day to every week.

△WeChat Official Mall shows that the system is under maintenance

The brand’s official Weibo account currently has only 3800+ followers, and the last update was on November 11 of last year. Saint-Gervais Mont Blanc WeChat official mall, operated by L'Oréal (China) Co., Ltd., shows that the system is under update and maintenance, and cannot be opened. Its WeChat mall was launched in April 2020 and ceased operation in September 2021.

In France, Saint-Gervais Mont Blanc's "thermal spring water" is particularly famous. Thermal spring water is soothing, healing, anti-inflammatory, decongesting and antiaging, it can relieve burns, scars, eczema and other skin diseases, so it is very popular.

The Saint-Gervais Mont Blanc brand has a history of around 200 years and is dedicated to the repair of sensitive skin using 100% French Saint-Gervais Mont Blanc thermal water. In 2016 the brand was acquired by L'Oréal, and entered the Chinese market for the first time through e-commerce channels in August 2019.

When it first entered the Chinese market the brand fully promoted the "Specialization Repair Series", including three star products: Saint-Gervais Mont Blanc Anti Redness Care (Anti Red Cream), Saint-Gervais Mont Blanc CICA [Mn] Cream (“Bandage” Cream), Saint-Gervais Mont Blanc Thermal Water Spray (Big White Spray).

Optimistic about the huge potential of the Chinese cosmetics market, L'Oréal Group had high hopes for the Saint-Gervais Mont Blanc brand's performance in the Chinese market. Saint-Gervais Mont Blanc had also become the first brand in the Chinese market preferred by the Group's overseas market plan.

Saint-Gervais Mont Blanc had been operating in the Chinese market for more than two years, but in the annual report the Mass Market Cosmetics Division did not mention the brand's market performance. On the other hand, L'Oréal's Active Cosmetics Division, which owns brands such as La Roche-Posay and SKINCEUTICALS, had strong growth rate, achieving a rapid growth rate of 30.3% in fiscal 2021 and doubling in four years, achieving revenue of 3.924 billion euros (about RMB 28.518 billion).

As One of L'Oréal's "Thermal Water" Brands, 

Why is Saint-Gervais Mont Blanc not Acclimated to Chinese Market?

Reason 1: The timing was not Optimal 

The year 2019 in which Saint-Gervais Mont Blanc entered The China Functional Skincare competition market was the first year of the national crackdown on "cosmeceuticals" publicity. 2019 was also the year that Winona had explosive growth and pushed up the revenue of parent company Botanee by nearly RMB 2 billion. 2019 was also the early stage of the eruption of new beauty retail channels represented by Douyin.

Saint-Gervais Mont Blanc was facing China's functional skincare growing market and the soaring competitors.

In terms of international brands, many entered China early on. VICHY entered China in 1998. La Roche-Posay entered China in 2000. Avène entered China in 2003, and SkinCeuticals entered China in 2010. These international brands had first mover advantages to a certain extent. In terms of domestic brands late comers such as WINONA and Dr. Yu were able to catch up and get ahead. Other domestic brands with “Xie Zi Hao” (“Medical Device Product Number”), such as RAUER, VOOLGA, and KeFuMei with different ingredients, efficacy, products & marketing set their foothold in the functional skin care competition field.

Reason 2: Products are not as competitive

La Roche-Posay is also L’Oréal’s thermal water spa-based brand. It is priced at a mid-range price. Its classic products include Effaclar acne care series, B5 essence, Effaclar serum ultra concentre and other products. La Roche-Posay's global revenue increased 28% year over year in 2021.

In addition to sensitive skin repairing, Vichy has strengthened its leadership position in the field of anti-aging in the European market. In Chinese Market Vichy has launched a new probiotic fractions bottle and has introduced professional scalp care brand. In 2021 Vichy global revenue increased by 9% year over year.

As mentioned above, Saint-Gervais Mont Blanc first introduced in the Chinese market their three star products of the "Specialization Repair Series", and then the brand derived three new products: mask, essence repairing cosmetic water and essence (safety bottle).

After the Saint-Gervais Mont Blanc’s operation in the Chinese market for more than two years, due to the tepid performance of "Purifying, Anti imperfections repair series" and "Skin firming, Wrinkle smoothing series", the brand’s mainstay products were still from "Specialization Repair Series".

△Saint-Gervais Mont Blanc most discussed TOP 6 products, from Beauty Evolution

Compared to the competitors’ products, each Saint-Gervais Mont Blanc product is not irreplaceable in the corresponding segment.

The thermal water spray, as one of Saint-Gervais Mont Blanc’s star products, has low barriers to entry. In addition to cosmetic brands, thermal spring water spray is also a standard product from high-end mineral water companies.

"The spray itself does not have much high scientific research content, and even Avène does not occupy the whole market only with one spray." An industry insider said. In addition, there are consumer reviews saying that the design of Saint-Gervais Mont Blanc’s nozzle is unreasonable, and the mist is too large "like an agricultural sprinkler irrigation faucet".

Compared with the functionality of water spray products, brand power and marketing publicity capabilities are more important. For example, later comer RELLET integrated the concept of "hyaluronic acid plus" and won the first place again in the Tmall moisturizing toner hot sales in “618” promotion event last year.

For another star product, Saint-Gervais Mont Blanc's multi-effect repair cream CICA [Mn] (“Bandage” cream), the ingredient list contains avocado butter, beeswax and other sealants for moisturizing, but the sealants cause the product to be prone to ball up on the skin. For anti-itching and oil control, titanium dioxide is added to the product, making the product on face appear to be thick and “false white” after application, and it is frequently complained about.

In comparison one of the competitors, WINONA’s Anti-sensitive Moisturizing Tolerance-extreme Cream, has been built into the "ultimate major product".

Reason 3: Marketing misalignment

The notes posted on the social platform shows that Saint-Gervais Mont Blanc has two major traffic ports. One is “U first trial”, which is affordable all year round. The other is recommendations by Li Jiaqi, which is “buying and receiving free products” in Li’s live streaming studio.

This directly exposes Saint-Gervais Mont Blanc's issues such as the lack of brand tonality and the lack of recognition of the brand among consumers.

Since entering the Chinese market Saint-Gervais Mont Blanc's marketing has had two areas of focus.

The first is to carry out public campaign publicity: the brand set up a special fund focusing on Chinese burn patients, and selected Yu Haoming as a spokesperson. It invited three burn patients to the French Saint-Gervais Mont Blanc's small town thermal water healing center for rehabilitation physiotherapy. The brand also filmed first documentary about burn patients in China. All the efforts were to shape the brand image of "strong repairing" properties.

The second is betting on "cosmeceuticals & post-surgery repair": the KOLs selected on the social platform are mostly "medical beauty experts", and the publicity point is "cosmeceuticals & post-surgery repair". However only using "thermal spring water", it is difficult to compete with the beauty brands with “Xie Zi Hao” (“Medical Device Product Number”).

CeraVe, another brand of L'Oréal that entered the Chinese market in the same year as Saint-Gervais Mont Blanc, works in a completely different way. CeraVe brand positions as a "skin barrier repair expert", and increases professional endorsement through "dermatology academic seminar" and "skin barrier clinical case competition", becoming a "dermatologist recommended brand".  CeraVe's use of dermatologists has reached an extreme, and it has used social media to amplify the brand’s image as a "repairing brand".

According to L'Oréal's earnings report, CeraVe's revenue last year was up 75% year over year. Although it is priced as a mass market product, it has become a 1 billion euro volume brand in January 2022.

"From the perspective of efficacy-based skin care, L'Oréal's brand matrix layout in the field of Active Health Cosmetics of the Chinese market has been relatively mature. CeraVe is priced at a mass market product price point. La Roche-Posay is priced at the mid-price point. SkinCeuticals is priced at the high-end. These three brands have shown high growth in recent years. From a positioning point of view, Saint-Gervais Mont Blanc does not seem to be able to help L'Oréal open a blank market in China.” An industry insider said.

What is the fate of Saint-Gervais Mont Blanc in the Chinese market? L'Oréal China has not yet officially replied. "Cosmetics Business Online" (CBO) reporter will continue to follow up.