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How L'Occitane went big in Japan

By Anna Stewart, CNN
updated 8:26 AM EST, Fri January 11, 2013
STORY HIGHLIGHTS
  • L'Occitane is investing 35 million euros in a facility that will increase its capacity by 60% next year
  • The company now sells 50% of its products to Asia with Japan its biggest market
  • All L'Occitane products are made in Provence, imbued with the essential oils

(CNN) -- It started with one man peddling lavender and rosemary oil at local markets -- now it's a business valued at $4.8 billion.

The L'Occitane factory remains at the heart of Provence, surrounded by fields of lavender, almond and olive trees; the natural ingredients that have made this business a global success.

The company's roots lie in the fertile soil where founder, Olivier Baussan, first distilled essential oils with his old copper still.

Baussan was just 23 years old when he was sold the old-fashioned distiller as a piece of scrap metal. It cost him half his salary.

"Distillation fulfilled a poetic side in me, I very much felt there was poetry in the chemistry between the fire and the plant to produce essential oils," he told CNN. "I belong to this land and to its traditions, so I am closely linked to this essential oil."

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The transition from market stall to public company wasn't smooth. In the 1980s a French venture capital firm called Natural acquired 90% of the business, which then had just three shops and was losing money.

Reinold Geiger, a minority shareholder at the time, had experience in the cosmetic industry. He became chief executive and pushed to grow the company.

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"This was a small company that needed to be developed. You don't do this in an office, you do this in the field, and go out and try to sell their product," he told CNN.

"It was a fabulous combination of a man who was a creative with a vision [Baussan] and myself. I totally believed in what he was doing. I believed in the product and we developed it one country after the other."

As the business expanded Geiger began to focus on the fast growth-markets of Asia. The company listed on the Hong Kong stock exchange in 2010, becoming the first French business to do so.

But the first L'Occitane shops in Asia took time to gain traction.

"When we opened the first stores in Hong Kong and Tokyo they didn't work at all," Geiger recalled. "It was a new brand in a new country where nobody knows you.

"The American consumers are curious -- if you have a good location they just walk in --- but the Asian consumers are more cautious, you need to be around some time, and little by little create brand awareness and credibility."

Creating brand awareness in Asia may have been slow, but time proved it was a good move.

The company now sells 50% of its products to Asia. Japan is its biggest market, while 12% of products are sold in the U.S., and around 24% in European markets.

Central to the brand's success has been its Provencal image. To this day, all products are made in Provence, imbued with the essential oils farmed on the fields surrounding the factory.

To keep up with the demand the company is investing 35 million euros in a new production facility that will increase its capacity by 60% next year.

And there is room for further growth, according to Geiger.

"We are far from the maximum potential and we will continue growing", said Geiger. "It is like when you build a house --- you will build one brick after the other.. it is interesting, an adventure."

And adventure that should see L'Occitane shops springing up like lavender all over the world, so that everyone can buy a piece of pastoral Provence.

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