EssilorLuxottica Merger Will Bring Huge Advantage To Indian Market
Termed as one of the biggest deal in the eyewear market, the merger of world’s leading French lens maker, Essilor International SA, with the Italian eyewear group, Luxottica, the creator of iconic brands like Oakley, RayBan, is anticipated to create an eyewear powerhouse of the world and change the dynamics of the industry.
Expected to complete the merger transaction by January 2018, BW Businessworld spoke with the Chairman and CEO, Essilor International Hubert Sagnieres, as he arrives in India, discussing the idea behind the merger and the significance it holds for the Indian market.
Essilor entered the Indian market through a joint venture with SRF Limited, New Delhi in 1988. After the exit of SRF Limited at the end of 2004, the company changed its name to Essilor India Private Limited.
Excerpts:
To begin with, how important is the Indian market for Essilor?
Essilor has been focussing on the eyewear market for about 180 years now, producing lenses and developing business models, only dedicated to lenses. So we are unique in that sense. We have only one vision and that is to improve the vision of people all over the world. Out of 7.3 billion people, 1.3 billion are Indians. It's almost two-third market of the world and holds immense significance in those terms. We have varied strategies at every level of the market.
In the beginning, we entered with more high-end products and step by step we developed offers with more adjusted needs of the people.
So it has been quite a transition from high-end premium products to more entry level products for India to fit the needs?
Yes. It's a part of our DNA as well. We have invented almost two third of the lenses sold in the world today with our own patterns. Originally, many years ago Indian market was restricted to glass lenses for us. The market has evolved very quickly from glass to plastic, which is much more convenient, light and offers much wider solutions. However, 30-40 per cent of the market is still glass dependent but is coming down at a fast rate.
Today we have 84 manufacturing sites, starting from 15 to 100 people, depending on the size. People want eyeglasses in two to three days. Logistics is complicated in India and we cannot have one production site. We not only produce lenses but also our own machines for the same. Therefore, we are very comfortable to set up the manufacturing unit in any part of the world, as we do not depend on anyone. We truly ‘invent, produce and develop’ our products.
This year would be significant not just for Essilor but for the world eyewear market as you merge with another big house, Luxottica.
How would that change the dynamics of the market?
Everything is linked to our mission to improve the vision of the people. The merger with Luxottica will give us much more visibility in those terms, which would focus on both awareness and accessibility.
Another advantage that the merger will bring is the creation of affordable fashion products at good cost. All these years we have been involved in highly technical and medical products and never focussed on the fashion side of our products. Affordable fashion is the new buzz and is equally important as the luxury fashion and the merger brings both the aspects to the table.
Luxottica will keep focussing and continue to develop its own brands like Ray Ban, Oakley, Channel, Michael Kors. We will improve the quality of the lenses they would be using and the services. It would be the first time we will have Luxottica frames in our labs.
The merger also came under the radar as a creation of a monopolistic entity. Your views.
It would be wrong to term it a monopoly as we would hold only 12 per cent of the world market, which is very small. It is more of a vertical integration instead of a monopoly. It’s two complimentary organisation joining each other which will increase the overall consumer benefit at the end of the day. More importantly, the globally the eyewear market is very fragmented. There is no leader. When there is no leader there is no voice. The merger will give ‘vision’ a voice.
Post the merger, what would be your strategy in India and how will that benefit the Indian market?
One of the biggest advantages would be the turnaround time of the products. I will give you an example to explain. Today in India, if you want to purchase say Oakley glasses with the prescription, it would be produced in the US. The consumer needs to wait for three weeks. Once we will be a combined company, everything will be produced in India and that three week time period will come down to three days. It's a huge improvement for the Indian market.
Second, is, of course, the affordable fashion, as I mentioned earlier for the Indian market.
