08/30/2011 12:19 pm ET | Updated Oct 30, 2011

L'Oreal Benefits From Economic Insecurities As Consumers Seek Small Luxuries

L'Oreal had a good year in 2010. Indeed, the world's largest cosmetics and beauty company experienced an increase in profits of over ten percent, according to BBC. How did they do it? Their focus has been to push luxury brands, such as Maybelline, on the mass market.

That strategy has been helped, not hindered, by a struggling economy, because of what analysts call the "lipstick effect" -- the tendency of consumers to treat themselves to small luxury goods in times of economic stress. Although L'Oreal's sales have slowed in the latest quarter, it's attributable to the company's consumer and professional brands. The luxury end of the company, lipstick and all, is doing "quite well," Tony Allen, Group Director of Corporate Branding, Dragon Rouge, told BBC.