(FORTUNE Magazine) – NIOSOME FACE CREAM to fight wrinkles is sold in exclusive, upscale beauty shops. Plenitude cream, for the same purpose, sells for one-sixth as much in supermarkets and discount stores. Both are based on the same chemical - innovation and made by the same company: French cosmetics giant L'Oreal. Many companies talk about the sweet scent of synergy. L'Oreal has deployed the all- too-vague concept to achieve 12% average annual sales growth and 15% profit growth over the past decade. Today L'Oreal is one of the world's largest cosmetics companies. Profits were an estimated $450 million in 1992 on sales of $6.6 billion. L'Oreal's strength lies in its ability to span both the luxury market, with brands such as Lancome and Helena Rubinstein, and the mass market, with Elseve and L'Oreal. Competitors Procter & Gamble and Unilever remain rooted among the masses, while Clarins and Estee Lauder are lodged up-market. The sophisticated strategy is the work of one of France's most unusual chief executives: Lindsay Owen-Jones, 46. A Welshman, he is one of the few foreigners to have broken into the nepotistic ranks of France's top industrialists. Fluent in five languages, Owen-Jones still holds a British passport but doesn't emphasize his nationality.

He joined L'Oreal at 23, fresh out of Oxford and the Insead business school in Fontainebleau, France. Like most of the company's other top executives, he has spent his entire career at L'Oreal, directing Belgian, Italian, and American operations before becoming CEO in 1988. Since taking over, Owen-Jones has made the 86-year-old company markedly more aggressive. He has pushed hard to increase sales outside Europe, especially in the U.S. and Japan. And he has been able to charge more for everyday cosmetics by giving them a more prestigious image. L'Oreal was founded in 1907 by chemist Eugene Schueller to supply hair dyes to beauty salons. Before, synthetic dyes had been used only on wool, but Schueller figured out a way to make them safe for human hair. Says R&D chief Jean-Francois Grollier: ''Research always has been our leitmotif.'' Under Owen-Jones, research spending has increased 10% a year to more than 3.2% of sales -- twice the industry average. What distinguishes L'Oreal is the way it makes R&D pay off by spreading its fruits over the company's large product line. An innovation is first launched as a luxury product. Then it is simplified and relaunched in the mass market. For such an aggressive company in such a glamorous business, L'Oreal is publicity-shy to the point of secretiveness. Reporters and analysts must hunt through endless tables in the annual report to find the strong earnings most other companies would shout about. , The company can show such disdain for public relations because it is so closely held by Liliane Bettencourt, the only daughter of L'Oreal's founder. Often described as the richest woman in France, Madame Bettencourt, 69, owns 51% of a holding company called Gesparal SA, which in turn controls L'Oreal. The other 49% of Gesparal is controlled by Nestle, the huge Swiss food group. If Madame Bettencourt, who has one daughter, ever decides to sell, Nestle enjoys the first right to buy the company. But L'Oreal officials insist Nestle is a hands-off shareholder helping to prevent any chance of an unfriendly takeover. This tightly controlled ownership permits L'Oreal to avoid stock market pressures and concentrate on the long term. Its pharmaceuticals division, Synthelabo, recently bought two French companies, Delagrange and Delalande, and took full control from Searle of British and Dutch joint ventures. Not all of L'Oreal's deals hold so much promise. In 1990 it surprised the luxury world by joining forces with the Vuitton family to buy control of the Lanvin fashion and perfume house. Since then Lanvin has been losing money, but Owen-Jones insists the acquisition is giving L'Oreal valuable experience in managing luxury boutiques. Even so, most observers remain in awe of L'Oreal's fundamental strength. During the spendthrift 1980s the company rode the roaring luxury market. Now, in more austere times, its mass-market side stands to counter any letdown in luxury buying. But then again, tough times for most luxury products don't necessarily mean tough times for L'Oreal. Recession-hit customers might put off big purchases such as cars and houses but still be willing to treat themselves to a $75 perfume.