Estée Lauder, bases its future growth on perfumes and make-up

The famous New York company of cosmetics, Estée Lauder, recently declared that it intended to take a bend concerning its strategic decisions. Indeed, the American group, having more than around thirty brands, among which the brands Clinique, Origins, Bobbi Brown, La Mer and Sean John distributed in China in more than 38 cities, wishes to carry its efforts towards the make-up and the perfume.

At its creation, Estée Lauder has begun by launching various creams. Today, these creams represent the key product range of the group (approximately 44 % of sales). However, the company also decided to develop, very early, perfumes to complete the offer proposed by the brand. Today, the group has for objective the market penetration of perfumes, a market which would seem to reserve margins of important progress, with a very promising potential, especially in China.

Indeed, China represents the third market (after the United States and Japan) of cosmetics in the world (see more info here). Now, cosmetics are considered, by the Chinese, as staple commodities and no as goods luxuries.

Some figures were declared by the CEO of the group, Fabrizio Freda, reveals us the capacity not exploited by the market of perfumes and make-up in comparison with the market of creams. Indeed, approximately 90 % of the Chinese would use creams, while they are only a third to use make up and less than 10 % to use a perfume.

Estée Lauder prepares the arrival of new fragrances

Estée Lauder prepares the launch of its new perfumes, which are in creation for soon 10 years. Among these perfumes we can find the new perfume “Modern Muse” and the perfume “Uomo” of the Italian brand Ermenegildo Zegna.

Furthermore, the launch of several perfumes inspired by the special tastes of certain countries such as the Middle East or still Japan is planned for soon. Indeed, Estée Lauder is known to create local brands being inspired by needs for the various populations, for example, the brand “Nutritious” which was specially created to seduce the Chinese (read our article about that topic).

modern muse

The perspectives of the group

Some groups such as P&G or L’Oréal have already conquered China in term of cosmetics; they register of important profits and a real commercial growth.

Estée Lauder is that the 5th market player of cosmetics behind these two groups, it registers however an increase of its sales of 13 % in 2011 and reaches a figure of 6,2 billion euro turnover. The group would justify this increase through the success of its products with the Chinese of the whole world which would represent approximately 700 million euros of its sales of 2012.

However, in spite of the high potential that reserves the Chinese market, Estée Lauder continuous to maintain its strong presence in the United States, where it holds at present 38 % of the market share. Indeed, for the CEO of the group, the United States represent the most emergent and promising country of the world. Many perspectives would be planned with in particular two figures which would be representative of the evolution of cosmetics within the population Americans. According to Fabrizio Freda, 70% of the growth will come from the old women of more than 55 years old and 80 % of the growth of the market of cosmetics will be represented by the populations of origins African and Latinos.