 | |
Issue
26 — August 2001 |
| | | |
Established in 1946 as a family-run concern, Estée Lauder has grown to become
one of the world's leading manufacturers and marketers of prestige skin care,
cosmetics, fragrances and toiletries. Although the company floated on the New
York Stock Exchange in September 1995, the Lauder family remains very much in
the driving seat.
In the fiscal year ended 30 June 2000, the company announced a 10% increase in
net sales to $4.37bn. Net earnings over the same period rose 15% to $314.1mn.
During the financial year, skin care sales put on 11% to reach $1.6bn. Makeup
products added sales of $1.58bn and fragrances weighed in at $1.09bn. Hair care
added a further $113.9mn.
According to European Cosmetic Markets (1), in 1999 Estée Lauder was ranked number
five in the Euro4.4bn facial skin care market across France, Germany, Italy, Spain
and the UK. Meanwhile, US trade magazine Happi stated in its 2000 US Top
50, that Estée Lauder was ranked fourth out of US manufacturers of household,
personal, industrial and institutional products.
Estée Lauder is the name behind a number of skin care brands besides the
signature Estée Lauder line itself. Products marketed under the Estee Lauder
banner are said to be technologically advanced and innovative with a reputation
for excellence and superior quality. The line includes prestige skin care, makeup
and fragrances. Aramis was the first offshoot to be added. It was set up in 1964.
The brand was said to have pioneered the marketing of prestige men's grooming
and skin care products and fragrances. In 1987, the brand launched a sub-range
called Lab Series For Men. This was designed to address the specific needs of
men's skin and products are broadly split into three areas: cleanse, shave and
protect. Aramis products are also sold in over 100 countries and territories.
The offshoot company, Clinique was founded in 1968. Its products are currently
sold in over 80 countries and territories. Its mission has always been to meet
individual skin care needs. Its famous 3-Step System of cleansing, toning and
moisturising forms the basis of the Clinique skin care range. The Prescriptives
subsidiary was set up in 1979. It is said to offer highly individualised products
for the makeup and skin care needs of contemporary women. Prescriptives products
are currently only sold in eight markets. Origins Natural Resources was established
in 1990 and, like Prescriptives, it is currently stocked in eight countries. It
is said to address total well-being with a complete collection of unconventional
products that go beyond the parameters of traditional personal care.
More recent additions to the Estée Lauder stable have been the result of acquisitions.
In 1994, the company acquired a majority equity interest in M.A.C (Make-up Art
Cosmetics) and in 1997 and 1998 it bought the balance. M.A.C. products are sold
in over 15 countries. In 2000, M.A.C introduced the Pro-Preferred Skincare range
which is divided into three categories: cleansers, moisturisers and "quick
fixes", the latter are treatments for specific skin problems. In 1995, Estée
Lauder purchased Creme de la Mer, described as one of the world's most sought-after
moisturisers. It was developed by Max Huber over 30 years ago and it combines
sea kelp and other advanced ingredients blended through a lengthy bio-fermentation
process. It is available in two lotion formulations (normal-to-dry and normal-to-oily
skin) and these were joined by a cleansing lotion, a cleansing gel, two tonics
and a serum in 1998. In 1999, an eye balm and a face mist were added along with
two body care products - a serum and a body lotion. The La Mer brand is currently
available in seven countries.
Also
in 1995, Estée Lauder bought Bobbi Brown essentials, a line from the makeup artist
of the same name, which has since been extended to include fragrance, skin care,
baby products and makeup tools and accessories. It is sold in over 15 countries.
While Lauder's strength is clearly in the prestige market, in 1997 it broke into
the US mass market with the acquisition of Sassaby Inc, the owner of the colour
cosmetics brand jane. The jane brand is targeted at 12-19 year-old girls and in
2000 it was extended beyond colour cosmetics into skin care with the goodskin
range. The skin care line incorporates botanical ingredients.
Aveda, the manufacturer and marketer of pure plant- and flower-based hair, skin,
makeup, body and aroma products came under the Estée Lauder umbrella in 1997.
This purchase brought Lauder into a new distribution channel, the professional
hair salon. Aveda products are currently available in more than 20 countries.
In 1999, Lauder purchased Jo Malone, the London, UK-based perfumer and skin care
company. The Jo Malone collection includes 200 skin care and fragrance products.
Also in 1999, Lauder signed an agreement to acquire Stila Cosmetics Inc, the Los-Angeles,
US-based prestige cosmetics company, founded in 1994. At the time the line was
available in limited distribution in the US, UK, France, Australia, Hong Kong
and Japan.
In the Estée Lauder stable, recent developments have included
the August 2000 launch of Idealist Skin Refinisher. This product is said to
smooth the skin thanks to an exclusive skin refinishing complex with two sugar-derived
resurfacers (acetyl glucosamine and sodium lactobionate) and clary sage. Additionally
green tea and caffeine calm redness and mulberry and saxifrage help fade the
appearance of spots while a marine algae extract regulates excess oil production
and barley extract, wheatgerm and cholesterol strengthen the skin's lipid barrier.
Finally, whey protein, vitamins C and E and pro-vitamin B combine to protect
the skin from free radical damage. Major skin care launches in 1999 included
Resilience Lift, a treatment specifically for women in their 40s, 50s and beyond.
It is formulated to address all three major factors in skin ageing: chronological,
environmental and hormonal. Key ingredients include a lift complex of whey proteins
and plant botanicals to increase natural collagen production and refirm the
skin. Heather extract protects existing collagen from being degraded by enzymes
in the skin and forskolin normalises cellular activity in the epidermis to restore
the skin's barrier function. Additionally adenosine monophosphate reactivates
cell energy, increasing natural collagen production and anti-oxidant vitamins
C and E prevent free radical damage. SPF15 also protects against UV damage.
It is available as a lotion or a cream.
In October 2000, Lauder's Clinique division introduced Anti-Gravity Firming Lift
cream, said to return the lost "cushion" to thinning skin with its hydrating
formula which lifts and firms. Active ingredients include white birch extract,
which according to Clinique, helps the epidermis to rebuild, inhibiting an enzyme
from breaking down the protective layers of the skin, making cells healthy and
giving them a longer life. Additionally cholesterol sulphate and epidermal lipid
blend preserve the intercellular bonds to repair the skin's moisture barrier.
In 1999, one of Clinique's biggest product introductions was Stop Signs, heralded
as its first anti-ageing serum. Said to "make time stand still", Stop
Signs tackles the signs of ageing in three steps. The first repairs the appearance
of fine lines and wrinkles thanks to whey protein, which supplements the natural
production of collagen; magnesium ascorbyl phosphate, a stabilised form of vitamin
C to enhance collagen synthesis; and ultrasomes, a microscopic delivery system
that contains an enzyme designed to repair the appearance of skin damage at the
source. Step two works to even out skin tone and correct discolouration, thanks
to mulberry root, grape extract and vitamin C and step three prevents future skin
damage from becoming visible with Lauder's SU.VI.MAX Complex, a blend of anti-oxidants
that targets the chain reaction set off by environmentally-triggered free radicals
in the skin.
Like many prestige companies, Estée Lauder has showed some reluctance to make
its products widely available through e-tailers for fear that its selective distribution
may be compromised. However, in summer 2000, the company announced that it was
teaming up with Chanel and Clarins to form a multi-brand e-commerce site through
gloss.com, an internet beauty site acquired by Lauder in April 2000. Brands sold
through the site will initially include Bobbi Brown essentials, Chanel, Clarins,
Clinique, Estée Lauder, M.A.C and Origins.
Despite its recent spate of acquisitions, it is clear by the way in which the
company has subsequently managed its new projects that it acknowledges that these
niche companies will perform best by maintaining a high degree of autonomy from
the mother company. Many of the brands purchased are very contemporary with a
young, trendy following, so little would be gained by aligning them and thereby
reducing their various individual characteristics. Advertising for the brands
supports this. While Estee Lauder products have been represented by the classic
beauty of Elizabeth Hurley since 1995, Tommy Hilfiger products, marketed through
Aramis, have a young, all-American look and models in advertisements for jane
reflect its younger target group.
Estée Lauder looks set to continue to grow in the future both through organic
gains and acquisitions. However, the company's most valuable asset is surely its
heritage and its reputation as a company that provides consumers with high performance
products aimed at their specific needs through brands synonymous with luxury.
| Estée Lauder
Companies |
Established:
1946 |
| Sales (year
to 30 June 2000): |
$4.37bn |
| Net earnings
(year to 30 June 2000): |
$314.1mn |
| Estee Lauder
brands |
Estee Lauder |
|
Aramis
(including Tommi Hilfiger) |
|
Clinique |
|
Prescriptives |
|
Origins |
|
M.A.C |
|
La Mer |
|
Bobbi Brown
essentials |
|
Jane |
|
Donna Karan |
|
Aveda |
|
Jo Malone |
| |
Stila |
| |
Kate Spade |
| |
Bumble
and bumble |
| |
Toni Gard |
(1) European Overview, European Cosmetic Markets, August 2000
