Lancaster’s Global Move

NEW YORK -- With manufacturing in Germany, perfumery in France and research and development in Monaco, the Lancaster Group is a company with several nationalities. Now it has acquired another: American.<BR><BR>This week, it took a major step toward...

NEW YORK — With manufacturing in Germany, perfumery in France and research and development in Monaco, the Lancaster Group is a company with several nationalities. Now it has acquired another: American.

This week, it took a major step toward turning the German prestige beauty company into one of the handful of global cosmetics giants, moving its corporate headquarters from Wiesbaden, Germany, to a new 65,473-square-foot home in midtown Manhattan.

Lancaster’s worldwide fragrance and cosmetics volume totaled $800 million in 1993, according to Peter Harf, chief executive officer of Lancaster and its parent, the Benckiser Group of Ludwigshafen, Germany.

Harf, who is the architect of the globalization drive, said he is aiming for annual growth rates of 15 to 20 percent going forward — without acquisitions.

Harf did not elaborate, but sources indicate that his goals fit the pattern that has already been established at Lancaster.

The company chalked up a 22 percent increase last year, attributed largely to a 200 percent growth in four markets — the U.S. and U.K., which were established in 1991, and Canada and Australia, which were entered last year. Lancaster also had a 50 percent increase in the global duty-free market. Another factor was the stronger-than-expected launch last year of Lancaster’s Skin Therapy treatment item in Europe and the U.S.

The U.S. subsidiary, also located in New York and headed by Richard G. Hartigan, is the fastest-growing of Lancaster’s major overseas businesses.

Sales reportedly approached $110 million last year; the goal by the end of 1996 is $300 million.

Lancaster does one-third of its global total in the German home market and is expected to do 20 percent this year in the U.S., according to sources. The next biggest markets are Italy, then Spain.

Harf said the move to the U.S. was designed not only to spur the continuation of the fast-paced U.S. growth, but also to give Lancaster an entry into South America and, more importantly, Japan.

“We felt that the U.S. is absolutely pivotal to a global approach,” Harf said.

“The next big investment will be to go into Japan,” Harf said, noting that the company now has a small subsidiary there and will probably make its move in two years.

“We need to find a fresh angle,” he said. “We can’t be the 20th skin care company business there.”

The Lancaster chief made it clear, however, that more than logistics was involved in deciding to relocate headquarters to New York. The company concluded that to run a luxury cosmetics business on a global basis, more expertise and opportunities were needed than could be found in Wiesbaden. “We said that if we want to grow the business, we’ve got to move out of Germany,” Harf noted.

Moving to Paris would have made Lancaster only “the third or fourth kid on the block.”

Besides, the company already had a “European heritage,” Harf said, since the original Lancaster brand was French and the owners are German. So the firm headed for New York in search of what Harf describes as “a fresh dimension.”

Lancaster, he said, has a “European flair and feeling.” But now Harf wants to marry that personality with “American production values,” while taking advantage of U.S. culture.

“We need a new inspiration, and this is a new environment that gives us fantastic resources in every dimension,” Harf said, alluding to the common aspects of American life — from Hollywood movies to TV home shopping — that are delayed in reaching Europe, if they get there at all.

In addition, the pool of talent is more attractive, with “more experienced people with more diverse background.”

Harf, who lives in Manhattan, is being joined here by his head of marketing, Michael Forster, who continues as president of Benckiser’s creative center in Paris. Harf said he will spend about a week every month in Europe and Forster will spend less time there.

The New York corporate staff is expected to grow to over 100 people by the end of the year, with about half that number now in place. About 300 positions were eliminated in Wiesbaden last year.

As the global headquarters for worldwide marketing, New York will become the center for Lancaster’s practice of building global “mega-brands” capable of achieving international awareness.

The latest project is a new fragrance brand, tentatively scheduled to make its debut as a women’s scent in the fall in Europe and the U.S. possibly next year.

Harf and Forster declined to name the designer involved, saying only that he is known for creating underwear for men and women and swimwear.

As in the case of its other licensees — Davidoff, Wolfgang Joop and Jil Sander — Lancaster has a reputation for building fragrance brands with personalities that are not widely known.

Harf noted that Zino Davidoff, a Swiss tobacconist, had a 3 percent recognition level before Lancaster launched a series of top-selling scents in his name.

Working with an unknown quantity presents advantages, Harf said, in “allowing us help form the characteristics and personalities of the brand.”

He could think of only one disadvantage.

“It’s more expensive,” Harf said with a laugh.