The Estée Lauder Cos. Inc. will flash its new Mandarin accent in mid-October when it unveils Osiao, its first Chinese skin care line.
The luxury-priced brand was developed by the New York-based company’s Beauty Bank division in partnership with Lauder’s local research and development operation, the Shanghai Asia Innovation Center. Osiao will be launched in two Lane Crawford stores in Hong Kong. Reportedly, Lauder eventually expects to expand the new brand’s distribution into Mainland China.
It is a bold move in a country that has played a key role in the resurgence of Lauder during the three years since the arrival of Fabrizio Freda as president and chief executive officer. But Lauder has not been alone. Shiseido developed and launched its Aupres line for the Chinese market in a pioneering leap in 1994. The Japanese giant now has a distribution of 950 retail doors, reaching beyond the major cities. L’Oréal rides high in the combined mass and class rankings in the skin care market. Procter & Gamble Co. recently planted its flag in Singapore, in a heavily symbolic move. It transferred its skin care, cosmetics and personal care headquarters from Cincinnati to where it saw the future — Asia.
Lauder, which closed its fiscal year on June 30 with a 10.3 percent sales increase — twice the rate of the prestige market — to $9.71 billion, was already established in China. During an earnings call on Aug. 14, Freda told analysts, “China overtook Japan to become our largest Asian affiliate, and our sales there climbed 28 percent in local currency, which enabled us to again expand our leadership position.” He added that Lauder now does business in 58 Chinese cities — 20 more than last year. And through e-commerce, the company’s reach extends to consumers in nearly 350 cities.
The importance of China is magnified since Lauder tracks travellers when they leave home and shop abroad. “For every dollar of sales we generate in China,” he continued, “we find that we get $2 from Chinese consumers elsewhere in places like Hong Kong, New York or Paris.”
Neither was Freda unnerved by talk of a slowdown in China. “We are cautious that macroeconomic conditions may impact future growth trends,” he said. “But we continue to grow by reaching new consumers as we expand into more cities.”
Nik Modi, a security analyst with UBS AG, agreed during an interview that China is a big driver for Lauder. He said the Chinese market generates 5 percent of Lauder’s global sales. Moreover, the company has experienced strong growth in North America and in the travel retail channel, allowing Lauder to reinvest in China. “It could be one of their biggest markets,” he noted, adding that beauty is more of a staple than a discretionary impulse purchase for Chinese women. “Even if there is a slowdown, we think [Lauder] will put up decent growth.” Stifel Nicolaus analyst Mark Astrachan added that the skin care business in Asia has “higher margins, a better mix, better growth and the Asian consumer doesn’t mind trading up.”
China’s beauty industry has been growing at a healthy clip. According to the country’s National Bureau of Statistics, the business in 2011 was up 18.7 percent year-on-year to 1.1 trillion yuan, or $17.1 billion at average exchange. That compares to a 16.6 percent increase in the segment between 2009 and 2010.
“Currently, foreign brands have gained a firm foothold in the mid- to high-end of the luxury cosmetics market in China,” said Li & Fung Research Centre’s study “China’s Cosmetics Market, 2011.” “On the other hand, domestic companies are mainly competing in the low-end market.”
According to Euromonitor International, the top three players in 2011 in the Chinese skin care market — combining both prestige and mass businesses — were L’Oréal, with 16.4 percent; Procter & Gamble, with 10.2 percent, and Shiseido, with 10.1 percent.
However, Lauder’s dynamic growth allowed it to claim superiority in its channel of prestige by this year. During a Consumer Analyst Group of New York Conference on Feb. 24, Freda said, “Mirroring the industry, our biggest emerging market opportunity is China, where we have made impressive inroads. We are the number-one prestige beauty player in our distribution. Estée Lauder is the leading prestige brand in each distribution and La Mer is the fastest growing luxury skin care brand.” Speaking of the global market in general, he pointed out, “by 2020, emerging markets are expected to grow by about $10 billion and represent more than 20 percent of global prestige beauty sales, with the largest portion coming from China, providing untapped opportunity for our brands.”
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye