NEW YORK — Patrick Bousquet-Chavanne, group president at the Estée Lauder Companies, told analysts attending a Banc of America Securities Consumer Conference Tuesday that he expects the flagship Estée Lauder brand to grow in at least the high-single digits in Asia and Europe and in the lower-single digits in the U.S.
Overall, he said, the category with the most potential for growth is color cosmetics, followed by treatment and then fragrance.
While the U.S. department store market is incredibly important for the brand, accounting for upward of 43 percent of Estée Lauder brand sales globally, Bousquet-Chavanne said he sees tremendous growth potential in global markets, particularly in the Asia-Pacific region — although he conceded that it’s difficult to estimate what effect SARS might have on that region in the immediate future. The brand does about $2.6 billion in annual global retail sales.
"We’ve seen very strong growth emanating from both Southeast and Northeast Asia in the past three quarters," he said, noting that while France and Germany were "a little difficult" lately, Southern Europe is doing better than expected and the United Kingdom is a bright spot. Travel retail, also, has been "rebounding in some markets almost to pre-9/11 levels."
The Estée Lauder brand, as reported, has been in a brand revitalization and modernization plan over the past few years, which has included a redesigned advertising and promotional presentation; a number of more youthful-feeling initiatives such as the Pure Color cosmetics line, and an overhauled counter design which premiered recently at Bloomingdale’s and will roll out to 300 doors globally within the next few years.
Bousquet-Chavanne also clearly sees increased product activity as a key strategy for the brand. During the conference, he noted that the brand’s percentage of new products has increased sharply in the last three years, going from under 15 percent in fiscal 2000 to 21.4 percent in 2003. In fact, he noted, newness has accounted for at least $500 million in retail sales for the brand globally this year.One of the most successful of Lauder’s recent new product initiatives has been Pure Color, he noted.
"We started from a position where the brand was too promotional, and we’ve had to correct that in stages," he said. "Most of the corrections are now behind us…advertising will probably go up on the brand as the promotional intensity goes down." In fact, the brand is now running TV advertising for its newest mascara."Our goal is to connect with a new generation of consumers," noted Bousquet-Chavanne, who added that the brand’s average user-age in the U.S. is 42 right now. His goal is to ratchet that down to a 38- to 40-year-old consumer within the next few years. By contrast, the brand’s core user in Japan is 32, and the brand is planning Asia-Pacific-only initiatives geared to appealing to that consumer base. In the U.S., the brand is doing such things as adding lip glosses.
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