This story first appeared in the June 10, 2011 issue of WWD. Subscribe Today.
No one will ever accuse John Demsey of underselling the potential of Tom Ford’s foray into luxury-priced cosmetics. He sees the designer’s ambitious expansion plans into color as creating no less than the new paradigm of prestige beauty.
“Tom Ford has become the arbiter of luxury and taste,” said Demsey, a group president at the Estée Lauder Cos. Inc., Ford’s licensee. “There is tremendous aspirational value in this collection. It is a branded category and real estate play that includes skin care and color cosmetics. We will redraw the designer fragrance and color cosmetics map with this launch.”
Demsey suggested the new color range could give rise to “what could be the greatest beauty and fashion house created in the past 25 years.”
Ford’s vision and taste level, coupled with Lauder’s development power, has resulted in the designer carving out a significant market position since his relationship with Lauder was formed in April 2005, aided by the capture of five FiFi awards from the U.S.-based Fragrance Foundation. Demsey declined to cite sales figures, but estimates by industry sources suggest total retail sales of Tom Ford Beauty reaching about $150 million globally, with 50 percent of the business done in Ford’s Signature Collection of fragrances, 45 percent — or approximately $65 million — in Private Blend scents and 5 percent in lip color. Of the approximately $75 million in retail sales done by the Signature fragrances, $25 million of that is reportedly generated by the Black Orchid scent. The lip color, which was launched to strong reception a year ago, has generated an estimated $6 million at retail in only 100 doors.
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In terms of distribution, about 20 percent of the business is done in the U.S., another 20 percent generated in travel retail and the remaining 60 percent done in the Europe-U.K. axis.
Demsey described the shape of the distribution “as zoned primarily in Europe and in superluxury in the U.S. You’re dealing with a business whose reference point is more London than Paris, more Los Angeles than Chicago,” Demsey said, adding that U.K. sales alone are about equivalent to those of the U.S. Including distribution development, the business has been expanding at between 40 and 50 percent each year, according to industry sources. Ford’s Signature fragrances are in about 2,200 doors in 36 countries — including Neiman Marcus, Saks Fifth Avenue, Bergdorf Goodman, Nordstrom, Bloomingdale’s and select Sephora doors in the U.S. — while Private Blend is in just 225 points of sale. As a comparison with the industry at large, Demsey noted prestige fragrances are often in up to 25,000 to 35,000 doors globally.
Distribution for the color cosmetics collection, which will launch in September, will be similarly selective. The 132-stockkeeping-unit collection will be in just 35 doors globally, each of which will have a dedicated Tom Ford Beauty counter designed by Ford. In the U.S., items range in price from $30 to $250 and will be sold in Tom Ford stores and Bergdorf Goodman, as well as select Neiman Marcus and Saks Fifth Avenue doors. Overseas, the brand will be in top doors such as Italy’s La Rinascente and the U.K.’s Harvey Nichols and Selfridges. Pricing will be at the market pinnacle on par with top-end cosmetic brands like By Terry and Shiseido’s Cle de Peau.
A greater number of doors — 100 globally — will get Ford’s expanded and repackaged lip color collection, which includes 18 sku’s. The line launched in spring 2010 with 12 shades. Each lipstick will retail for $48. Both distributions — for the new color line and the expanded lip collection — will merchandise the makeup items with two new Private Blend fragrances, Santal Blush and Jasmin Rouge. The fragrances will be in 225 doors globally and range in price from $195 to $475. A new Signature Collection fragrance, Violet Blonde, is also planned for a September launch and could do $30 million at retail globally in its first year on counter, according to industry sources. In the U.S., Violet Blonde will appear at Saks in August for a four-week exclusive before rolling out to stores like Neiman’s, Bergdorf’s, Nordstrom and Bloomingdale’s. A bath and body subbrand of the Neroli Portofino fragrance from the Private Blend series was launched in stores this spring in the 225-door distribution.
“Tom’s lipstick sales made it clear to us that Tom Ford Beauty has tremendous credibility in color,” said Caroline Geerlings, president of Tom Ford Beauty and new business at the Estée Lauder Cos. “Tom believes that great makeup starts with flawless skin, so we also decided to include skin care in this collection.” Six of the sku’s are in skin care, she noted.
Demsey added, “many designer brands do skin care as an afterthought. Tom Ford has always been unconventional — he doesn’t follow the paradigm of what he’s supposed to do.”
While Demsey and Geerlings declined comment on projected sales, industry sources estimated the full collection could do about $40 million at retail globally in its first year on counter. Advertising, shot by Mert Alas and Marcus Piggott and featuring Ford and Lara Stone, will focus on the Tom Ford Beauty brand as a whole, rather than focusing on specific product launches, said Demsey. “This is the first time in men’s and women’s that the brand comes together as a brand story,” he said. Demsey explained that Ford is meticulous in making sure every visual aspect in the brand — the color of the packing, the hue of the makeup, the visual impact of the counter presentation — works together, like envelopes inserted into each other. “It’s a lot of different pieces, but the pieces orchestrate together to drive the total story — and that is the mastermind of Tom Ford,” Demsey said, adding that the synchronization “drives the brand image, not just category sales.” As an example, he pointed out that the “visualization of Violet Blonde works together with the makeup so that the advertising muscle of Violet Blonde has a halo effect on the advertising that’s being done on beauty.
“He is somebody who is basically redefining beauty, luxury and prestige with a holistic approach, as opposed to layering it, piece by piece, on something that is preexisting. It really is being built from the ground up,” Demsey asserted, noting that the top management of Lauder has been behind the overall mission every step of the way. “Leave it to Tom Ford to reinvent the prestige model for the Millennials,” Demsey said, meaning this is one of the few exercises in upper-tier brand creation in this century.
Going forward, Demsey sees tremendous opportunity for Tom Ford Beauty in Asia — especially as the designer launches his fashion in China, Japan, Korea and Taiwan — and said he plans to take the color line to China within 18 months of its launch. But he’s not in a huge hurry to add doors. “A slow, highly productive build which establishes the whole Tom Ford house is far more important,” he said. “This is not a niche play and this is not simply a branding exercise. Tom Ford and Estée Lauder are in business for the long term here. The company placed its bets and Tom Ford placed his bet on us seven years ago and this is the logical extension of that investment.” While Demsey refused to comment on what that potential could be, industry sources estimated that within the next five years, Ford’s overall beauty brand could generate $400 million to $500 million at retail globally.