LAUDER IN EUROPEAN JOINT VENTURE
Byline: Jenny B. Fine
NEW YORK — The Estee Lauder Cos. continues to make major moves as part of a global expansion plan.
After acquiring two companies in the last year and recently going public, the firm has formed a joint venture with former Lancaster president Herbert Frommen to launch a fragrance company in Europe.
The Weisbaden, Germany-based venture, as yet unnamed, will be headed by Frommen, who will work closely with Lauder’s Aramis division. Lauder’s existing European affiliates will distribute its brands; the primary outlets are expected to be perfumeries, rather than Lauder’s existing department store counters.
“We have a substantial fragrance business in Europe, but we felt this is an opportunity for us to become a little bit more aggressive in going after market opportunities, particularly for Aramis,” said Fred H. Langhammer, president and chief operating officer of Lauder. “The perfumery markets lend themselves to a more aggressive launch pattern.”
Terms of the deal were not disclosed, though Langhammer said Lauder has a majority interest in the venture.
By collaborating with Frommen, Lauder has chosen an executive who has extensive experience in the European market. At Lancaster, which he headed until late 1993, he was responsible for developing numerous fragrances, including the Joop, Davidoff and Jil Sander brands.
“We chose Frommen because of his track record,” said Langhammer. “The brands he has introduced in Europe, particularly the German-speaking market, demonstrated to us his creativity and knowledge of the European cosmetics market.”
Plans for the company’s first launch are already under way. A men’s scent is scheduled to be introduced in Germany, Austria and Switzerland in June or July, according to Langhammer. He said it will be a designer product, but refused to disclose the designer.
He did say the new entity’s initial concentration will be on the men’s market.
Langhammer did not rule out the possibility of distributing the new fragrances domestically, but said, “At this juncture, we’re primarily focusing on Europe.”
Langhammer declined to project a sales volume for the new venture, saying it would be premature because the company has not yet formulated a business plan. Lauder does not break out its earnings by division, only by geographic region. The firm’s net sales in Europe, the Middle East and Africa were $860.8 million in the year ended June 30.
Lauder has been increasing its overseas interests in the last year. In February, the company entered into a joint venture with MAC, acquiring its overseas distribution rights, and in October, acquired Bobbi Brown Professional Cosmetics. By going public in November, the 50-year-old company received a large cash infusion, which could be instrumental to further global growth.