NEW YORK — John Demsey, global president of the Estée Lauder and MAC Cosmetics brands at the Estée Lauder Cos., gave a tutorial on brand restoration Tuesday night.

The occasion was the Newsmaker Forum of the Cosmetics Executive Women, and the event drew 350 executives, many of them corporate chiefs, to the Harmonie Club. “We packed the house with employees from the Estée Lauder Cos.,” Demsey joked dryly. He discussed the blurring of traditional market segments, the “massification” of beauty; the proliferation of new products, brands and new areas of specialization, and channel consolidation.

“The DNA of the brand has been building for 60 years,” said Demsey, in a speech titled Rediscovering Estée Lauder. “And it gave us great bones to build on for the future.”

“What began as one woman’s vision is today one of the world’s leading global businesses,” said Demsey. Noting that the founder’s vision included many philosophies that are timeless in their appeal, Demsey discussed how the business has grown from four products to more than 20 separate brands, which generate close to $6 billion a year in more than 120 countries.

Like any venerable brand, Estée Lauder has faced its own issues with keeping things fresh. Since taking over as global president of the brand a little over a year ago, Demsey has signed Gwyneth Paltrow to an advertising contract and Tom Ford to a beauty deal, in addition to hiring a host of top executives, including Thia Breen, president of Estée Lauder North America, and Andrea Robinson, who is now president of Tom Ford Beauty and Prescriptives.

“It is important, when trying to add newness to a brand, to not only know what’s right for the brand, but what’s wrong for it,” said Demsey. And what was right for it, he pointed out, was to honor the brand’s heritage. “In our first meeting, Tom [Ford] said that he wanted to redo Youth Dew, because that’s where the whole brand started,” said Demsey, noting that “sometimes when you’re looking for an answer [about updating], it’s staring you right in the face.”

Another heritage product, Pure White Linen, is on tap for April. Hastening to say “it’s not a flanker,” Demsey noted that the new scent will juice up the 1978 launch’s bottom line. Advertising featuring Paltrow will break in fashion, beauty and lifestyle magazines in July, and features the Oscar-winning actress (pre-pregnancy) in an ethereal white linen Balenciaga shift. The campaign was shot by Mario Testino at the Huntington Library in Pasadena, Calif., in the fall.

This story first appeared in the March 24, 2006 issue of WWD. Subscribe Today.

Things got particularly lively during the question-and-answer period after Demsey’s prepared presentation.

While Demsey was a bit evasive in discussing specifics of upcoming initiatives — “It’s hard to talk about the brand without disclosing trade secrets, especially for this audience,” he said — he was frank in admitting that the Federated-May Co. merger will force most brands, including his, to be more creative than ever in marketing to consumers. “Channel consolidation presents a huge challenge, especially as we are committed to prestige distribution,” he said. “But this consolidation is not the apocalypse that everyone is making it out to be. It will take us back to 1990 levels. We will have to market in new ways, but we’ve seen this challenge before.”

In particular, he said, “the Internet is a lot more powerful than anyone realizes.” Noting that “you can be very successful having 5 percent of 100 people rather than 100 percent of 5,” Demsey noted that Sean Combs’ fragrance, called Unforgivable, has had three co-op ads thus far. “The rest was Internet marketing,” Demsey said, “not the traditional ways.” That’s no surprise, he said, drawing on his MAC Cosmetics experience. “MAC is one of the largest color brands and does virtually no national advertising,” he pointed out. “You have to ask yourself what allows you to best serve the brand, whether that’s something traditional or not. We have a very pragmatic approach [with the Estée Lauder brand]: We know who we’ve been, who we are, and where we want to be, and we’re making sure that the initiatives that we pursue reinforce the brand’s image, rather than just move the mark.”

International markets will be particularly critical moving forward, Demsey said. “Ten years from now, probably most of our growth will come from outside the United States.”

Asia is particularly promising, he noted. “China now looks a lot like Japan does,” he said, praising the robust market. “We are extremely bullish on China and several other developing countries.” When asked if India is one of them, he said, “We are excited about India’s potential, but there is currently no real prestige business as we know it. But it will come.” Lauder’s sister brand, MAC, currently has one store in that country. As well, Brazil and Russia have emerging middle classes who are hungry for beauty products, Demsey noted.

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