Estee Lauder Companies (US)

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Estee Lauder is one of the world's foremost marketers of beauty and cosmetics products. It is the #1 prestige beauty marketer in the US, and #2 worldwide (behind L'Oreal). The family-controlled group has a substantial portfolio of leading brands including the main Estee Lauder portfolio, Clinique and men's range Aramis, and also produces fragrances and cosmetics under license for designers including Tommy Hilfiger, Donna Karan (as DKNY) and Tom Ford. Other brands include MAC and Bobbi Brown cosmetics, Jo Malone fragrances and bath products, and La Mer and Origins prestige skincare. More recently the group has moved into haircare through acquisitions including Aveda and product extensions, as well as into the mass-market cosmetics sector, with a collection of products exclusively for Kohl's stores. The group has gone from strength to strength under CEO Fabrizio Freda, and surpassed several milestones in 2013 including revenues over $10bn and profits in excess of $1bn for the first time.

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Adbrands Company Profiles provide a detailed analysis of the history and current operations of leading advertisers, agencies and brands worldwide, and include a critical summary which identifies key strengths and weaknesses. Adbrands Account Assignments tracks account management for the world's leading brands and companies, including details of which advertising agency handles which accounts in which countries for major markets. Subscribers may access the following website links:

Estee Lauder Companies website

Brands

Estee Lauder MAC
Clinique Bobbi Brown
Origins Prescriptives

Jo Malone

Darphin
Aveda Bumble and Bumble
Tommy Hilfiger beauty Donna Karan NY
American Beauty Rodan+Fields
GoodSkin Flirt
Lab Series Grassroots
La Mer Smashbox

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 17th Nov 2016: Estee Lauder announced its biggest ever acquisition with a deal to buy fast growing premium cosmetics brand Too Faced for $1.45bn, more than five times its annual revenues this year. Lauder brands president John Demsey said that Too Faced would bring a lighter and more playful tone to the group's overall portfolio. "It has a distinctly feminine whimsical sensorial territory that is differentiated among the brands that we currently have. It’s not to say that there are not other brands in the marketplace with this positioning [but] our corporation, to date, does not have a brand that is overtly this pretty and feminine.”

Adbrands Weekly Update 24th Aug 2016: Estee Lauder Companies reported solid performance for the year to June: there was "much to celebrate" said CEO Fabrizio Freda. A key development was a return to growth for the core Estee Lauder and Clinique brands, which appeared finally to find favour among a new generation of millennial customers. “A year ago, Lauder and Clinique were declining. Now they are flat," said Freda, "so there has been significant improvement." The company credited a marketing push towards younger consumers. That led to makeup overtaking skincare as the group's biggest segment. Group sales rose 4% to $11.26bn, while net income edged up 2% to $1.11bn. Currencies depressed the reported numbers, as did a clutch of restructuring charges. At constant rates, revenues would have risen 9%, with makeup and fragrance up 15% and 10% respectively, offset by slower 3% growth in skincare.

Adbrands Weekly Update 26th Nov 2015: Estee Lauder Companies promoted Jane Hertzmark Hudis to a new role as group president alongside John Demsey, dividing day-to-day responsibility for all brands between the pair, who both now report to group CEO Fabrizio Freda. Demsey oversees the main Estee Lauder brand as well as designer fragrances, Tom Ford, MAC and others. Hudis is responsible for the group's other key brand Clinique as well as other luxury skincare products including La Mer, Darphin, Origins and Aveda. The new duties for Hudis anticipate the retirement of longtime Clinique leader Lynne Greene next year.

Adbrands Weekly Update 20th Aug 2015: Foreign exchange took a bite out of Estee Lauder, whose annual revenues slipped back from prior year highs to $10.78bn for the year to June 2015. At constant rates the increase would have been 3%. Net income fell 10% to $1.09bn.

Adbrands Weekly Update 21st Aug 2014: Beauty group Estee Lauder claimed "outstanding" performance for its most recent fiscal year, ending in June. Revenues rose 8% to a new high of $10.97bn, while net earnings jumped 18% to $1.21bn. It was the group's fifth consecutive year of record results, with all segments and all regions reporting growth in mid to high single digits. That made for a striking contrast with, for example, P&G's beauty business which recently disclosed an overall 2% decline over the same period. 


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Background

Free for all users | see full profile for current activities: Despite its prestigious image, the Estee Lauder brand was actually born above a humble hardware shop in the neighbourhood of Queens, New York. Josephine Esther Mentzner was the daughter of Czech-Hungarian Jewish immigrants. As a child, she was reportedly misregistered in school by a French teacher as Estee, and the name stuck. Having worked for a while in her father's hardware store, she got a job in the early 1930s selling Super Rich All-Purpose Creme, a skin lotion concocted by her uncle, in a concession at a Manhattan beauty salon. Here she charmed customers with what was to become a marketing standard in the beauty industry, offering a free sample of the lotion to take home with them. A natural saleswoman, Estee quickly progressed to a job behind the beauty counter in an upmarket department store. In the early 1940s she decided to set up in business for herself, supported by husband Joseph Lauter. She persuaded him to change his name to the more refined-sounding Lauder, and in 1946, they secured their first concession at Saks Fifth Avenue department store. They formalised Estee's free giveaway policy, offering a free sample with every product sold, a tactic now widely used in the industry, and known as GWP, or Gift-With-Purchase. 

The company's big breakthrough came in 1953 with the launch of a combined bath oil and fragrance, known as Youth Dew. Gradually the company added other cosmetic products, and as the business grew, Lauder assembled a salesforce of hand-picked "beauty advisors" to sell her products through department stores and other upmarket retailers. A firm believer in word-of-mouth promotion, Lauder exhorted all employees to spread the word about the company's products with the motto, "Telephone, telegraph, tell-a-woman". Determined to capture an upscale market, she also priced her products at the highest end of the scale, making them seem even more prestigious. In 1957, Re-Nutriv, a skin cream made from shark and turtle oils, was priced at $115 a pot, when other premium lotions sold for around $10. Incredibly it was a big success. 

The company now established itself in the international market, opening a London outlet (in Harrods department store) in 1960, followed by one in Hong Kong a year later. Lauder herself quickly threw off her Queens roots, becoming a sophisticated figurehead for her products. Although she never denied her humble background, the image she cultivated was that of Viennese royalty, rather than Jewish immigrant shopowner's daughter, and she set out to befriend the great and the good among the world's aristocracy. Meanwhile the company's advertising was high-class and refined. In 1970, the company signed sophisticated model Karen Graham to an exclusive contract as the "face" of Estee Lauder, and featured her in all its advertising for the next 15 years, establishing another industry standard. (She was subsequently replaced as Estee Lauder "spokesmodel" by Willow Bay and later Paulina Poriskova).

Gradually other brands were added to the stable. In 1964, Lauder introduced a range of men's fragrances, under the Aramis brand. Clinique, launched four years later was the first allergy tested, fragrance free cosmetics brand. The Prescriptives range, introduced in 1979, targeted professional women; while Origins Natural Resources, launched in 1990, was one of the first beauty products to be based on homeopathic and natural remedies. Estee Lauder handed over day-to-day control of the company to her two sons, Leonard and Ronald, during the 1970s and 1980s. In 1995 Leonard floated part of its stock, although the family retained voting and majority control. The IPO made billionaires of all three.

The group also used funds generated by the float to stock up on a portfolio of edgier, more urban beauty brands. Over the next five years Estee Lauder acquired a string of specialist makeup brands including Bobbi Brow, MAC and Stila, as well as prestige haircare products Aveda and Bumble and Bumble and British fragrance designer Jo Malone. Also in 1995, Estee Lauder signed Liz Hurley, the famous-for-being-famous girlfriend of actor Hugh Grant, as its newest spokesmodel. Initially the relationship benefited both parties enormously, as Hurley became one of the global paparazzi's favourite subjects. However the relationship came under some strain when Hugh Grant made headlines of the wrong sort after being arrested with a prostitute. Nevertheless, Hurley held onto the contract, and continued to be one of the world's most photographed women. By 2001 however her star had waned more than a little after a string of unsuccessful films and sensational newspaper headlines of her own. That year Estee Lauder signed up a new face, supermodel Carolyn Murphy, who gradually took over from Hurley. The company also began pushing forward family member Aerin Lauder, Estee's grand-daughter and a party-loving (but well-behaved) socialite, to become the public face of the company. 

In 2000 the company dipped its toe into the online sector, acquiring beauty ecommerce website gloss.com. Following the downturn in the interactive sector, Estee Lauder recruited Chanel and Clarins as partners in the business. However it struggled, and the group wrote off its investment in the business in 2001. It was later discontinued. In a bid to face off fierce competition from rivals, especially L'Oreal, Estee Lauder has unveiled a deluge of new products in recent years. In 2001 alone it launched more than 300 new products under its various brands. The group's founder died in 2004 at the grand old age of 97.


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