‘Accelerating innovation in a big way’: Estée Lauder will debut first products developed by China R&D facility in Q4

This was revealed during the Estée Lauder Companies’ Q1 earnings conference by president and chief executive Fabrizio Freda.

The first innovation from its newest R&D centre in China is set to debut in the latter half of the year under the Estée Lauder banner.

Freda expressed his excitement of the launch, noting it was “very dedicated to specific Chinese consumers”.​

“One in particular from Estée Lauder Perfectionist Pro franchise is especially exciting as it is among the first product created in our China innovation labs and addresses local demand for SPF 50 plus UV protection that is suitable for sensitive and post-derm procedures of the skin.”​

In 2023, the company expanded is research and development presence in China with the China Innovation labs in Shanghai.

According to the firm, it was the first It is the first ELC facility outside of the US to have end-to-end innovation under one roof. This includes research, ideation, insights, clinical, sensory and performance testing, formulation, packaging, and engineering.

This is part of the firm’s strategy to “accelerating innovation in a big way” ​in the Chinese market, said Freda.

“Our focus remains bringing irresistible newness to consumers to best create growth opportunities,”​ he said.

China recovery slow but sure​

This quarter, the company’s organic sales in China returned to growth by low single digits, attributed to double-digit growth in January this year.

“For mainland China, we returned to organic sales growth, albeit at a slower pace than expected amid an overall soft prestige beauty industry. Retail sales for prestige beauty were strong in January but moderated in February and March, due in part to the Chinese New Year,” ​said Freda.

Despite the results, Freda emphasised that the firm was seeing an improvement in Chinese consumer consumption.

He said the firm observed the Chinese consumers “in total”​, considering them not just in mainland China, but also in Hong Kong, travel retail China, and international travel retail.

“We see actually progress in the total Chinese consumer consumption on our brands and they are very solid.”​

Freda elaborated: “When you put all these numbers, and frankly they are all solid numbers – except the international travellers in other cities, which is an estimate in our model – we see clear progress and there is progress between quarter two and quarter three despite the softness in the mainland, and actually they are turning positive, very interestingly positive, in quarter four estimates for the future.”​

Overall, there was a “sense of recovery in the overall consumption”​ in China, said Freda.

“All-in-all, I just want to make sure that we understand that despite the short-term softness of the market in Mainland China, the overall trend of Chinese consumers is positive, and this trend is expected to accelerate in the future.”​