Estée Lauder cosmetics sales cross US one billion dollar mark in China

By Amanda Lim

- Last updated on GMT

Estée Lauder cosmetics sales cross US one billion dollar mark in China
Estée Lauder Cos. sales in China reach a billion dollars for the first time, contributing to the 29% growth in Asia-Pacific and boosting the company to reach $13.7bn in sales, a 16% increase from 2017.

Led by accelerated growth in China and a resurgence in Hong Kong, Asia-Pacific generated the fastest growth.

According to the company, business in China increased rapidly, growing in every category and every channel in almost all its brands.

Much of its growth in Asia-pacific can be attributed to travel retail as well, revealed the company, where it has become the top-ranked beauty company in Asia-Pacific airports.

“Today, 72 years after its founding, our flagship brand is not only the largest in the company, but one of the fastest growing as well. Estée Lauder is stronger than ever and demonstrate that our authentic roots make the brand relevant for women of all ages, backgrounds and ethnicities around the world,”​ said Global Brand President Stéphane de la Faverie.

Brand Milestones

According to the company’s fourth-quarter report for 2018, a number of brands in the company portfolio had an excellent year in China.

After its debut on Tmall, Alibaba’s online platform, MAC sales more than doubled in China, despite underperforming in North America.

The company attributes this stellar performance to its strategic investment in advertising for the fast-growing Asian market, the same strategy it took with the Estée Lauder brand in recent years.

Clinique’s ‘hero franchises’, such as the Moisture Surge range, grew 30% in Asia and emerging markets. The brand is expected to continue growing, especially with distribution via Tmall, which the company called its “largest door in Asia.”

Its success on Tmall will likely see more of its brands on the platform. Just two weeks ago, the company’s fragrance brand Jo Malone London launched on the site to strong sales during its first few days, shared the company.

Millennial Chinese lead Asia

This year, nearly 70% of sales were generated outside the US, while sales in the emerging markets jumped 24% and accounted for 15% of total business.

The millennials of China were a rich source of sales for the Estée Lauder Cos. The firm credits the growth of prestige beauty to their spending power and insatiable appetite for luxury products.

For instance, the company shared that more than 40% of first-time buyers of La Mer were in their 20s. The strong interest propelled La Mer past the billion dollar threshold to become the fourth billion dollar brand in the Estée Lauder Cos. portfolio.

The strong performance of brands like Estée Lauder overseas are contributing to the desirability to Chinese consumers, the company added.

As the Chinese middle class continue to grow and their spending power increases, the Estée Lauder Cos, will continue to put more focus on them. To continue to hold their interest, the company shared their intention to find ways to cater to the Chinese consumer.

“We [will] continue to serve Chinese consumers with a deep understanding of their needs and diversity by creating relevant products and communication uniquely designed for them,” ​said de la Faverie.

The company also added that they will be watching the current trade issues between the US and other nations closely.

“We are closely watching the evolving global issue concerning tariffs and trade, including Europe and China, important markets for us, where we intend to remain focused on our long-term growth. We believe we will have some flexibility to address the potential impact of existing and proposed tariffs and remain committed to satisfying global consumers with our quality products,”​ said Fabrizio Freda, president and CEO of the company.

The future is digital

One of the main elements of its success, shared de la Faverie, was the company’s focus on digital marketing and social engagement.

Online, global business grew 60% and represented 10% of total sales, and more than 20% in US and China. Online sales grew across the board, from its own brand sites to third-party platforms like Tmall.

As e-commerce continues to grow, the company said that it was focused on becoming a “digital first” brand, a play to target the millennials, who make up one-third of their consumer group.

It shared that about two-thirds of their global media spend was in digital and social marketing in order to reach consumers on online platforms such as Instagram, Facebook, Weibo, Wechat, and Kakao Talk.

The firm said would continue to leverage the popularity of celebrity and celebrity influencers such as their latest supermodel spokesperson Karlie Kloss and beauty guru Violette, who is currently their digital native Global Beauty Director.

In addition to these celebrities, the brand has also engaged global ambassadors such as Chinese actress and singer Yang Mi and Egyptian-born Sudanese model Anok Yai.

“The brand global spokesmodel celebrate women of all ethnicity and ages to help the Estée Lauder brand win in virtually all markets,”​ said de la Faverie.

“In the next year, what we have in mind is that we see continuous accelerating opportunity as exciting I should say in India where we are going all the way,”​ said Freda.

“We expect to continue success in Mexico and in other areas where we are doing really, really well, and amplify the portfolio in new markets in Asia, like the Philippines, Indonesia where we are seeing some amazing growth in this moment and great opportunities for the future.”

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