The growth in India helped to drive the organic sales growth momentum in the firm’s emerging markets.
“Indeed, in fiscal year 2023, our emerging markets delivered organic sales growth of 20%, led by India, Brazil, Turkey, and Thailand. India grew nearly 50% for the year, driven by excellent performance by our long-standing brands in the market and the very successful launch of The Ordinary,” said Fabrizio Freda, president, CEO and director, the Estée Lauder Companies.
The Ordinary first launched in India in June 2022 through a partnership with Indian e-commerce company Nykaa.
The skin care brand was founded in 2016 by Brandon Truaxe, the late founder of beauty company Deciem.
Estée Lauder closed the deal for a majority stake in Deciem in May 2021, which added The Ordinary and NIOD into its portfolio of brands. The acquisition increased Estée Lauder’s ownership of the firm from approximately 29% to approximately 76%.
Over the 2023 fiscal year, The Ordinary recorded strong growth across all markets, thanks in part to innovative new launches in both skin and hair care.
“The Ordinary graduated into our tier of scaling brands, as double-digit sales growth propelled it well above $500 million,” said Freda during the firm’s latest earnings conference.
“The Ordinary proved its high-performance, ingredient-led products are well loved and we believe it is just getting started in realising its global potential.”
Travel retail falters
The success of The Ordinary was not enough to offset the decline of Estée Lauder’s skin care division. Skin care net sales fell by 14% with declines observed in Estée Lauder, La Mer and Dr.Jart+.
The biggest blow to the skin care business was Asia’s volatile travel retail market, particularly in China and South Korea.
“Indeed, our global travel retail business decreased 34% organically in fiscal year 2023, solely driven by Asia travel retail… The challenges in Asia travel retail disproportionately pressured skin care, which is our highest-margins category,” said Freda.
On the other hand, the company announced that its business in China had returned to growth.
“We are pleased to have returned to organic sales growth in mainland China this fiscal year 2023 and to have expanded our prestige beauty share, as the market gradually evolves in its recovery from the pandemic,” said Freda.
“Impressively, mainland China's fourth quarter organic sales were up double digit compared to both one and two years ago, and we further expanded our prestige beauty share in the quarter.”
Freda highlighted the strong performance of Aveda in China. The hair care brand was launched in China last year.
“Aveda quickly captured up the ranks of prestige hair care, driven in part by its focus on the skinification of hair and high-performance product for scalp care.”
Freda reinforced the company’s optimism in China’s long-term growth.
He concluded: “Our company has great confidence in the long-term development of China, and we are proud of the very strong business we have built, led by our exceptional local team. The Chinese consumers continue to be the unrivalled number one growth drivers of our industry throughout the decade.”