Estee Lauder outlines ambitions to grow Asian skin care category

Estee Lauder has been growing its Asian business significantly in recent years, capitalizing on significant economic and consumer growth in key markets, with a particular focus on the rapidly expanding China market.

Speaking about plans for the coming year, Freda stressed that the prestige cosmetics player would be concentrating its growth ambitions on the skin care category, while stressing the additional potential in the Asian market.

“This year we will concentrate on skin care and particularly in the Asia, which currently accounts for about 60 per cent of sales in this category,”​ Freda said to the assembled shareholders and journalists in New York yesterday.

Big focus on China​

Further to this, Freda also outlined the company’s plans for the China market, which has been pivotal to growth in the region thanks to the emergence in recent years of a strong consumer market for luxury cosmetics and fragrances.

According to a research report from RNCOS entitled, ‘Cosmetics and Toiletries Market in China’, China provides one of the fastest growing and still untapped cosmetics and toiletries market in the world.

Specific to this, the report states that the skin care segment in China has been a particularly key growth contributor thanks to an explosion in interest for anti-aging, toning and whitening products.

The research reveals the skin care segment will grow at a CAGR of 12.7 per cent during the forecast period 2010-2013, having acquired a market share of 40 per cent.

Tapping into Chinese travel retail​

Estee Lauder’s strategy to further tap into this growth potential in China is specific to its significant presence in the cosmetics and fragrance travel retail segment, as Freda explained.

“In 2009 50 million Chinese people traveled abroad and that figure is expected to be 90 million by 2013. Our travel retail segment plans to capitalize on the growing number of Chinese nationals that travel,”​ he said.

Freda also pointed to targeted products developed for the Asian market and in particular stressed the fact that it had developed a skin care line using pomegranate extract that targets dry skin.

Focus on targeted products​

“This kind of initiative helped to grow our skin care sales in Asia during the 2010 financial year by 11 percent,”​ he said.

The skin care category as a whole is seen as a significant growth opportunity for the business, particularly given that it is already the largest and most profitable segment of the company’s operations, on top of having the biggest profit margins.

In August the company reported a strong fourth quarterly performance, with sales rising more than 9 percent to reach $1.84bn, however, it expects sales in 2011 to be negatively impacted by currency translations, estimating growth in the range of 3 to 4 percent.