Estèe Lauder to benefit most from skin care and color cosmetics investment
At 24% and 23%, skin care and make-up segments are relatively higher than the likes of fragrance and hair care.
Geographically, the global cosmetic giant generates 42% in total revenue in The Americas, 38% from EMEA and 20% in the Asia-Pacific region.
According to Trefis analysts, between 2007 – 2013, Estèe Lauder’s revenues from the Americas and EMEA grew 3% and 6% annually, while the Asia-Pacific market grew 12% annually.
Latin America driving growth for Estèe in color cosmetics
Latin American consumers have increased their consumption of nail products and BB creams over the past few years which has reflected in Estèe Lauder's revenues at an annualized pace of 6% since 2007.
Much of which came from Brazil, Argentina, Mexico and Uruguay.
Having acquired make-up brand Smashbox back in 2010, the brand now plans to expand its product portfolio as well as increase its retail presence to TV retailing.
Going forward, entry into multi-benefit products and increasing marketing budgets and retail channels, according to Trefis analysts, should accelerate revenue growth rate for Estèe’s color cosmetics segment.
The demand for products beyond the BB/CC creams, with multi-benefit combinations, are becoming ubiquitous in developed markets.
This enormous demand for skin care products from emerging economies should result in growing skin care sales for Estèe Lauder and should translate into further expansion in revenue share from the Asia-Pacific market.
An investment in prestige on the cards?
Back in April the rumour mill was in full swing with some suggesting that Estée Lauder could be ripe to join the acquisition trail given its history and the current state of the market.
Much like its other big rivals, the company has a history of small takeovers and turning them into big name brands, but it has now been almost four years since it acquired Smashbox, which set tongues wagging.
At the time, senior research analyst at Kline Ewa Grigar told Cosmetics Design that there is one evident trend when it comes to investing in hot emerging markets, and that is in acquiring a local brand rather than investing into a tedious process of launching its own brand without having a guarantee to succeed.
"Staying in prestige would probably be the best move for Estée Lauder and travel retail would also make sense. Globalisation is also important so I wouldn’t be surprised if the next move was to acquire a prestige brand in a different international market,” she reported at the time.