Tier-ll and III markets on Estée Lauder’s shopping list

Over the last 2-3 years, the brand has doubled its sales in India.

“Never underestimate any woman’s desire for beauty,” said the late Estée Lauder, one of the world’s first female entrepreneurs. She co-founded The Estée Lauder Companies Inc. with her husband Joseph in 1946. Lauder started her business with four skincare products and changed the face of the global cosmetics industry.

The beauty industry has changed dramatically over the years. Today’s online world has got brands rethinking their strategies. Brands are now taking the e-commerce route, prestige beauty consumers are growing and so are younger consumers, and men are entering this segment.

According to Euromonitor, the size of the global prestige beauty and personal care category is over $731 million, while prestige skincare business is worth $192 million.

Estée Lauder, the flagship brand of The Estée Lauder Companies Inc., has been on a journey to establish itself as a leader in the prestige beauty industry in India. How does it plan to do this? What are its expansion plans in the country?

The brand has announced Bollywood star and former Miss World, Manushi Chhillar, as its newest Global Brand Ambassador. Chhillar has previously served as the face of Estée Lauder India’s Advanced Night Repair campaign in Fall 2022.

Chhillar has joined the current roster of Estée Lauder global talent including Adut Akech, Ana de Armas, Amanda Gorman, Bianca Brandolini D’Adda, Carolyn Murphy, Grace Elizabeth, Karlie Kloss, Kōki and Yang Mi.

Chhillar will also appear in upcoming campaign for Double Wear Stay-in-Place Makeup, debuting later this month.

As a part of its India journey, the brand will also unveil a campaign, ‘My Shade, My Story’. The campaign is already live globally and will be launched in India on May 15, 2023. Just like it's global campaign, this campaign will also feature unconventional champions from diverse backgrounds, with distinct skin tones to represent Estée Lauder’s #1 selling foundation that boasts over 50 shades.

The brand’s products can be bought primarily online, including its website.

On the media mix, Dikshita Shukla, brand manager, Estée Lauder and The Ordinary, India, says, “We only look at online and digital media. We’re not present on TV, radio, etc. We are approximately 6-10% in OOH, and looking at about 60% in digital media and another 20% in online.”

Online presence

The brand launched its products on Nykaa first, and is now looking at its next e-commerce platform Reliance Retail’s Tira.

“We always had a deep sense of partnership with our online players. We also have our own website. Our website continues to help translate our offline experience to online experience. The website looks like you have stepped into an Estée Lauder store,” mentions Shukla.

“Whereas, on e-commerce platforms, there are 1,000-plus brands. We drive brand equity in a big way on our own website.”

The brand has already cracked Tier-1 cities, and is looking to expand into Tier-II/III markets.

"Now, we see a lot of rising middle class consumers from Tier-II/III towns who’re entering the ‘prestige’ segment. We have already launched some stores in these markets through our partners. We won’t be surprised if, in coming years, the split between Tier-1, II and III markets is almost the same,” states Shukla.

The online presence has helped the brand’s sales. As Shukla mentions, “Over the last 2-3 years, we’ve doubled our business in India.”

The company owns a diverse portfolio of brands, including La Mer, Jo Malone London, Clinique, MAC Cosmetics, Bobbi Brown, Tom Ford Beauty, and more. The company has over 700 brands under its portfolio that are distributed internationally through both digital commerce and retail channels.

As per another report by Mordor Intelligence, India’s cosmetics products market is projected to register a CAGR of over 4% by 2028.

Some of the major players in the market studied are L'Oréal, The Estée Lauder Companies, Vellvette Lifestyle Private Limited (Sugar Cosmetics), and Natura & Co.

Portfolio diversification

Shukla says that Estée Lauder is a mix of skincare and makeup business.

“Within makeup, there’s a lot of competition. It’s just about continuing to diversify our portfolio’s global strengths. For this, the brand will be launching a wide range of lipsticks in India. We never thought we would have depth in our lipstick portfolio.”

“Lipsticks are a big opportunity for us, in India, as the country is a ‘lip’ market.”

A couple of months back, the brand relaunched its blush and eye-shadow palettes with luxe (luxury) packaging. According to Shukla, as much as the consumers love the company’s products, they love the packaging more.

“We’re always striving to make the product experience as elevated as possible.”

Diversification of the makeup portfolio, is another thing that the brand is looking at.

“Makeup is quite dynamic. It’s a lot more dynamic than skincare, especially in terms of consumer trends. Skincare trends stay a little longer, while makeup trends move faster,” informs Shukla.

Expanding consumer base

For many years, the brand’s core TG has been quality-seeking consumers. Those who really know and understand skincare and makeup, and don’t mind paying a little bit extra for the products. But now, the brand has expanded its consumer base.

The brand has observed that more and more men are entering the skincare segment.

“Many men are gravitating towards the ‘Advanced Night Repair’ serum category,” mentions Shukla.

In addition to this, Shukla says, “Our consumers are getting younger and younger. They’re also upgrading and entering the prestige world for the first time. To make sure our younger consumers get all the benefits, we have ‘minis’ for all our top-selling products at accessible price points.”

According to an ESW report, 67% of Gen Z and millennial shoppers prefer to wait for lower prices on online products, even if it means risking the item going out of stock. Nearly 40% of ‘power shoppers’ who spend at least $2,500 annually on beauty products, are bargain hunters.

Increasing consumer awareness, advancement in skin care products and increasing inclination of young consumers towards beauty industry, are some of the factors driving the cosmetics industry. What more can this industry offer?