Estée Lauder poised for growth in China thanks to focus on burgeoning millennial market

By

Robin Driver

Published
Mar 14, 2019

With millennials leading growth in China’s booming beauty industry, a recent report from data and analytics firm GlobalData highlights the steps taken by classic American cosmetics company Estée Lauder to appeal to the Middle Kingdom’s increasingly affluent youth.

 
Despite the ongoing trade war between the US and China, Estée Lauder reported strong sales of $4.01 billion in the East Asian country for the second quarter ended 31 December 2018, last month.
 
According to GlobalData, this success is related to initiatives taken by the beauty company as part of its long-term investment strategy for China, which involves a marked shift in the group’s target market toward a younger demographic.

In particular, Shagun Sachdeva, consumer insights analyst at GlobalData, pointed out the redesign of Estée Lauder’s marketing in the country, as well as the company’s renewed focus on digital engagement and use of social media platforms such as WeChat and Weibo.
 
The analyst further underlined the importance of Estée Lauder’s collaborations with high-profile local celebrities – such as actress and singer Yang Mi and model Liu Wen – in driving brand awareness in the Chinese market, particularly among younger consumers.
 
“With China forecast to emerge as the fastest growing market for the global cosmetics and toiletries industry by 2022, the New York-based company transformed itself from being identified as a brand offering a range of anti-ageing products for older women into a youthful brand that appeals to growing population of young women with high spending power,” explained Sachdeva in a press release.  
 
Having already proved its effectiveness, the strategy should also help position Estée Lauder to take best advantage of the rapidly developing Chinese cosmetics market as it continues to grow in the future.
 
Indeed, statistics from GlobalData show that sales of cosmetics and toiletries in China have increased by 8% from $68.05 billion in 2017 to $73.52 billion in 2018, and this figure is expected to hit $100.30 billion by 2022.
 
Estée Lauder’s progress in China helped drive sales growth of 17% in the group’s Asia-Pacific region in the second quarter, with total-company sales rising 7% to $4.01 billion.

Estée Lauder’s quarterly net income came to $573 million, four times the figure reported by the company in the prior-year period.