Beauty & The Best: Luxury cosmetics behemoth Estée Lauder hunkers down on India as its sales double in 2 years

• India’s luxury skincare and cosmetics segment is growing at a very rapid clip. India is a focus market for the world’s 2nd largest cosmetics company, as the pandemic has shown that demand is not just limited to the mega cities.
  
• Demand for luxury skincare is growing rapidly in cities like Bhopal, Ahmedabad, Guwahati and Pune as consumers are uptrading to luxury.
  
• Sales momentum in India has spurred the world’s second-largest beauty and cosmetics company to appoint Manushi Chhillar as its global brand ambassador.
  

India’s rapidly evolving consumer base is kicking up quite a storm in the beauty world’s teacup. And leading this charge are India’s Tier 2 & 3 cities like Bhopal, Guwahati, Ahmedabad and Pune that cannot have enough luxury skincare and make-up. India’s beauty market may be $16 billion in size, but it has been given a short shrift by most global biggies, barring Estée Lauder Companies Inc. Not surprising then that the world’s second-largest cosmetics company has seen its sales double in the last two years. A key driver of this trend is the voracious demand for social media content on health and beauty over the last three years of the pandemic.

While still small in size, India’s luxury skincare and cosmetics segment is growing at a very rapid clip. The size of the prestige beauty and personal care category is $731.5 million, while prestige skincare is a $191.9 million business, according to Euromonitor. Skincare is one of the fastest-growing categories, clocking a compound annual growth rate (CAGR) of 6.4% in India over the past 5 years.

While L’Oreal Groupe is the largest player in India too, with a market share of 14.9%, Estée Lauder Companies comes next with a market share of 9.5% in beauty and personal care (see table). Estée Lauder’s portfolio of brands comprise iconic names like Bobbi Brown, La Mer, Clinique, MAC Cosmetics and Tom Ford Beauty, among many others. It has over 700 brands under its portfolio spanning skincare, make-up and fragrances.



Dikshita Shukla, India brand head at Estée Lauder, says this is make-up’s moment in India as, “Tier 2 and Tier 3 cities has an emerging middle class population that is uptrading to luxury.” For Estée Lauder, the world’s second-largest cosmetics company after L’Oreal, India is a focus market because it is at an inflexion point. Many of the world’s leading luxury beauty brands have gone easy on India because it was never considered to be a market as big as China. The pandemic has proved many of these brands wrong, as Indians are not shying away from spending upwards of a few hundred dollars on luxury skincare and make-up.

For long, luxury was perceived to be the preserve of only the well heeled in the mega metros, but the pandemic has turned this thesis on its head. Today, not only are the elite from India’s small towns buying luxury skincare but also deploying private jets to ship their favourite macaroons and cakes from French patisseries for their soirees. This is a much underrated trend and few understand the rising power of India’s hinterland. Estée Lauder has not only been aware but has actively cultivated this market through its omnichannel strategy. Over the next few years, Shukla says, she won’t be surprised if the sales are equally split between metros and Tier 2 & 3 towns.

Estée Lauder was the first to partner and launch on Nykaa and now Reliance Retail’s Tira. This online presence helped the company accelerate sales during the pandemic. Estée Lauder has also spruced up its own online presence with its store that helps service customers online in the same way that they cater to them at the physical stores. With the lockdowns becoming history, Estée Lauder is now focused on massive scaling up of its brick-and-mortar presence through partnerships with Sephora and Shoppers Stop.

Estée Lauder has been in India for a decade and has worked consistently to become the largest luxury beauty brand in India. While its portfolio of brands and offerings across skincare, make-up and fragrances is a big draw, it has also been proactive in improving reach and distribution. It was the first to tie up with Nykaa to improve the reach of its products beyond the mega metros. Given that it is a triaxis beauty brand, it has a product for every reason and every season almost. A lot of its competitors have used their global strategy in India, which has not really worked as India is a unique market. Shukla says: “We have adapted to India and understood what customers want. We have specifically been able to serve the market and consumers with what they wanted.”

To crack the India market, Estée Lauder Companies has adopted a three-pronged strategy. It has identified and promoted its hero products for starters. The company has picked up its iconic products and gone to market with its benefits that the Indian consumer could relate to. Estée Lauder has also taken the omnichannel route to improve reach of its products across India – it was the first luxury brand to partner with Nykaa and now Tira for online sales. After the pandemic, of course, it also caters to customers on its own website. Estée Lauder has attempted to replicate the store experience online too with beauty assistants and virtual trials to help consumers arrive at a decision. There was a perception that luxury could not be purchased online but the pandemic has shattered that myth.

Estée Lauder has broken ranks with rivals in India in terms of its go-to-market strategy not just when it comes to product positioning and retailing, it is also the first luxury brand to appoint an Indian as its ambassador. Bollywood star and Miss World 2017, Manushi Chhillar, is now the Global Brand Ambassador for Estée Lauder. Chhillar joins the current roster of Estée Lauder global talent including Imaan Hammam, Adut Akech, Ana de Armas, Amanda Gorman, Bianca Brandolini D’Adda, Carolyn Murphy, Grace Elizabeth, Karlie Kloss, Kōki and Yang Mi. So far, Estée Lauder has had Indian faces endorse their products in India but this is the first time an Indian will join ranks with its other global ambassadors.

Explains Chhillar, “Estée Lauder is an iconic brand founded by a visionary woman, Mrs Estée Lauder, who proved anything was possible with hard work, passion, and dedication. Like her, I hope to be a role model for women around the world, inspiring them to believe in themselves and their ability to impact positive change.”

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