Indian beauty set for a makeover

After 60 years and 135 countries, the Estee Lauder bandwagon enters the Indian market with its beauty products. When Estee Lauder established her beauty business in 1946, she started humbly with four products.

Today, after 60 years, the brand is sold in over 18,000 doors across 135 countries and India is the latest to join the bandwagon. Mumbai got its first company-owned Estee Lauder store which will be followed by one in Bangalore in August, and two in Delhi by October.

"Estee Lauder is scheduled to launch a freestanding store in Bangalore at The Collection in UB City Mall and two freestanding stores in Delhi "" one in Promenade and the other in Courtyard Malls. Over the next three years, we intend to open 20 locations and expand into cities including Hyderabad, Pune and Kolkata," elaborates Sonia Michon-Floc'hlay, vice-president and regional brand director, Estee Lauder.

India's organised cosmetics market, growing at a healthy 25 per cent, has proved a major attraction for the company.

"The timing is right to bring Estee Lauder to India," claims a statement from John Demsey, group president of Estee Lauder Companies and hopes "...I am confident that Estee Lauder will be a huge success in India."

The confidence emerges from the fact that the Indian cosmetic market is expected to move from $950 million in 2008 to $1.4 billion in a couple of years, as estimated by the Associated Chambers of Commerce and Industry of India.

In its second quarter results, Estee Lauder reported sales of $2.31 billion on the back of strong performances in the emerging markets. In particular, the company highlighted the Asia Pacific region and China where most of its brands sold out during the period and sales reached $347.4 million.

To augment its foray in the Indian subcontinent, Estee Lauder has initiated India-specific cosmetic that includes six additional shades of Double Wear liquid and powder foundation developed specifically for Indian skin tones and a colour collection called Jewels of Summer, created by Lauder's granddaughter, Aerin Lauder, senior vice-president and creative director, Estee Lauder.

The Assocham report also brings to fore the dismal amount of money spent on buying cosmetics by Indians. The organisation says that the per-capita expenditure per year on international branded cosmetics products is just $0.68 in India, half that of China's $1.5. Michon-Floc'hlay has an answer.

"We are traditionally a departmental store brand and that is what we intend to do in India too." The brand is mulling to step up its presence through shop-in-shop counters in shopping malls and woo the departmental store crowd with entry-level products.

Meanwhile, the brand is struggling to add trained service staff comprising beauty advisors to deliver Estee Lauder's signature service and help customers choose the appropriate skin care and makeup products.

The low penetration of international cosmetics brands can be explained by the large differences in price between imported and domestically produced products.

Although India allows the entry of imported cosmetics without any restrictions the tariffs on such goods are particularly high at present, approximately 40 per cent. This results in a large price difference between imported and domestic products "" a premium that the majority of the population is unable to pay.

Estee Lauder too is re-inventing its retail strategy in India. "We realise that our customers might find the prices prohibitive. Thus, we will target departmental store customers with lower priced, entry-level products and premium store customers with our customer service and higher valued products," cites Michon-Floc'hlay.