Estee Lauder puts on right strategy for Africa

New York: When Estee Lauder opened a store selling M.A.C. makeup in Lagos, Nigeria, this month, it didn’t have much company.

Going where rivals aren’t is standard operating procedure for the 29-year-old cosmetics line. M.A.C. has long courted various ethnic groups, including American blacks, and Estee Lauder sees the brand as the key to unlocking emerging markets.

M.A.C. is already the best-selling high-end makeup in India, Brazil, South Africa and Turkey, according to the company. The brand’s tony stores are a revelation in nations such as Nigeria, where Western-style retailers are so scarce that wealthy shoppers are forced to search out upmarket brands on trips overseas. Once M.A.C. has a foothold in a market, Estee Lauder sends in its other brands such as Clinique and Aveda.

“The biggest play for the corporation, period, in terms of market development today, is the M.A.C. brand,” group president John Demsey said. “It is the singular biggest source of growth for the company.”

Estee Lauder’s sales in the US slowed after the recession as consumers traded down to less pricey brands such as Revlon and Procter & Gamble’s CoverGirl. While Estee Lauder’s US sales have recovered in the past two years, the New York-based company is increasingly focused abroad, where it generated 63 per cent of its revenue in fiscal 2012. Estee Lauder had revenue of $9.71 billion in fiscal 2012; it doesn’t break out M.A.C. sales.

In 1984, Frank Toskan, a make-up artist, and Frank Angelo, who ran a chain of hair salons, founded M.A.C. in Toronto. The brand, which stands for Make-Up Art Cosmetics, was originally created for professional make-up artists. Estee Lauder bought a majority stake in 1994, acquiring the rest four years later.

M.A.C.’s mission statement is “All Races, All Sexes, All Ages,” and it has long courted minority women who couldn’t find make-up that complemented their skin tone. M.A.C. is the top seller of high-end makeup to American blacks, according to Estee Lauder, with its products making up half of the sales in that category.

The brand “speaks to multi-ethnic consumers,” Estee Lauder CEOfficer Fabrizio Freda said.

The company introduced the brand to Brazil in 2002 and took over distribution there three years ago and began opening stores. M.A.C. global brand president Karen Buglisi calls Brazil “our China.”

In 2008, M.A.C. opened a store in Paris’s Strasbourg St. Denis, near a cluster of West African beauty supply-stores frequented by African immigrants. Typically Estee Lauder sells its products in more upscale precincts of Paris.

“No one in the prestige business in their right mind had ever considered doing such a thing,” Demsey said of setting up shop in Strasbourg St. Denis.

Still, it wasn’t long before wealthy Nigerian travellers discovered the M.A.C. store in Paris. The location became one of the company’s top stores in France and, as in Brazil, the brand became popular in Nigeria.