Estée Lauder: The Family-owned Cosmetic Manufacturer's Growth Strategies
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Code :FMB0004
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Region : USA
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Introduction: Since its inception in the 1930s, Estée Lauder has been a family-owned business. Under the leadership of Estée, “the longtime undisputed queen of the cosmeticsworld”,5 the business grew from a cream maker to a cosmetic giant with upscale brands like Estée Lauder, Clinique and Bobby Brown essentials. The business continued to grow, through acquisitions and new product introductions, under the leadership of her son, Leonard Lauder. Estée Lauder has 26 brands under four categories – cosmetics, skin care, fragrance and hair care. In April 2004, William (Leonard’s elder son) was promoted as the CEOof the company,marking the transfer of leadership of the company to the third generation Lauders. With the family controlling themajority stake, 82%of the voting shares, Estée Lauder controls one-fifth of the US beauty business and nearly 50%of the prestige beautymarket.6 With sales in more than 130 markets worldwide, the company reported sales of $6.34 billion in 2005,withmajority (53%) of its sales being in theAmericas [Exhibit 2].However, the company is facing increasing competition in both high-end and low-end beauty segment and its continued dependency on departmental stores for its sales has proved to be an impediment to its growth.As traditionalwisdomcites that family-run business generally do not pass three generations, analysts are sceptical about the companywitnessing the same growth in the newmillenniumas it has throughout its history.
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