The New Guard: Fabrizio Freda Takes the Reins

Fabrizio Freda, recently appointed ceo of the Estée Lauder Cos., reveals his sweeping vision for transforming the prestige player into a global powerhouse.

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Beauty Inc issue 05/08/2009

To that end, Lauder’s international strategy aims to put a greater emphasis on creating economies of scale by region, and also on developing new marketing capabilities on a regional basis. The regional structure, slated to be effective in July, will include Thia Breen, who is currently global president of the Estée Lauder brand, as president, North America, which is a newly created position and region, and Cedric Prouvé, group president of International. Prouvé will continue to have the following direct reports: Fabrice Weber, president, Asia Pacific; Ivan Fernandez, president, Europe, Middle East and Africa; Olivier Bottrie, president, travel retailing worldwide; Per Neuman, general manager Estée Lauder U.K.; and the newly created region of Latin America led by Daniel Rachmanis, senior vice president, Latin America and business development. Breen and Prouvé will report directly to Freda.

“A truly global company is a company that can take the best ideas, the best creativity, the best profits and bring them to the rest of the globe, wherever those best ideas are,” says Freda. “That’s why we’re creating the regions. The real long-term goal is to become so global that the opportunity to grow will be enormous.”

Weiser of Caris & Co. in a recent research report wrote, “To adapt to the global recession, Lauder is ensuring there are affordable entry price points within each brand. Lauder is finding that consumers are trading down within its brand portfolio, for example to MAC Cosmetics from the higher-priced Bobbi Brown.” She also notes that due to the weakening of the British pound, London has become the shopping mecca of Europe, and Lauder’s U.K. business is holding up nicely. The company continues to gain share in Japan, and consumption is healthy in Russia, says Weiser.

Freda’s second ambition is to burnish Lauder’s credentials as a bastion of innovation that’s mined globally — not simply from North America. “If you want to have the next idea to sell the globe on whitening and pigmentation, you go to Asia,” he says. “If you want to have the best possible idea on colors and lipsticks, you go to Paris. If you want to have a good understanding on mascara, you defi itely continue working in the U.S.”

Freda’s propensity to see opportunities through an international filter has won him praise from Wall Street. When it comes to Freda’s strategy for international growth, analysts applaud his agenda of moving strong and deep into key markets, like China, rather than spreading its efforts thinly across the entire globe.

“To create a sustainable, profitable model in a market you need to achieve a critical mass in that market,” says Freda. “Our international strategy will be one of achieving critical mass and strong penetration in the key, most potential markets, rather than diluting ourselves a little bit everywhere.”

Lauder’s short list of key markets includes China, Russia and the Middle East. Also on the company’s radar are “incubator markets”—particularly India and Brazil — where Lauder is starting from a relatively low base, but sees solid long-term potential.

“In incubator markets we are going to invest gradually and in a way where demand will anticipate our distribution,” Freda says. “We incubate by riding demand ahead of distribution, that’s the way prestige brands are built. It’s also less risky from an investment standpoint because it takes time but takes more gradual investment and then over time yields great, great returns.

“On the contrary,” he continues, “on markets where we are already today competing and where we need to achieve our goal faster, like China, Russia and the Middle East, we are investing more aggressively and looking for more aggressive growth across the entire portfolio.”

Freda’s international perspective is well informed. The trilingual executive (he speaks Italian, French and English) has lived in towns throughout Italy — Naples, Rome and Florence — and in Germany, Switzerland and Belgium. During his time at Gucci in the late Eighties, Freda had international oversight of marketing and strategic planning. While at P&G, he worked in various divisions — namely cough and cold, laundry, health and beauty, and, most recently, snacks, as president of Global Snacks — roles that required market insight in myriad regions and countries. Freda is bent on helping Lauder executives see through that international lens.

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