Women’s Wear Daily
04.16.2014
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The Plugged In World of John Demsey

By combining his appetite for pop culture with a razor-sharp business acumen, the group president of Estee Lauder is redefining 21st-century beauty branding.

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Jo Malone Limited Fragrance

Photo By Kenji Aoki

Aspiration is a word that comes up often in Demsey’s conversation. In his mind, it is the single most important attribute that the company sells. “Beauty in its abstract concept is an aspiration. It’s not always a reality,” he says. “There is an aspirational element to beauty that exists from dollar stores all the way up to Bergdorf Goodman, because beauty in its ultimate is an aspiration.”

 


To that end, aspiration is the lens through which Demsey views all aspects of the business — be it product development or distribution strategies, global expansion or brand messaging. The success of Tom Ford’s collaboration with Estée Lauder helped clarify that vision even more. “All of a sudden, I had people calling me for the brand who had never called before,” Demsey recalls. “That started to stimulate the thought in terms of how do you define modern-day aspiration, where does it exist and how do you live it?”


The answer was China. Period. “Thia Breen and I came to the conclusion that the aspirational future of the world was Asia, and that was really the pull in terms of where, if you wanted to win the hearts and minds of the aspirational consumer for the next 20, 30, 40 years, you’d better be successful there. To that end, Lauder shifted its message in China from “less promotional to more aspirational,” Demsey says, with a clear emphasis on luxury skin care. The concept, Demsey points out, “was very similar to the way the brand was originally established in the U.S. in the late 1940s and ’50s at stores like Saks Fifth Avenue and I. Magnin.”


The strategy worked. Today, Estée Lauder claims to be the number-one prestige beauty brand in its distribution and the fastest-growing Western brand in Asia. The Estée Lauder Cos. doesn’t break out regional sales by brand, but sales in the Asia Pacific region increased 17 percent, or $250 million, for the fiscal year 2011, to almost $1.8 billion. Sales in China alone grew 33 percent, and the company expects it to become its largest market in Asia Pacific this year.


Still, it’s one thing to build a global business with a brand that already has more than $1 billion in sales. It’s quite another to do it with a brand from scratch, a feat Demsey is currently tackling with the introduction of an ambitious color cosmetics and skin care line under the Tom Ford banner. Although the 132-stockkeeping-unit line is currently bowing in just 45 doors worldwide, the launch is primarily a global play, not a U.S. one. “Tom Ford has placed a big bet on China and Korea and, to a lesser extent, Japan,” says Demsey. “He sees the future of luxury as heavily rooted in those capital cities in Asia.”


That being said, Tom Ford beauty won’t launch in Asia until sometime next year. While the brand currently has a strong fragrance and lipstick business with estimated global sales of $150 million at retail, and rich Chinese consumers have a predilection for luxury labels from the West, fragrance is still a cultural anomaly in Asia. “We deliberately held off on the Asian articulation of the brand to make sure we understand everything that is working and to make sure it goes into the marketplace in the right way,” says Demsey.


The launch of Tom Ford is ambitious to be sure, but Demsey has proven himself to be an able brand builder over the years. When he took over MAC in 1998, it had an estimated wholesale volume of $140 million. Today, industry sources estimate its wholesale volume at more than $1.5 billion. The NPD Group reports the brand is ranked number one in prestige color, and is number one in the lip and eye categories, number two in foundation and number five in mascara. Those figures exclude sales in MAC’s own stores. Demsey declined to comment on the sales figure but does note that the MAC AIDS Fund raised about $3 million when he first arrived, a figure which has risen to $230 million collectively today ($38 at million of that in the last fiscal year alone).

 

Although sources estimate Tom Ford’s makeup and skin care is expected to hit $40 million in first-year sales — a pittance compared to Lauder’s billion-dollar behemoths — the company has thrown the full weight of its support behind it. “New brands today are the big brands of tomorrow,” says William Lauder, chairman of the Estée Lauder Cos. “I remember being asked to speak once about MAC and niche brands at a conference, and my comment was, ‘Every brand has a niche. Some are bigger than others. The characterization of MAC as niche still holds today — it just has a very nice niche.”


Demsey is modest about the brand’s success. “When I first got to MAC, Leonard Lauder told me to make it more MAC than it ever was. I thought, ‘Whatever that means,’” he laughingly remembers.

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