Inside the $1.2 Billion Empire of Estee Lauder

It was from humble begins that we met Josephine Esther Mentzer. A…

Inside the $1.2 Billion Empire of Estee Lauder

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January 10 2020 / Dining Contributor
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It was from humble begins that we met Josephine Esther Mentzer. A young and ambitious daughter of immigrant parents living together with her eight brothers and sisters in a small house in Queens, New York. She was fascinated with the art form of beauty from a young age.

But it was when her Hungarian uncle, John Schotz, a budding chemist, who moved in with the family that drove her passion into an aspiring career. Her nights were often spent creating velvety balms and skin creams in the family kitchen, where this leading prestige beauty brand was born.

Armed with four skincare products and a simple premise: that every woman can be beautiful, Josephine took to the beauty salons of New York to hustle and sell her very first products. Even from a young age, Josephine was an extremely savvy businesswoman but also had an innate ability to know what women wanted.

She spent her time with potential customers as they sat under the hair dryers in the salon. She believed that if you wanted to make a sale you had to make an intimate connection with every customer. You had to make a physical connection through touch, show her the product and give guidance on how it should best be used. It was these early encounters with her customers in the salon that helped this backyard business blossom.

In 1946 with her husband Joseph Lauder they officially launched the company as ‘Estée Lauder.’ As the sales grew Josephine took to the department stores. With her charm, humour and undeniable elegant style, Josephine was able to secure her first major order with Saks Fifth Avenue for $800. But Estée was a visionary, this was not going to be just a small boutique brand she had high hopes for her company.

The business rapidly expanded and she began opening stores of her own. Josephine made it her obligation to attended every store opening, spending significant time with each of her beauty advisors on sales techniques and merchandise display.

Instilling the importance of each customer interaction and its ability to create a life-long relationship. Over seventy years on and the importance of personal high-touch service hasn’t waived, and it is the essence of how Estée Lauder delivers its product to consumers adding value with the service they provide.

In 1960 global expansion beginning with the first overseas accounts, and by 1989 the company has reached $1 billion in sales. Not only had Josephine created the world’s most prestigious and innovative beauty company, but she was also a wife, mother and loyal friend to many right up until her retirement in 1995.

The only thing more important to Josephine than the company was her family. So, naturally, she was thrilled that her children and grandchildren joined the family business and held an active role in its management.

Following Josephine’s passing in 2004 the Lauder family remained at the heart of the publicly traded, family-controlled company. With second and third-generation members of the family continuing to hold leadership roles and advocate Josephine’s vision. It is a rare mix of family values in such a high performing public company. The Lauder family beneficially owns shares of Class A and Class B Common Stock with approximately 86 per cent of the voting power.

Today, Estée Lauder encompasses a complete skincare range, makeup, fragrance and hair care with over 25 brands under its ownership. Cosmetics brands falling under the Estée Lauder umbrella include Aerin Beauty, Bobbi Brown, Clinique, Flirt!, M.A.C., Prescriptives, Smashbox, Tom Ford and Tory Burch. Many designers also offer scents and body products exclusively through Estee Lauder.

These include Coach, Donna Karan, Ermenegildo Zegna, Kiton, Marni, Michael Kors and Tommy Hilfiger. With a focus on prestige brand, Estée Lauders high-end labels include Aramis, Aveda, Bumble and Bumble, Darphin, Jo Malone, La Mer, Lab Series Skincare For Men, Ojon, Origins and Osiao.

With such a diverse range of labels the company now engages with women in more than 150 countries. With more than 1500 freestanding stores of their own and via 1700+ e-commerce sites.

Estée Lauder has demonstrated strong growth in the last few years, generating about $17.1 billion in sales in 2017, up from about $16 billion in 2015. But it's 2019 that has been its banner year, reporting group sales of $21.63 billion. Encouraging their stocks to rise by 55%, making the five members of the Lauder family worth an estimated $47 billion.

The majority of its sales are made in Europe, the Middle East, Africa, and the Americas; but it is the sales from Asia and Pacific that has shown the most promising growth since 2010. It is this market that Fabrizio Freda, Estée Lauder’s president and CEO, attributed the company’s eye-popping turnover in the last 12 months.

Sales in Asia surged by 25%, led by growth in China, Hong Kong and emerging markets in Southeast Asia. They have plans to continue to invest in these emerging markets beyond China to the greater Asia Pacific region.

The world has seen drastic changes in the industry since the inception of the Estée Lauder brand some seventy years ago, but what is still ever-present with this empire is the essence of Josephine’s bold vision and her passionate spirit.

The drive and determination from this leading lady is an inspiring story to women of all generations now more than ever. Within the Estée Lauder company, we see over 48,000 employees, with 84% of the workforce being female and over 55% of vice president positions and above also held by women.

There is a good reason why Forbes has just listed Estée Lauder as the number one employer for women in 2019. Following in Josephine’s footsteps this tribe of leading ladies have built a company with an estimated net worth of $1.2 billion (as at January 03, 2020).

The Estée Lauder company has lived an iconic American dream fairy tale. From rags to riches from the kitchen of the family home in Queens to family listed on Forbes billionaires hotlist. Josephine herself proves that with enough perseverance, an honest philosophy, and a resilient passion that one woman can change the face of an industry and become skincare pioneer in a market as competitive and cutthroat as the cosmetics industry.

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