Estée Lauder’s Big Bet on China Is Looking Not So Pretty
TikTok phenomenon in the U.S. to respond faster to trends and keep rebalancing the distribution of its products to continue betting on its retail partnerships with Ulta Beauty, Target and Sephora-Kohl’s ventures, where mass beauty brands top sales. Indie brand e.l.f.
leads social media charts as the most-followed beauty brand on TikTok, with one million followers. It is also the most sold cosmetics brand at Target, according to e.l.f. “As soon as we have finished this balancing of the key drivers, we will go back to growing market share, as well for the long term," Freda said of his U.S.
plan. At the same time, Freda is accelerating a plan to regionalize the company’s supply chain away from China and, particularly, Shanghai, after last year’s lockdowns prevented it from getting products to stores and online shoppers in the region. “Our supply chain structure was built when our business was 90% in the West, and now our business is more one-third, one-third, one-third," Freda said.
The company is building a manufacturing plant in Japan, set to open toward the end of the year and serve Asia as a whole. It is also opening two China distribution centers in Hainan and the port city of Guangzhou, about 80 miles northwest of Hong Kong. Analysts say they welcome the investments in the Asia Pacific region.
Euromonitor health and beauty analyst Yang Hu said a lack of investments in the area would put in danger the company’s long-term growth. However, other analysts such as Ashley Kang, head of beauty at market-research firm Kantar, believe the selection of Japan as a new manufacturing hub shows Estée Lauder is no longer giving priority to China. “That’s why it is trying to boost other markets as a backup plan," Kang said, pointing
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