Estee Lauder "finally" loses to L'Oreal

From January 1 to December 31, 2022, Estée Lauder's total revenue fell by 7.7% to US$16.36 billion, while cumulative net profit fell by 53.9% to US$1.49 billion. The Group attributed this to the "epidemic."

L'Oréal's full-year 2022 revenue rose 18.5% year-on-year to €38.26 billion, while net income rose 24.1% year-on-year to €5.71 billion, a world of difference.

-In China's premium cosmetics segment, L'Oréal's market share overtook Estée Lauder's to 18.4%, Estée Lauder's 14.4%, and LVMH ranked third at 8.8%.

As early as 2005, Estée Lauder's Asia Pacific headquarters moved from Singapore to Shanghai. L'Oréal Asia Pacific headquarters only moved from Paris to Shanghai in 2013. However, to this day, Estée Lauder China's decision-making is still subject to the Group's headquarters, across the Pacific Ocean, the Chinese market's e-commerce placement, Daimler cooperation, and new marketing layout, all in the prolonged lobbying and waiting lost in the first opportunity.

Estee Lauder China had little say, and the Group pressed for goods in duty-free stores and once played 60% off in Haikou duty-free stores, triggering confusion in the price system.

L'Oreal "decentralized" the duty-free channel in Hainan

An internal committee was set up to coordinate duty-free related work with executives from the China and Asia Pacific travel retail teams.

Effective 0000 hours on January 29, 2023, Estée Lauder announced price increases of 10% or less for its 348 SKUs, including Frozen Age Platinum. This is the fifth price increase since the epidemic.

L'Oreal and P&G raised prices 3 and 4 times during the same period.

Estee Lauder's frequent price increases, in addition to making up for the profit difference, the deeper reason is that the headquarters management of the market trends and beauty understanding is too traditional, and the investment in research and development and technological innovation is lagging behind the rivals.

Since the epidemic, beauty giants have made efforts in biotechnology and beauty technology to build their moats and find new areas of development.

L'Oreal Group has launched over twenty beauty technology products, from skincare to skin detection, to assist in makeup application.

Estee Lauder's R&D expense ratio will be 1.6% and 1.5% in 2020 and 2021, respectively; L'Oreal's will be 3.45% and 3.19%, respectively. The core ingredient of the star product, "small brown bottle" and "Bifidus yeast," is purchased from outside.

Estee Lauder from "Asia Pacific support group growth" to "double-digit decline in Asia Pacific" but a year. But thanks to the long-term growth of Asia-Pacific revenue, it is still an enormous ship even if it lags behind this round of technological transformation. But where the future is heading, we have to wait for the answer of time.