Estee Lauder announced earnings Wednesday before the markets opened. The forecast was a continuation of steady growth for the beauty brand.
The company owes its success, in part, to what’s known as the “lipstick effect”: When money is short, consumers treat themselves to cheap luxuries, like lipstick.
“The color cosmetic industry has actually fared better than most during the recession,” says Shannon Romanowski, beauty and personal care analyst at Mintel.
In recent years, Estee Lauder has also profited from consumers returning to slightly higher-end beauty products, like “prestige” make-up brand M.A.C. But the fastest-growing market may surprise you: Brazil. The country has been called “our China” by M.A.C global brand president Karen Buglisi.
M.A.C. is the leading prestige make-up brand in Brazil and several other Latin American countries. That is, in part, a credit to its product line.
“Most brands are targeted to, say, less than 70 percent of the consumer base is white,” says Karen Grant, senior global industry analyst for beauty at NPD. Grant says only half of M.A.C.’s consumer base is white. “It is a really great brand to then leverage abroad.”
The fact that M.A.C. is a prestige brand has also worked to its advantage, even in places where counterfeiting is rampant and cheap.
“In South Africa, there were so many knock-offs that they were like ‘Well, you know, suppose we offer them the real thing,’” says Grant.
M.A.C. opened stores in Lagos, Nigeria this year, and is coming soon to Botswana and Zambia.