It’s a strategy the company turned into a mantra: “Launch at the top, and stay at the top,” Lauder writes.
“If you launch at the top of the market, you have two ways to go: up or down,” he continues. “If you launch into the heart of the market, there’s always someone who will sell a similar product cheaper than you, and you have no way to go but down in what becomes a race to the bottom.”
The General Motors of Cosmetics
Lauder officially joined the company in 1958 after attending the Wharton School, followed by a stint in the Navy, and was named president in 1972. (His mother kept the title of chief executive officer.)
While his father managed operations and his mother served as the face of the company, Lauder began to map out a business plan that mirrored what was then the largest company in the world. “My dream was to make Estée Lauder the General Motors of the beauty business,” he writes, “with multiple brands, multiple product lines, and multinational distribution.”
He conceived and launched Clinique in 1968, a skin-care line that capitalized on the era’s nascent appreciation for “hypoallergenic” skin care and beauty “regimens,” rather than “products.”
“The Estée Lauder brand had an aura of glamour; it embodied aspiration,” Lauder writes. “Clinique was more democratic; it was less about aspiration and more about everyday pragmatism.”
Several more brands followed, including Prescriptives (1979) and Origins (1990). Starting in the mid 1990s, Lauder began to acquire outside brands, including Mac Cosmetics, Bobbi Brown, Aveda, and La Mer.
The strategy paid off.
In 1946, the company’s first official year in business, annual revenue stood at $50,000. By 1960, annual sales were “just a shade over $1.75 million,” Lauder writes. By 1970, the figure hit $50 million. By 1975, annual sales surpassed $200 million, and in 1986 topped $1 billion. By the mid-1990s they’d doubled, Lauder writes, to $2 billion; by the late 1990s they’d doubled again, to more than $4 billion.
Today, annual sales are roughly $14.3 billion.