Setting beautiful trends

The Estée Lauder Companies expands manufacturing to Japan

JANUARY 2022 Investing in Japan / Text by Toby Waters / Photo by Michael Holmes

Japan cares deeply about beauty. According to the Ministry of Economy, Trade and Industry, the value of the nation’s cosmetics and personal care market was $35 billion in 2019 — the third largest in the world, after the US and China. So, the multinational prestige beauty firm, The Estée Lauder Companies — which celebrated its 75th anniversary last year — has learned to listen carefully to consumers here to help set trends.

“Japan is an incubator for excellence in beauty,” says Matthew Growdon, president and general manager of The Estée Lauder Companies Japan. “It influences beauty trends not only across Asia but also globally. Japanese consumers are very discerning, so we’ve spent a lot of time working with our Japanese partners to produce relevant products for them and to really understand what they would like in terms of makeup, skincare, and fragrances.”

Among The Estée Lauder Companies’ 25 brands are Aveda, Bobbi Brown, and La Mer. Some of the firm’s bestselling products in the skincare segment — which is the biggest category for the firm in Japan — include Clinique’s Clarifying Lotion and the Estée Lauder brand’s Advanced Night Repair.

“Our MAC brand has lipstick and foundation products that are top sellers in the Japan market,” Growdon says. “And we have a number of successful fragrance brands, most notably Jo Malone London and the up-and-coming Le Labo. We’ve seen the fragrance category go from a single-digit share of the market to the mid-teens in just two years.”

After more than 50 years in Japan, The Estée Lauder Companies has developed a loyal customer base. Now, the firm is taking its business to the next level with a series of significant investments in R&D, innovation, manufacturing, and partnerships that will help ensure it continues to set beauty trends across Asia in the years to come.

BEAUTIFUL INNOVATIONS

In July 2020, The Estée Lauder Companies opened its newest Innovation Hub, in Tokyo. This new hub will focus on developing products for the Japanese market, specifically in the area of skincare.

“It’s a way for us to deepen our understanding of Japanese consumers, and it’s also further evidence of our commitment to staying highly relevant to Asia,” says Growdon. “It will help us with everything from the textures, formulas, and scents that consumers here are looking for, right through to how we tailor our marketing efforts to ensure that Japanese consumers understand why our products meet their specific needs.”

The Innovation Hub also finds new partners, new ingredients, and new formulas that are sourced from around Japan.

“Having a cross-functional, Japan-based team is a competitive advantage, allowing us to work with local partners far more quickly,” says Jack Basaly, head of manufacturing for the Asia-Pacific region. “This team helps us develop the right products, formulas, and marketing approaches for our consumers.”

CUTTING-EDGE BEAUTY

A major investment The Estée Lauder Companies has recently made in Japan is to build its first manufacturing facility in the APAC region. Construction on the Sakura plant in Ibaraki Prefecture began in January of last year and the plant will open later this year.

“We’ve been manufacturing our products in North America and Europe for a long time, and now it’s time to expand our geographical footprint to Asia and be closer to our consumers in this region, where demand is rising,” says Basaly. “This will benefit us in Japan and, at the same time, we will also be able to enhance our efficiency when serving our regional market by exporting these products to the rest of Asia.”

Japan was selected for the project because of its reputation for expertise in cosmetics manufacturing, as well as in automation and robotics.

“With our base in Ibaraki Prefecture, we can leverage all the technology that Japan can integrate into our new plant — with the highest degree of automation, the latest technologies, and enhanced data and analytics capabilities,” notes Basaly. “We anticipate sharing what we learn from this manufacturing facility throughout our global manufacturing network so that we can multiply our successes.”

Growdon adds: “We have designed the factory in a way that focuses on employee experience and, in particular, supports working parents. The office facility includes a nursery for our working parents — a feature that is still relatively uncommon in Japan and helps address one of the key barriers to attracting the mix of employees we want to have.”

EQUALLY BEAUTIFUL

As a firm that was founded by a woman and that creates products predominantly for women, gender equality is a core value at The Estée Lauder Companies. Management across the company is active in supporting female employees, bringing more women into leadership roles, providing an environment where they can build productive careers, and combatting age discrimination.

“The empowerment of women in the workplace is a keystone of how we operate as a company,” says Growdon. “In Japan, 50% of our managers are women, which is something we are looking to increase, and 70% of our overall workforce is women. I believe those are strong numbers for a firm here.”

Another differentiator is that The Estée Lauder Companies is a meritocracy: the firm rewards strong performance instead of seniority. This means that younger employees, including many young female employees, are given equal opportunities to move into management roles, something that should be a compelling proposition to the best young talent in Japan.

“We believe our workforce should reflect our consumers — and many of our customers are young Millennials,” states Growdon. “It is imperative that we have people in decision-making positions that understand how these consumers think so we can make the right decisions in terms of brand marketing.”

As The Estée Lauder Companies Japan develops and empowers its female talent, Growdon believes it is making an important contribution to the communities where it operates throughout Japan.

“We want to see this value of women’s empowerment reflected more broadly in Japan,” says Growdon. “Bringing more women into the workplace is recognised as a key issue for Japanese society, so we hope that, by empowering women within our sphere of influence, we can help cultivate broader long-term benefits for the future of Japan.”

The Estée Lauder Companies is setting some beautiful trends. •