Estée Lauder's High-End Fragrance Brands Enter the Chinese Market
- Chaileedo Press
- May 31, 2023
- 4 min read
Le Labo previously had two stores in Hong Kong and the upcoming store in Shanghai's Xintiandi will be its first store in mainland China.
On March 30th, Le Labo, a niche fragrance brand under the Estée Lauder Group, announced the upcoming opening of its first store in mainland China with the message "久闻，不如见面" (I've heard a lot about it, let's meet). Industry insiders speculated that the store would open in the first half of 2023, and now it has been confirmed that the store is awaiting local fire department approval and is expected to meet Chinese consumers offline on June 1st.
Founded in downtown New York in 2006 by Eddie Roschi and Fabrice Penot, Le Labo was acquired by Estée Lauder in 2014. The brand has attracted extensive attention from Chinese consumers, as evidenced by its 28,000 followers and 23,000 likes on the Chinese social media platform Xiaohongshu as of today(May 31st, 2023).
(credit: LE LABO account on Xiaohongshu)
Currently, some consumers are sharing on Xiaohongshu that "the pricing in China is very reasonable, similar to that of abroad when considering exchange rates." In his article, they introduced the prices as follows: 2380 yuan ($334.86) for 100ml, 1680 yuan ($236.37) for 50ml, and 780 yuan ($109.74) for 15ml.
(Chinese consumer’s post on Xiaohongshu )
The first store in the Chinese Mainland
Previously, Le Labo had two stores in Hong Kong. The upcoming Le Labo store in Shanghai's Xintiandi will be the brand's first store in mainland China.
(LE LABO's storefront)
On the ground floor of the store, 17 of the brand's 19 iconic fragrances, body, hair and skincare products, as well as its best-selling candles, are on display and for sale.
(LE LABO's ground floor)
On the second floor, there are display cabinets and a lounge area. The brand has recreated the perfumer's workbench, displaying fragrant oils with ingredient labels and perfumery tools to recreate the perfumer's workplace.
(LE LABO's perfumery corner on the second floor)
It is worth mentioning that this is also the second Le Labo store in the world to have a cafe. The cafe on the second floor offers vegan coffee and baked goods. The lounge area also features books on perfume, handmade creations, and lifestyle topics.
Unfortunately, the specialty of the Le Labo store is the fragrance-making workshop, where perfumers can handcraft fragrances on site, allowing customers to see the process of fresh fragrance blending. However, due to Chinese cosmetics regulations, on-site fragrance blending cannot be demonstrated at the Shanghai store at this time.
Fragrance is Estée Lauder's Cash Cow
When acquiring Le Labo, Estée Lauder stated that the brand offers consumers exceptional service, personalized products, and uniqueness, which have earned it a loyal following through high-quality products and unique retail experiences.
“Le Labo is the perfect complement to our portfolio of prestige beauty brands,” said Fabrizio Freda, President and Chief Executive Officer of The Estée Lauder Companies Inc.
In its analysis of Estée Lauder's financial report, CHAILEEDO found that in the past fiscal year of 2022, Estée Lauder's fragrance business achieved sales of $2.508 billion, a year-on-year increase of 30%, and the fastest growth rate among all business segments. This was mainly due to the impressive performance of Jo Malone London, Tom Ford Beauty, Le Labo, and Kilian Paris, with Le Labo achieving double-digit growth in sales.
(Credit: Estee Lauder Financial Report 2022)
According to the latest financial report for the fiscal year 2022, the group's fragrance business recorded a net revenue of $775 million for the first three months ending December 31, 2022. Driven by the three major brands Estée Lauder, Le Labo, and Tom Ford Beauty, comparable revenue growth reached 12%, and the fragrance business grew in all regions around the world.
“The introduction of Le Labo, a well-known perfume brand, will further enrich and strengthen the brand matrix of Le Labo in China,” said Jiayu Fan, president and chief executive officer of Le Labo China. ”We are confident that the brand will become an engine of growth for Estée Lauder Cos. in the perfume sector and for the overall business.”
Beauty Giants Swarm into the Chinese Fragrance Market
The popularity of the Chinese fragrance market continues to rise. According to CHAILEEDO DATA, the market size of the Chinese fragrance market in 2022 was RMB 16.1 billion (USD 2.265 billion), with a year-on-year growth rate of 20.15%.
A report titled "2022-2023 China Olfactory Economy Development Trends and Business Opportunities" released by iMedia Research shows that compared to the slow growth of the global perfume market, the domestic perfume market continues to grow significantly. It is expected that the compound annual growth rate of the Chinese perfume market will remain at around 22.3% in the next five years, and the market size is expected to reach 30 billion yuan ($4.2209 billion) by 2025.
Among them, high-end unisex fragrances have become the fastest-growing subcategory, increasingly sought after by consumers.
Major beauty conglomerates, including Estée Lauder, have introduced new brands to China. In 2020, By Kilian and Editions de Parfums Frédéric Malle, both owned by Estée Lauder, entered the Chinese market and opened their first store at Shanghai's IFC Lujiazui.
In 2021, Shiseido Group's Serge Lutens entered China. The same year, L'Oreal's PRADA fragrance and beauty also opened its first store in China. In 2022, Maison Francis Kurkdjian, a high-end fragrance brand owned by LVMH, entered the Chinese market.
In addition, international high-end niche brands are also optimistic about the Chinese market. On May 16th, 2023, Bon Parfumeur, a Paris-based brand, opened its first offline flagship store in China, located next to Le Labo's chosen location in the trendy Xintiandi area of Shanghai.
As a new growth driver for Estée Lauder, Le Labo has become a pioneer for Estée Lauder to further explore the Chinese market. In its high-growth stage, Le Labo will also bring new possibilities for Estée Lauder's layout in the Chinese fragrance market.
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