Why Did Estee Lauder Decide To Invest In The Multi-Brand Skincare Brand Deciem?

+5.54%
Upside
154
Market
163
Trefis
EL: Estee Lauder logo
EL
Estee Lauder

Shortly after announcing one of its strongest quarters in Q3 FY 2017, Estee Lauder has declared its first strategic investment in another entity for this year. The company has announced that it will invest in Deciem, a company which like Estee Lauder’s latest acquisitions, focuses mostly on millennial beauty users and diverse skin tones. After making a series of investments in the makeup segment, it was time for Estee Lauder to also boost its skincare segment’s appeal. Deciem’s unique products are massively popular and further expanding its global presence can help Estee Lauder capitalize on this popularity and seize a bigger chunk of the global skincare market.

Why Deciem?

Deciem, founded in 2013 in Toronto, Ontario by Brandon Truaxe, is currently led by Truaxe and Co-CEO Nicola Kilner. It follows a multi-brand strategy and its vertical integration ensures that it manages everything in the supply chain starting from its own laboratory, manufacturing, e-commerce sites, retail stores, and marketing infrastructure. This helps the company to adapt to market cues even faster and create and incubate innovative products and provide unique beauty solutions to its clientele.

Relevant Articles
  1. What’s Next For Estée Lauder Stock After 10% Gains Post Q2 Results?
  2. What’s Next For Estee Lauder Stock After A 19% Fall Yesterday?
  3. Will Estee Lauder Stock Rebound To Its Pre-Inflation Shock Highs?
  4. Cross-Sector Comparison: Is Estee Lauder A Better Pick Over LLY Stock?
  5. What’s Next For Estee Lauder Stock After A 17% Fall In A Month?
  6. Should You Buy Estee Lauder Stock After A 36% Decline Since 2021?

So far, Deciem has launched 10 brands among which The Ordinary is an internationally popular brand of skincare treatment and NIOD is a skincare brand focusing on the root causes of aging. Deciem offers a wide range of products at different price points and sells them through its own multi-brand stores, department stores, e-commerce, TV shopping networks, and select retailers. It is mainly available in the U.S., the U.K., and Canada. The products are a big hit with millennials and the diverse consumers who look for functional products that are formulated based on science.

How Might The Deciem Investment Benefit Estee Lauder?

After its acquisition of Becca and Too Faced in the makeup segment, it was time for Estee Lauder to invest in a skincare company as this segment is the second largest revenue contributor (~38%) after makeup (~40%). Skincare contributes over 45% of our stock price estimate for Estee Lauder with makeup at a little over 40%. Given the importance of this segment in its portfolio, it was logical for Estee Lauder to invest in a skincare brand that also had the same appealing factors like its newly acquired makeup brands, that is, attracting millennials and a diverse consumer base. Estee Lauder can further achieve the goal with Deciem as it expands its global footprint to attract even more customers from across the world.

According to our estimates, Estee Lauder currently enjoys around 7% share of the global makeup market which is expected to grow slightly to 8% by the end of our forecast period. Brands like Deciem might help grow the company’s global skincare market share even further with their unique and diverse range of products, popularity among the younger beauty users, and a strong presence in the digital sales channels.

Editor’s Note: We care deeply about your inputs, and want to ensure our content is increasingly more useful to you. Please let us know what/why you liked or disliked in this article, and importantly, alternative analyses you want to see. Drop us a line at content@trefis.com

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Estee Lauder

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Get Trefis Technology