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CEW Newsmaker Forum with Fabrizio Freda

By: CEW
Posted: February 22, 2010

Fabrizio Freda, president and CEO, The Estée Lauder Companies, Inc., and Carlotta Jacobson, president, CEW, at Newsmaker Forum in New York City.

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“Getting a big organization behind change is a challenge. The alignment is essential; with 29 brands, some very different from one another, it’s been complicated by very separate entities,” he said. Freda noted that he wanted to utilize the best resources for the brands and keep the diversity of the brands in alignment. “The main activity is to align, leverage, scale and differentiate, which is what is happening at this moment. After alignment comes execution, where you invest heavily in the areas where you want to grow.

“By 2020, China will be as [key] as the U.S. market. In addition, 50% of women around the globe are women of color, and we need to invest more in the creativity, the heart of our strengths, to reach those diverse consumers,” noted Freda.

Changes will manifest in a variety of ways, with Freda noting that he wanted to see the company becoming truly global. “You can develop and take the best technology of China and Brazil, for example, and bring it to the rest of the world. This is a big ambition. Most companies are very well anchored to their home markets, but we are hoping to bring the innovation and best creativity and technology to the total company and, ultimately, for the globe,” he said, adding, “In this way, we can be a symbol for the entire industry.”

He noted the diversity of markets around the world, from high-end consumers in the growing Chinese market to the optimistic Turkish market and the diverse Brazilian market, largely centered around mass products. “It’s a big opportunity, and it can only be [met] by creating the right prestige mix, with self-standing stores, and digital media as well,” said Freda.

When asked about changing consumer behavior patterns, Freda said, “I don’t think this is the new normal. It could be for the next year or two. The consumer in North America is much more sensitive to quality and the experience of the product. Today’s women are much tougher in judging value. If coming back means she’s spending more, than I’m all for it, but for the prestige cosmetic market, which sells beautiful products that deliver performance, it also sells customization, education, and a moment of service.” Freda cited MAC stores, where consumers can learn how to apply makeup as an example of the prestige experience. “You get emotion here, I’m not sure you get that in a mass store. We call this ‘high touch’ service, which has a lot of value for women,” he said.

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