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Why did Est é e Lauder raise prices collectively for the second time this year for international brands, starting from July 1st

王俊杰2017
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Est é e Lauder has once again reported a price increase.
The reporter received confirmation today from Est é e Lauder Group that as part of the global price adjustment plan, starting from July 1, 2024, Est é e Lauder Group will raise the suggested retail prices of some of its brand products in China.
Est é e Lauder stated that the product pricing adjustment takes into account various factors, including raw material prices, production and operation costs, and transportation and warehousing costs. The group will regularly evaluate the suggested retail prices of products and make necessary adjustments to the suggested retail prices of some products in a timely manner.
This is the second price increase by Est é e Lauder Group this year. At the beginning of 2024, some of Est é e Lauder's products experienced a price increase. At that time, the reporter inquired about several brand counters as consumers, such as Est é e Lauder's small brown bottle eye cream, which was priced at 565 yuan, compared to 550 yuan before adjustment; The price of another 75ML collagen cream was 1080 yuan before the adjustment and 1130 yuan after the adjustment, but the price of platinum face cream did not rise.
Some consumers reported to the reporter that some high-end brands under Estee Lauder had increased "surprisingly". For example, a Tom Ford perfume he used previously was 1350 yuan when he bought it last year, and it has risen to 1950 yuan this year.
The reporter learned from industry insiders that international brand price adjustments have become a routine operation in the past few years, and brands will undergo a wave of price adjustments in January and February. In addition to Est é e Lauder, brands under the L'Oreal Group such as Coen's, YSL Saint Laurent, and Armani also raised prices for some of their products at the beginning of this year.
"The collective price increase of international brands is mainly due to the pressure of performance growth in the Chinese market, in addition to objective reasons such as raw material price increases. After the total sales volume cannot achieve growth, sales can be achieved through price increases." The founder of Yimei Digital Supply Chain Platform and daily chemical expert Baiyun Hu told reporters that price increases can be understood as a response to changes in the Chinese cosmetics market, and this has been proven to be an effective strategy. As Chinese domestic brands become increasingly expensive (high-end) in product structure, international brands must continue to widen the "value distance" with domestic brands by raising prices, thereby maintaining the value image of international brands at the consumer user level.
Est é e Lauder Group's Q2 2024 financial report (September 1-December 31, 2023) shows a 7% decrease in net sales and an 18% decrease in net profit. To this end, Est é e Lauder Group has begun implementing a profit recovery plan and will launch a large-scale restructuring plan during the third quarter, mainly to adjust business scale, including reallocating resources to businesses and brands that can bring growth. In addition, it plans to adjust some related positions globally, with a reduction of about 3 to 5% in positions.
These measures currently seem to be quite effective. The group recently released its third quarter financial report, which showed that in the three months ended March 31, 2024, the group's revenue has returned to positive growth, with the Chinese market, which has been dragging the group down for two consecutive quarters, also returning to low single digit growth. Est é e Lauder expects the group's organic net sales to recover double-digit growth in the second half of the 2024 fiscal year.
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