JOHANNESBURG (Reuters) - Estee Lauder (EL.N) plans to expand its presence in sub-Saharan Africa by rolling out its $1 billion brands, Clinique and MAC, to tap into strong demand for luxury cosmetics among the region’s middle class, a company executive said on Wednesday.
The high-end cosmetics company will introduce Clinique, its second biggest brand with sales over $1 billion, in Nigeria this year and in Mozambique in the near future, Sue Fox, Estee Lauder’s managing director for sub-Saharan Africa, told Reuters in an interview.
It launched MAC makeup in Nigeria’s largest city Lagos in February after being “inundated” with requests and will be opening another store there within weeks, Fox said.
“There’s massive interest from the consumers there in international brands,” she said. “We’re very excited about the potential of MAC in Nigeria. That’s led us to pursue a strategy with MAC that will ensure that we’re able to bring the brand to consumers in other markets.”
The company has earmarked a second new market for MAC, its third biggest brand, this year and another two or three in 2014, adding to new partner stores in Botswana and Zambia.
It is also about to enter Cote d‘Ivoire for the first time with fragrances, currently its biggest category in Africa. Estee Lauder’s partners in designer fragrances include Tom Ford, Michael Kors Holdings Ltd (KORS.N) and Coach Inc COH.N.
Fox said Estee Lauder views sub-Saharan Africa as “a long-term build,” citing its youthful population, brisk economic growth and urbanization. The region, with the exception of South Africa, is its newest market.
“The potential of Africa, we believe, is extremely positive and we wouldn’t be entering unless we believe that there was long term sustainable growth,” she said.
“Our target consumer is the emerging middle class, the established middle class and that affluent African consumer who’s probably extremely well traveled and very brand savvy.”
However, the main hurdle to the company’s growth in Africa is the lack of retail infrastructure outside South Africa.
“We would probably be going a lot faster if there was the availability of retail space,” Fox said. “The concept of department stores doesn’t really exist outside of South Africa. I think there are great opportunities for retailers and for mall developers in sub-Saharan Africa. Brands want to be there.”
Estee Lauder is focusing on cities with the biggest growth potential, said Fox, and has identified key locations such as Lagos, Abuja and Port Harcourt in Nigeria, as well as the capitals of Ghana, Kenya, Tanzania, Mozambique and Angola.
Reporting by Tosin Sulaiman; Editing by David Evans