Lauder Takes Stake in Forest Essentials

INDIA: The Estée Lauder Companies Inc. has purchased a minority stake in Forest Essentials, a privately held Indian company that manufactures, markets and sells beauty products based on Ayurvedic formulations. Terms of the agreement were not disclosed.

Forest Essentials, which was founded in 2000 by Mira Kulkarni, uses pure essential oils and natural plant extracts in its range of skin, body and hair care products. Its portfolio consists of more than 100 SKUs sold in seven freestanding stores and in high-end hotels and spas across India. According to Kline & Company, Forest Essentials holds an 18.4% share in the burgeoning Indian spa market, which is expected to grow by more than 13% annually through 2012.

“Forest Essentials gives us a stronger presence in the rapidly expanding prestige beauty business in India,” said William P. Lauder, chief executive officer of The Estée Lauder Companies. “We have seen how more and more consumers around the world are interested in beauty products with a natural heritage. This agreement will help us expand our growing expertise and competitiveness in the natural products arena while Forest Essentials will benefit from our long history of successful brand management and global expansion.”

Lauder began selling its products in India in mid 2005 with the opening of a freestanding MAC store in Mumbai. Today, it offers Indian consumers six brands—MAC, Tommy Hilfiger, Donna Karan, Aramis, Clinique and most recently, Estée Lauder.

According to Kline & Company, the acquisition not only gives Lauder a stake in the country’s leading spa brand, but may also pave the way for Forest Essentials to expand globally. In addition, Kline’s consultants predict the move could spur future expansion in Lauder’s specialty retail strategy to capture a bigger piece of the $6.3 billion personal care market in India.

“Estée Lauder has not previously had a strong brand presence in the naturals market here,” said Ali Khan, director of Kline’s India office. “This move allows them to test the waters for expansion by partnering with a local company to gain a bigger presence and to experiment in the Ayurvedic naturals market, which is very popular among both natives and visitors to luxury spas.”