Who Was Estée Lauder?

Estée Lauder founded a billion-dollar cosmetics, skin care, and perfume empire

Estée Lauder (1908-2004) was an American entrepreneur and co-creator of a cosmetics corporate empire, Estée Lauder Companies (EL). Now in its ninth decade, the company that bears her name is a major manufacturer and marketer of quality skin care, makeup, fragrance, and hair care products. Its more than 25 brands are sold in approximately 150 countries, booking annual revenues of more than $17 billion, and it employs in excess of 60,000 people.

In building her business, Estée Lauder pioneered not only a variety of now-familiar personal-care products but also a series of practices that have become standard in the beauty field. She “defined the development of the American cosmetics industry,” fashion trade publication WWD declared in its obituary of her.

Key Takeaways

  • Estée Lauder was an American entrepreneur and founder of the Estée Lauder Companies, one of the largest players in the beauty business.
  • Lauder started the company in 1946 with her husband and a quartet of face creams; it began to take off in the early 1950s with the introduction of a bath oil that was also a perfume.
  • Her company’s expansion was in large part due to its launching or acquiring new brands to lure different consumers but keeping them as distinct entities.
  • Lauder pioneered several practices that are now industry standards, including gifts with purchase, beauty contracts, and designer licensing deals.
  • When she died in 2004, Lauder was eulogized as the last great independent titan of her field, one who fundamentally shaped the luxury cosmetics industry.

Estée Lauder

Investopedia / Lara Antal

Early Life and Education

Josephine Esther Mentzer was born and raised in a working-class neighborhood in Queens, New York City. Her mother and father were Jewish immigrants from Hungary and Czechoslavakia respectively. Esther—who commonly went by the nickname Esty, Frenchified to Estée a decade later—attended Newtown High School in Queens and graduated in 1927. As a teenager, she began working with her chemist uncle, who ran a small business concocting facial creams, perfumes, and other skin and beauty products (literally in the kitchen sink at first, later in a lab).

In 1930, Estée married Joseph Lauter (later changed to Lauder), after which she continued to promote and sell her uncle’s lotions. Renaming and repackaging her quartet of products, along with homemade makeup, she began demonstrating them in beauty salons, trying them out on women as they sat getting their hair done. As she put it, while under the dryer, they “had nothing else to do.” Delighted with her new look, a woman would usually buy something.

Estée divorced Joseph in 1939, but the couple remarried in 1942 after she had a change of heart. By 1944, the Lauders were running the beauty concession stands at several salons throughout Manhattan and selling products to out-of-town salons through jobbers. In 1946, they launched Estée Lauder Cosmetics as an official company. The plan was that Estée would lead product development, sales, and marketing, while Joseph managed finance and operations.

The Company’s First Years

The young firm’s first big break came about a year later: The swellegant department store Saks Fifth Avenue placed an order for $800 worth of lotions, creams, and cosmetics—the equivalent of $10,000 today.

After that, the Lauders closed the salon concession stands and began to concentrate on upscale department stores for distribution. Estée herself would travel to each location to train the store’s sales associates, set up the counters and merchandise displays, do press interviews, and meet customers. She believed strongly in a personal touch (literally—applying lotions and lipsticks to faces) and in word-of-mouth marketing. Her mantra was, “Telephone, telegraph, tell a woman."

Estée also provided additional products when a customer bought something and generous samples when they didn’t, practices that dated back to the beauty salon days. “I just knew…a gift with a purchase was very appealing,” she wrote in her autobiography, Estée: A Success Story. Such promotional tools also compensated for the fact that the company, which grossed $50,000 in its first year, wasn’t able to afford much advertising.

The gift-with-purchase strategy not only became an Estée Lauder trademark but also grew to become standard practice in the cosmetic industry and is still done today, contributing as much as 30% of some companies' annual sales volumes.

In 1953, Estée Lauder Cosmetics expanded into fragrance, introducing Youth-Dew, which was marketed as a bath oil that doubled as a perfume, encouraging women to use it more lavishly. The first of many scents the company would develop, it was a huge hit, boosting corporate sales to $5,000 a week. By the late 1950s, the company was grossing about $800,000 a year. Youth-Dew’s success not only catapulted sales; it also cemented Estée Lauder as a major force to be reckoned with in the beauty industry.

Notable Accomplishments

In the 1960s, expansion became the name of the Estée Lauder game. The company began branching out in several ways. One was geographic: the Estée Lauder line appeared in department stores abroad, beginning with London’s Harrods in 1960. It expanded its manufacturing facilities, creating three large production sites throughout the decade.

Further expansion had to do with the audience. Sensing a large, untapped market among men, Estée Lauder began developing products for them. First was the fragrance Aramis in 1963. In the next couple of decades, other male-oriented efforts included the fragrances Lauder for Men and Ermenegildo Zegna Parfums. The company also developed a high-end skin care line for men called LAB SERIES, which currently sells four products "every minute somewhere in the world."

Able to afford advertising by 1962, Estée Lauder Cosmetics also pioneered the idea of featuring the same model in all of its campaigns—“the Estée Lauder woman.” In 1970, Karen Graham was officially designated as such when she became the first model to sign an exclusive “beauty contract” with the company.

Growing the Portfolio

Through these and other initiatives, Estée Lauder Cosmetics started transforming from a company into an empire in the 1970s. Like an empire, it consisted of distinct parts and products that represented a shrewd mix of science and fashion, movie-star glamour and medical innovation, and designer status and all-natural ingredients. The company was able to project many images via its variety of brands. Unlike other cosmetic giants, which pushed a single, proprietary line of products, Estée Lauder Cosmetics (and its chief executive) reveled in diversity and separate lines. “The best way of competing was with two companies, not two products under a parent name,” Estée’s memoir explains.

From the 1960s through the 1980s the company tended to create new brands, which included Aramis, Clinique, and Prescriptives. Launched in 1990, Origins offered another innovative but soon to become standard practice: Along with being sold in department stores, it had its own freestanding boutiques, which added to the line’s “organic,” artisanal aura.

Later, in the mid-1990s and 2000s, the company shifted into acquisitions: Bobbi Brown, Jo Malone London, MAC, Bumble and bumble (hair care), and Smashbox were some of the hot brands it bought. It also made licensing deals with the likes of Michael Kors, Donna Karan, Tom Ford, and Tommy Hilfiger, cashing in on the craze for fashion-designer–created cosmetics and scents.

Many consumers may not realize that their favorite exclusive or artisanal skin care line, such as Dr. Jart+ or Too Faced, is actually owned by cosmetics corporate giant Estée Lauder.

Corporate Changes

Leonard Lauder, Estée’s oldest son, became president of the company in 1972. Ascending to the title of chair of the board, Estée began reducing her role in day-to-day operations and decisions. She very much remained the public face of the company, though, making appearances and participating in product launches. For years, Estée Lauder’s ads for a new product carried the tagline, “And only one woman could have created it,” so it was strategic to keep the company associated with Estée and her personal touch, even as it expanded and diversified. Plus, in an era when the women’s liberation movement was in full swing, flaunting a female founder didn’t hurt.

Leonard became chief executive officer (CEO) in 1982. Though her son still often consulted her, Estée further reduced her role—“more queen mother than queen,” as biographer Lee Israel put it in Estée: Beyond the Magic. Still, Estée remained a highly active presence throughout the 80s.

In 1989, the company achieved $1 billion in sales. On Nov. 17, 1995, it went public, holding its initial public offering (IPO) on the New York Stock Exchange as Estée Lauder Companies Inc. Debuting at $26.00 a share ($6.50 on a post-split basis), the offering raised more than $450 million. Estée retired shortly afterward with the honorary title of founding chairwoman. When she died in 2004, Estée Lauder Companies was posting around $5 billion in annual revenues.

$2.9 billion

The estimated worth of Estée Lauder Companies when it went public on the New York Stock Exchange on Nov. 17, 1995—the equivalent of $5.29 billion in today’s dollars.

Wealth and Philanthropy

During her lifetime, Estée became quite wealthy. In the late 1980s, she possessed personal assets worth $233 million. The Lauder family—which currently owns Class A and Class B shares of Estée Lauder Companies’ common stock and 85% of the voting power—has a personal net worth of $40 billion in 2020. Though Estée reveled in the good life—owning and decorating several homes; socializing with celebrities, political leaders, and royals, and traveling and entertaining constantly (she was renowned for lavish parties)—she, the family, and the company contributed substantially to various charitable, civic, and cultural causes.

One of the first actions by the Estée Lauder Companies Charitable Foundation, set up in the 1960s, was to create playgrounds in New York’s Central Park. It has also made contributions to the Whitney Museum of American Art and the Museum of Modern Art. After Estée’s husband died in 1983, her two sons established the Joseph H. Lauder Institute of Management & International Studies at the University of Pennsylvania.

Perhaps the company’s best-known initiative is its Breast Cancer Campaign, founded in 1992 (and the creator of the breast cancer awareness movement's widely recognized pink ribbon). Through its Breast Cancer Research Foundation, it has funded more than $108 million for global research, education, and medical services to diagnose, treat, and eradicate breast cancer.

Honors and Awards

Estée received dozens of accolades and awards throughout her life. According to her autobiography, the ones she most cherished included:

  • The Insignia of Chevalier of the Legion of Honor from the French government (1978) for contributions to restoring the Palace of Versailles
  • The Gold Medal of the City of Paris (1979)
  • The Crystal Apple from the Association for a Better New York (1977)

In addition, Harper’s Bazaar named her one of its 100 American Women of Accomplishment in 1967. In 1989, The Wall Street Journal added her to its Gallery of the Greatest: People Who Influenced Our Daily Business list of the century’s biggest business influencers.

Personal Life

Though Estée was firmly at the helm in the early days, she saw her company as a family business. Her husband, Joseph, worked alongside her, running the financial and manufacturing aspects, while she handled creative and marketing affairs. Her eldest son, Leonard, helped out as a teenager, officially joining the company in 1958. He eventually took it over, becoming CEO in 1982 and chairman in 1995, when it went public; he became chairman emeritus in 2009. His wife, Evelyn, and younger brother, Ronald, also played significant roles in the company. As of 2022, Estée’s grandson William (Leonard’s son) is executive chairman of Estée Lauder Companies, and other grandchildren hold significant positions as well.

Estée was justifiably proud of her company being a third-generation enterprise, attributing much of its success to that. When looking back on competitors such as Max Factor, Revlon, and Elizabeth Arden, whose family members failed to step up after the founders passed away, she commented that “the personal love and involvement are gone” from them. “They’re companies now, not a family’s heart and soul,” she said. “It won't happen to Estée Lauder.”

Does the Lauder Family Still Own Estée Lauder?

Although Estée Lauder Companies has been a public company since 1995, the Lauder family still owns a considerable chunk of it. Their shares of Class A and Class B common stock comprise approximately 85% of the voting power.

Does Clinique Own Estée Lauder?

No. In fact, it’s the other way around: Estée Lauder Companies owns Clinique. It founded the hypoallergenic line, developed with a dermatologist, in 1968.

How Many Brands Does Estée Lauder Have?

As of 2022, Estée Lauder Companies owns more than 25 brands, all relating to skin and hair care, fragrance, and cosmetics.

The Bottom Line

Estée Lauder took a quartet of face creams and grew a skin care and beauty empire. A business that in its first year grossed $50,000 was booking $5 billion when she died, nearly 60 years later. And it still thrives today, unlike many of its cosmetic competitors. Corporate rivals such as Helena Rubenstein, Elizabeth Arden, Max Factor, and Revlon were also the brainchildren of charismatic individuals; all are now gone or have been acquired.

Timing had something to do with her success—the post–World War II prosperity and return to glamour that enabled and encouraged women’s discretionary spending on skin care and makeup certainly helped. Still, Estée also had a knack for networking, a keen marketing sense, a ferocious work ethic, and a never-ending inventory of ideas. Several techniques she pioneered or popularized have become widely adopted in the cosmetics field today, including gifts with purchase, beauty contracts, age and gender targeting, stand-alone stores, and designer licensing deals.

She was also able to keep the Estée Lauder Company growing by continuously adding new lines and products, either by creating them or acquiring them. By making them stand-alone brands (or, in the case of acquisitions, letting them stay that way), she was able to appeal to a variety of consumers and capture different markets without muddying any messages or images.

Admittedly, much of the company’s expansion occurred under the management of Estée’s children, particularly Leonard. Still, that is a result of her ability to instill a love of the family business in subsequent generations and know when to hand over the reins. Although an outsider, Fabrizio Freda, is currently president and CEO of Estée Lauder Companies, other Lauders continue to play active roles, including Estée’s grandchildren.

Estée Lauder was “the last great independent titan of the cosmetics industry,” as The New York Times characterized her. Small wonder, then, that upon her death, WWD announced, “An epoch has ended.” Its obituary quoted Jack Wiswall, president of the Designer Fragrances Division at rival L'Oréal as saying, “Estée changed the whole landscape. She put the bar so high that everybody else had to play catch-up.”

Article Sources
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