Kline Analysts Say Clinique-Allergan Deal Sets Beauty Industry Precedent in Channel Diversification

- Smart Strategy Capitalizes on Growing Trend in Professional Skin Care -

Jan 28, 2008, 00:00 ET from Kline

    LITTLE FALLS, N.J., Jan. 28 /PRNewswire/ -- Beauty industry analysts at
 worldwide consulting and research firm Kline & Company are calling
 Thursday's announcement by Estee Lauder to marry its powerhouse Clinique
 brand with specialty pharmaceutical company Allergan a shrewd
 diversification strategy by the cosmetics maker. The strategy will allow
 Estee Lauder to gain a foothold in the booming medical distribution
 channel. It will also position the Clinique brand for growth through
 cross-channel marketing and help balance the overall lackluster performance
 in the prestige beauty market, according to Kline.
     "Estee Lauder has always been innovative and aware of the value in
 diversifying their channel mix," says Carrie Mellage, director of the
 Consumer Products practice for Kline's market research group. "With low,
 single-digit growth in the prestige skin care market, the Clinique brand
 has suffered somewhat, along with the rest of the market. Meanwhile, the
 medical channel is growing fast, posting a 16.5% jump in 2007. It's no
 surprise that Estee Lauder would see the opportunities here and tap into
 this outlet."
     Estee Lauder is set to begin manufacturing and distribution of its new
 Clinique-branded line of skin care products, to be marketed by Allergan and
 sold only through doctors' offices, in the fall. The new line will be
 designed to complement in-office procedures, a product strategy that has
 surged in popularity over the last year, according to Kline's research. The
 deal will also bolster Allergan's position in the medical channel, where it
 already has a solid presence with its Botox, M.D. Forte, and Prevage
 brands. There will likely be other cross-channel benefits for the Clinique
 brand as well.
     "The medical channel is actually a drop in the bucket compared to the
 overall Clinique reach, so this move is not likely a purely sales-driven
 strategy," says Karen Doskow, project manager for Kline's Consumer Products
 practice. "It's also about brand extension -- a marketing play to extend
 the Clinique brand, similar to the way Dove, Aveeno, and Neutrogena have
 used doctors as a marketing channel by asking them to recommend their
 products to patients. It builds credibility, and it's an opportunity to
 grow outreach efforts across all channels."
     Doskow also points out that one reason for the unprecedented growth in
 the medical channel is the surge in the number of physicians dispensing
 skin care products to their patients. According to data from Kline's
 in-depth report Professional Skin Care 2007, due to be published later this
 month, dermatologists and plastic surgeons are now being joined by a new
 category of "other" physicians, which includes general practitioners,
 gynecologists and obstetricians, and even dentists.
     "We've seen a 36% jump in the number of 'other' medical specialties now
 dispensing skin care products to their patients," Doskow says.
 "Dermatologists and plastic surgeons are losing their market share to other
 specialists who are now treating patients for conditions like adult acne
 and age spots."
     "This all adds up to a potentially greater market share for the
 Clinique brand and underscores the value of diversification across multiple
 channels in order to achieve optimum market reach."
     For more information about Professional Skin Care 2007, go to
     About Kline
     Kline is a worldwide consulting and research firm dedicated to
 providing the kind of insight and knowledge that helps companies find a
 clear path to success. The firm has served the management consulting and
 market research needs of organizations in the chemicals, materials, energy,
 life sciences, and consumer products industries for nearly 50 years. For
 more information, visit www.KlineGroup.com.
For more information, contact: Carrie Mellage Director, Consumer Products Industry Practice +1-973-435-3412 carrie_mellage@klinegroup.com