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Kline Analysts Say Clinique-Allergan Deal Sets Beauty Industry Precedent in Channel Diversification
Date:1/28/2008

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

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 Dos
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SOURCE Kline
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