Turning the business of beauty into a global culture

Founded by the daughter of east European Jewish immigrants in 1935, Estée Lauder is one of the world’s top five beauty conglomerates, with global sales totalling $9.7 billion last year and 28 brands including Aramis, Aveda, Clinique, Jo Malone, Kate Spade, Missoni, Origins, Donna Karan, Michael Kors, Tommy Hilfiger, Tom Ford Beauty and Coach.

John Demsey joined Estée Lauder in 1991 after earning degrees at Stanford and New York University, and holding executive positions at Revlon, Bloomingdale’s, Macy’s, Benetton and Saks Fifth Avenue. Since 2006, he has been third in command at corporate headquarters on Fifth Avenue.

But Demsey still travels downtown often, to MAC Cosmetics’ spartan, ultra-modern headquarters in Soho. (MAC stands for Make-up Art Cosmetics.) The company is the third largest brand in the Estée Lauder corporation and had more than $1 billion in turnover last year. It remains under his purview and is, he admits, his first love.

Demsey was appointed president of MAC when Estée Lauder completed its purchase of the company in 1998. Under his watch, MAC expanded from 19 to more than 75 countries and territories.

What Demsey calls MAC’s “global palette” includes 1,450 stock-keeping units. “Our foundations go from the bluest, darkest black to the palest porcelain white,” he says.

“We sort the range of products based on geography. If you walk into a store in Beijing or Vietnam, in Scandinavia or Johannesburg, you are going to see a different assortment of MAC products . . . You would see stronger corals in Germany, blue-reds in Nordic markets, vivid purples in Italy, more matt nudes in Brazil.”

MAC’s company handouts refer to it as the “cult make-up authority”. The word “cult” is appropriate, Demsey insists. MAC was founded in Toronto in 1984 by Frank Toskan and Frank Angelo, a make-up artist and a hairdresser. Its products were intended for professional use.

“The original followers of the brand were make-up junkies, musicians, models, fashionistas and a lot of transvestites,” Demsey explains. “Because of the flamboyance that can be accomplished through the high pigmentation and long wear of the products themselves, the brand became incredibly popular in sub-culture groups.”

MAC did not evolve through traditional advertising or mass distribution, Demsey continues. “It was established by word of mouth, built in a viral way. The way people joined up with the brand was cult-like and almost religious in its fervour, so we are considered to be a cult.”

Most of Estée Lauder’s brands target specific age or demographic groups. Not MAC. “The positioning is all ages, all races, all sexes,” says Demsey. “The thing that is unique about the brand is that a quarter of our customers are under age 25, and a quarter are over age 45. You’re as apt to see my 80-year-old mother in a MAC store as you are to see my 18 year-old god-daughter.”

MAC salespeople are required to wear black, a precept followed also by staff at MAC headquarters.

“From the beginning, the company didn’t want people in competition in terms of who could afford to wear what to work,” Demsey explains. “You don’t need a lot of money to put on a black Gap T-shirt and a pair of black jeans. And you can be any size, because everybody looks good in black.”

The MAC Aids Fund will mark World Aids Day tomorrow by raising funds in its stores. That too has become a tradition. The fund was started in 1994, before Estée Lauder purchased the company, and was perpetuated by Demsey, who has served on the boards of at least a half dozen Aids charities.

“I’ve lost a lot of friends in the fashion and beauty business, having worked in it for close to 30 years,” Demsey says. “When I was given the opportunity to run this brand and work on the fund, it was more than just my day job. I’m an all-in kind of person and I wanted to make a difference.”

Emotional

MAC’s original founders and their friends began donating money to organisations serving Aids victims in Toronto, then Los Angeles, San Francisco, New York and Chicago.

“The first donations were an emotional, charitable response to the toll that HIV Aids was taking in the make-up artist and fashion communities,” Demsey explains.

Toskan and Angelo devised a novel way to finance the charity. They included Viva Glam products in the MAC cosmetics line – usually lipsticks distinguishable from other MAC lipsticks only by the red band around the middle of the case. All proceeds from the sale of Viva Glam is donated to Aids treatment and prevention.

The fund has raised $270 million in this way. As Demsey notes, “that’s a helluva lot of lipsticks at $14 each”. For World Aids Day, MAC will match all online sales of Viva Glam products, doubling the contribution of each purchase.

The drag queen RuPaul was the first Viva Glam spokesperson. “For a company that sells 99 per cent of its products to women to have a black man dressed as a woman as its spokesperson says something” about its non-conformist streak, says Demsey. Elton John and Linda Evangelista are among more than a dozen other celebrity advocates enlisted by him.

Demsey insists the Aids fund is good business, because the programme “emanates from the heart and soul of the make-up artists who drive our sales every day”, and because it strengthens what he calls “a familial feel” among MAC workers. “People don’t just come to work for the company,” he says. “They join the company.”

Annual average staff turnover among MAC employees averages between 15 and 20 per cent, he notes, compared to an average of 60 to 100 per cent in the beauty industry at large.

Demsey calls himself a child of the Andy Warhol generation. He believes people look to pop culture for reference points, “whether it be music, celebrity, high arts, low arts, street culture, high fashion, low fashion, trends, youth culture, sub-culture. With the connectivity of online, there is more and more of a mash-up.”

The term “mash-up” comes from contemporary music, where segments from different tracks are inter-cut. “I believe MAC is a mash-up of various cultures, lifestyles and inspiration points,” Demsey says. “It’s globalised culture.”

Demsey has developed his own technique for trend-spotting. When he travels, he always watches the local equivalent of MTV and fashion television. He asks staff for a selection of local and international fashion and celebrity magazines. “I look through them to see if I can spot something going on,” he says.

Then he tells his chauffeur: “ ‘Drive me to where young kids congregate. Show me where the rich people live, and show me what’s alternative.’ As a result of doing that, I get a real fix of what’s going on in a certain marketplace. I’ll start talking to someone and they’ll say, ‘How do you know that?’ ”

Trend-spotting

So what is the zeitgeist of 2012?

“As you start to get older, everything feels retro,” Demsey says. “Now feels very ’70s to me: hard times, dance music, escapist entertainment, fashion fantasy. We are in a social values period again, but there’s probably a lot more hedonism out there.

“The world is balancing between left-wing and right-wing. You’re dealing with a transitional period in society, and you see it in fashion and make-up. Everything goes, and there’s always a generation that never saw it before.

“Those who are 21 or 22, the children of the baby boomers, grew up in the online age. They have tastes, shopping habits and a style very different from their parents, who are more modern than seniors before.”

Although it has been affected by the downturn in department store sales, Estée Lauder is faring better in the recession than some of its competitors, including L’Oréal, the world’s largest beauty conglomerate, and Avon, which sells directly door to door.

Its beauty division grew 6 per cent in the third quarter, ahead of the global cosmetics market, which is expected to expand by about 4 per cent this year.

Demsey attributes the resilience of cosmetics in the crisis compared to apparel to what he calls the democracy of beauty. “The price of entry into make-up is relatively inexpensive, and if you make a mistake, it’s an affordable mistake,” he says.

He claims “bragging rights” as an Irishman because he was born on St Patrick’s Day. “So I feel Irish, with the name Demsey, but there’s no ‘p’. It’s the Jewish version of Dempsey. Family folklore says my grandfather didn’t speak a word of English when he came over from Russia, and they looked at him and said, ‘You look like a Demsey.’ ”

MAC has just opened a new shop on Dublin’s Henry Street, its eighth outlet in Ireland, to appeal to a younger clientele than its flagship counter in Brown Thomas.

“We see our turnover increasing in Ireland,” Demsey says. MAC at Brown Thomas ranked fourth in sales worldwide last year, and the company says MAC is the best-selling cosmetic in every department store where it is traded in Ireland.

The Irish economy “seems to have turned the corner”, he adds.

How can he tell? “Business. Numbers. What I read. The real estate market is starting to rebound. Businesses are starting to create jobs again. There has been a rationalisation of the excesses in the crazy boom period.

“The Irish are travelling again. I don’t think people thought Ireland would feel like it was turning around as quickly as it has.”

CV John Demsey

Name: John Demsey

Age: 56

Position: As group president for the Estée Lauder Companies since 2006, Demsey oversees Estée Lauder, MAC Cosmetics, Tom Ford Beauty, Prescriptives, Bobbi Brown, Jo Malone, La Mer and Smashbox Cosmetics.

He’s a trend-spotter and innovator who keeps his brands in sync with fashion and entertainment.

Family: Divorced with a four-year-old daughter.

Outside interests:Collects fashion and paparazzi photography from the 1960s, 1970s and 1980s. "I'm quite passionate about it. I have about 600 pieces of work in my home."

Something you might expect:"I'm internationally business-minded and conversant in different cultures and business practices around the world. I'm a global businessman."

Something that might surprise:Demsey 's roots lie far from the beauty industry with his family involved in a steel-processing business in Ohio.