ELC’s new, state-of-the-art distribution centre in Switzerland will support the dynamic growth of the company’s TR business, which accounted for 28% of group sales in fiscal 2021.
SWITZERLAND. The Estée Lauder Companies (ELC) today unveiled a state-of-the-art new distribution centre in Galgenen, Switzerland designed to accommodate the anticipated dynamic growth of its key global travel retail business.
Travel retail is one of the US beauty powerhouse’s most important growth channels; a business which reaches over three billion customers annually. The channel contributed 28% of ELC’s sales in fiscal 2021, compared with just 6% in 2004.
ELC said that the new facility will enhance the global supply chain, doubling output capacity while enhancing the flexibility necessary in a high-growth sector.
The Moodie Davitt Report Founder & Chairman Martin Moodie was on location today at Galgenen, 42km outside Zürich, for the unveiling of the facility. The opening ceremony at noon was followed by a tour of the centre. The event was graced by VIP guests, retailers, ELC employees, local government officials, suppliers and international media.
It was hosted by ELC President and Chief Executive Officer Fabrizio Freda and ELC Executive Vice President Global Supply Chain Roberto Canevari. Newly appointed ELC Travel Retail Worldwide Global President Israel Assa was unable to attend but spoke to media representatives online about the critical importance of the new facility. [We will bring you interviews with Assa and Canevari soon].
Speaking on video from New York, ELC Executive Chairman William P. Lauder told guests, “Our company has a long history of success in Switzerland. Forty-five years ago we opened our first manufacturing plant in Lachen. Today we celebrate the steps taken to further our success with maximised output capacity, and the flexibility to adapt to travel retail’s high growth potential.
“Beyond this, I’m incredibly proud of how this centre will advance the sustainability of ELC’s global manufacturing and distribution network through its best-in-class environmental design and renewable energy efforts. Not only are we enhancing our efforts to provide consumers with transformative products and experiences, but we are also contributing to the wellbeing of the planet.
“As we look to the next 45 years and beyond, we look forward to building upon the great travel retail supply chain business in. We have a bright future ahead of us.”
A testament to confidence
Speaking live at the event, Freda said, “It goes without saying that it’s been a challenging two years for all of us all over the world. But the long term outlook for prestige beauty is fantastic. And particularly the travel retail channel remains resilient and continues to drive strong growth for The Estée Lauder Companies. In fact, globally travel retail accounts for nearly a third of our business and we are extremely confident in the channel for the long term.
“The opening of our Galgenen distribution center is a testament to this confidence and uniquely positions us to to ever-changing retail needs in growth scenarios around the world.”
Other key ELC leadership figures were also in attendance. They included Senior Vice President and General Manager Europe, Middle East and Africa (EMEA) Nadine Graf; General Manager Switzerland Maike Kiessling; Senior Vice President Global Supply Chain EMEA and Travel Retail Worldwide Jamal Chamariq; and ELC Vice President, Supply Chain, Travel Retail Worldwide Sascha Trabelsi.
The 300,000 sq ft facility is the extension of ELC’s existing distribution network in Switzerland. The group currently has four distribution centres in the country, which is also home to its EMEA and travel retail supply chain management hub in Wolleau.
Commenting on the milestone in an official statement, Freda said: “Travel retail continues to demonstrate its resilience, driving tremendous growth over the last decade for The Estée Lauder Companies. We remain extremely confident in the channel for the long-term, especially as travel restrictions ease globally and people start travelling again.
“The opening of our new Galgenen distribution centre will enable us to adapt even better to ever-changing retail needs and growth opportunities for the channel and expand upon our existing distribution presence in Switzerland.”
Based on Generation Research figures from 2020, ELC Travel Retail is the market leader in the beauty category across (collectively) skincare, makeup, fragrance and hair care.
Assa, who took the reins at ELC Travel Retail after the retirement of Olivier Bottrie, commented in a statement, “As we mark the 30th anniversary of The Estée Lauder Companies’ travel retail business, we are incredibly proud of our track record of exciting and delighting travellers all over the world with our exclusive products and high-touch experiences for the travel retail industry and having made the channel an integral engine of growth for ELC.
“As we look to the future, this investment here at Galgenen is a testament to our belief in the long-term growth potential of this channel and that by investing in these capabilities and with our retailers, we can capture the next generation of growth in this dynamic, prestige marketplace.”
Assa told The Moodie Davitt Report during an extensive interview on the eve of the opening, “The Galgenen distribution centre is a symbol of our belief in travel retail as an industry and as a channel for The Estée Lauder Companies. And frankly, it positions us super well for the ever-changing needs and demands of consumers going forward.
“It’s incredibly impressive… I mean, it’s an over 300,000sq ft facility so it’s massive. But it’s also flexible, it’s modular. It really means we are able to deliver a best-in-class experience from a supply chain perspective. And when we built it, obviously we built it with sustainability in mind. So that means everything in terms of renewable energy, best-in-class environmental design, being able to reduce energy and reduce water consumption.
“And we’re also hoping by the end of this calendar year to be LEED certified. So that would be a great boon as well. I think given the fact that consumers are travelling again, this couldn’t come at a better time for us in terms of the opening. It really is going to position us to grow along with the growth of the industry. So we’re super excited about it, and we’re really proud of it.
“This opening has big, big meaning, both for the travel retail business overall but also from a global supply chain standpoint,” Canevari told The Moodie Davitt Report. “For travel retail this is essentially doubling our capacity of global fulfilment, which means we have a lot of confidence in the potential commercial growth of the channel. And we need to stay ahead of the growth.
“The other important element is not only the capacity but also the technology that allows us to have flexibility in growing and being very modular in following the demand. In a world of volatility and uncertainty not just having the capacity but also having the opportunity to use that capacity in a flexible way is strategic. And that’s why Galgenen is super important.
“On top of that, there is state of the art technology, which means operational excellence, which means quality, which means speed to market – all attributes of a modern supply chain that are very relevant.
“The role of a good supply chain is to always be a little bit ahead of the requirements so that when the requirements materialise we are ready to fulfil.” [We will bring you an interview with Roberto Canevari soon]
In addition, Galgenen will drive ELC’s sustainability mission across its global manufacturing and distribution network. The facility, which features best-in-class environmental design and renewable energy, was built based on the newest standards of energy and water conservation.
It features total LED lighting, an energy-efficient HVAC system and solar roof panels that can generate up to 1600 kilowatts at peak performance. It has also been equipped with a comprehensive waste management system and electric trucks for waste removal. Wooden waste pallets from the facility will be recycled as renewable heating energy.
“Galgenen will serve as a cornerstone of The Estée Lauder Companies’ agile, global fulfilment network,” added Canevari in a statement. “This distribution centre will not only significantly enhance our capacity but enable operational efficiencies, speed-to-market and resiliency through innovative, highly automated equipment and technologies. Additionally, we are proud that Galgenen is also a shining example of ELC’s commitment to safety, quality, and sustainability.”
ELC said that the facility underlines the group’s global mission to reduce its environmental footprint and implement environmentally responsible practices across its business. It also drives ELC’s mission to leverage new technologies to provide customers around the world with transformative and eco-conscious products and experiences.
ELC opened its Swiss affiliate office over 55 years ago, followed by the opening of its manufacturing facility a decade later. ELC is the fifth-largest employer in the Schwyz canton.
