• Ad Age, Monday, November 22, 2010 7:18 AM

Jack Neff reports that the upper crust is splurging on high-end beauty products with the result that sales for prestige brands such as Estee Lauder (up 14% for organic sales) and L'Oreal (up 6%) surpassed their mass-market cousins Procter & Gamble and Unilever, which each reported about a 4% lift. But P&G's shipments for its ultra-prestige SK-II skin-care business also rose 20% last quarter, and it is readying new campaigns for other high-end lines.

"The luxury consumer is shopping again, and we are seeing our strategy contribute to ... prestige beauty growing faster than mass in many parts of world," Estee Lauder CEO Fabrizio Freda told analysts last month.

Sanford C. Bernstein analyst Ali Dibadj sees a "decoupling" of the luxury and prestige market, including LVMH and Elizabeth Arden, from mass marketers. One reason the more affluent feel better now may be the Republicans' midterm election gains, according to the Ipsos Mendelsohn Affluent Barometer. Forty-one percent of Americans with household incomes of $100,000 or more feel more optimistic after Election Day. The rebound in equity markets this year hasn't hurt, either.

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