On Friday, Coty Inc. unveiled a new, long-term strategy underpinned by six priorities for sustainable growth. The initiatives build on the actions taken by the global beauty firm over the past year, which have accelerated its move towards sustainable and profitable growth, with greater cost controls and a more competitive market position.
In a presentation to investors, Coty Chief Executive Officer, Sue Y. Nabi, outlined how the business will be delivering enhanced performance against strategic priorities:
- Stabilization of Consumer Beauty make-up brands and mass fragrances
- Acceleration of luxury fragrances and establishing Coty as a key player in prestige make-up
- Building a skin care portfolio across prestige and mass divisions
- Enhancing e-commerce and Direct-to-Consumer (DTC) capabilities
- Expanding in China through prestige and select consumer beauty brands
- Establishing Coty as an industry leader in sustainability
“We anticipate a rebound in demand for beauty products as pandemic restrictions ease, led by luxury beauty, clean beauty, China and skin care. Our performance will be supported by a purpose-led and highly focused portfolio: anchored in luxury with highly desirable brands and delivered through innovative omnichannel activations,” said Sue in a release. She added, “Across our business, we are harnessing sustainability as the ultimate driver of innovation – enabling our brands to capitalize on growing consumer demand for outstanding beauty products that are clean and green. We intend to use this strategy to build Coty into a truly global beauty powerhouse.”
Strengthening Consumer Beauty and Mass Fragrances
Coty looks to strengthen the performance of its consumer beauty business by rejuvenating and repositioning several key brands to capture new growth opportunities, including CoverGirl, Sally Hansen, Rimmel, Max Factor, and adidas through a focus on brand equity, key trends, clear consumer targets, in-store execution, product innovation, and ensuring that each brand has a distinctive purpose.
CoverGirl: A Fresh Approach
Coty looks to strengthen CoverGirl’s appeal to a broader U.S. consumer base by building on key heritage trends, including clean makeup and makeup/skin care hybrid products, supported by new launches and innovative marketing. CoverGirl, which this year celebrates its 60th anniversary, is already benefiting from this repositioning and is delivering improved sales. A new marketing campaign is underway to support this strategy, “Simply Ageless,” featuring former CoverGirl Nineties supermodel, Niki Taylor. The new campaign will begin to air the week of April 26 in the U.S.
Build Skin Care Portfolio
Coty is looking to build its skin care portfolio across mass and prestige, and to capitalize on trends such as regenerative medicine and clean beauty. Coty currently has three skin care brands, with a fourth brand, SKKN by Kim, launching in fiscal year 2022. Each brand occupies distinct positioning, price tiers, and geographic strengths. Coty now sees an opportunity to extend several of its designer brands and consumer beauty brands into the skin care portfolio.
Within its existing skin care portfolio, Coty is repositioning its brands for greater success. Lancaster, which has a rich history related to innovative skin care technology and protection, intends to transform from a regional UV protection brand to a leader in skin care enhancement and renewal. Philosophy, which produces Purity, the number-one facial cleanser product in the U.S., is expected to move from being a U.S.-centric well-being beauty brand to a leader “in green, clean-ceutical” skin care.
Accelerate Growth in Prestige, China
Coty looks to enhance the performance of its luxury business by accelerating its core prestige fragrance business and capturing new opportunities in prestige cosmetics and skin care. By fiscal year 2025, Coty is targeting skin care to increase from approximately 6 percent to over 10 percent of revenue; prestige cosmetics to increase from approximately 3 percent to a high-single digit percent of revenue; and China’s contribution to triple to more than 10 percent of revenue. With prestige fragrances, prestige cosmetics, skin care and China operations delivering above-corporate margins, this targeted portfolio mix is expected to drive profitability and margin expansion.
Coty maintains a leading position in luxury fragrances, with three of the top 10 female fragrance brands and two of the top 10 male fragrances of 2020 within its portfolio. Coty expects to bring more iconic female fragrances to market and expand its presence in artisanal fragrances. Additionally, many of Coty’s licensing agreements with luxury brands enable the potential for extension into additional beauty categories, such as cosmetics and skin care.
Coty said it demonstrated the growth opportunity of prestige through the success of Gucci Beauty. In the last nine months, Gucci cosmetics sell-out grew more than 110 percent in the U.S. and by more than 50 percent in Asia Pacific, while Gucci foundation sold more than 60,000 units in two months. Gucci Beauty has also seen outstanding success since opening the brand’s Tmall flagship, making it one of Tmall’s top four luxury beauty brand openings since 2018. Coty also noted the significant growth opportunity for leading artisanal fragrance brands in China, including Chloe, Tiffany & Co., and Bottega Veneta.
E-Commerce Fueling Luxury and Mass Growth
Coty plans to accelerate its e-commerce and Direct to Consumer (DTC) growth, through a transformed approach to its digital strategy. In the second quarter of 2021, Coty recorded 40 percent e-commerce sales growth driven by its prestige and mass businesses.
Coty aims to create a more sustainable and inclusive world through its “Beauty That Lasts” platform, which is built on three pillars: product, planet, and people. Coty’s R&D division will integrate sustainability criteria into the packaging and formula development of every new product. Coty’s next quarterly earnings will be announced on May 10.