Coty to drive growth with “rejuvenated” brand positioning and prestige push
American beauty giant Coty Inc. unveiled its new growth strategy at an investor event on Friday, revealing plans to reposition brands in its consumer beauty and skincare portfolios, and accelerate growth in its prestige, skincare and digital businesses, as well as in its operations in China.
By repositioning and “rejuvenating” key brands including CoverGirl, Sally Hansen, Rimmel, Max Factor and Adidas, Coty is hoping to capture new growth opportunities and strengthen its consumer beauty business. According to the company, its repositioning efforts will be focused on brand equity, key trends, clear consumer targets, in-store execution, product innovation and ensuring that each brand’s purpose is distinctive.
In particular, Coty intends to broaden the U.S. consumer base of the CoverGirl brand, which turns 60 this year, through an approach that combines the label’s heritage as a beauty pioneer with innovative new launches and marketing campaigns.
As part of this strategy, Coty announced that it will be launching a new marketing campaign for CoverGirl’s Simply Ageless anti-aging foundation. The campaign will star Niki Taylor, who served as a CoverGirl ambassador in the 90s, and will seek to tap into the growing demand for skincare-powered makeup through a “healthy fresh take on traditional beauty advertising” featuring images and footage taken by Taylor in her own family home.
According to Coty, CoverGirl, which recently began the implementation of its repositioning, is already seeing improved sales thanks to the strategy.
Elsewhere, Coty is seeking to capitalize on trends such as regenerative medicine and sustainable beauty in order to develop both its mass and prestige skincare businesses. The New York-based company’s skincare portfolio currently features three brands, which include Lancaster and Philosophy, and are soon to be joined by Kim Kardashian’s SKKN by Kim, set to launch in fiscal 2022.
Coty not only intends to reposition is existing skincare brands for accelerated growth but is also exploring the possibility of expanding a number of its designer and consumer beauty brands into the category.
Another key pillar in Coty’s growth strategy is its prestige business, which the company hopes to boost by doubling down on its core prestige fragrance operations and by capturing new opportunities in prestige cosmetics and skincare.
Coty, whose prestige fragrance portfolio already includes three of the top 10 female fragrance brands, aims to expand its offering through new launches and expansion into artisanal fragrances. In support of these efforts, the company said that it will guarantee that none of its major luxury licenses are set to expire in the next five years.
The group also highlighted that many of its fragrance licenses with luxury brands allow for expansion into other beauty categories, including skincare and cosmetics, potential that the company will now seek to explore. As an example of the kind of trajectory it is hoping to replicate in its prestige cosmetics activities, Coty cited the success of its Gucci Beauty brand, whose sell-out has grown more than 110% in the U.S. and over 50% in Asia Pacific in the last nine months.
The company is also looking to bolster its brands in China, where the performance of its products, along with its increased presence in popular travel retail destinations, have boosted the group’s confidence that it can capture further market share and growth in the country.
Through the combination of these strategies, the group’s objective for 2025 is to increase skincare from approximately 6% to over 10% of its revenue mix, prestige cosmetics from approximately 3% to a high-single-digit percent, and Chinese revenues to more than 10%.
Like many of its peers, Coty is also aiming to accelerate growth in its e-commerce and direct-to-consumer channels. According to the company, it recorded 40% growth in e-commerce sales in the second quarter of 2021, and intends to build on this momentum through a transformed and integrated approach featuring strategic innovations such as social listening and social commerce.
Finally, Coty highlighted the sustainability efforts being made by its “Beauty That Lasts” platform, which recently announced an index aiming to facilitate the integration of sustainability in the company’s product development process.
“Coty is ideally positioned to accelerate sales and profit through our six strategic priorities, that will reposition and expand our portfolio to meet the great opportunities ahead,” said Coty CEO Sue Y. Nabi in a release. “We anticipate a rebound in demand for beauty products as pandemic restrictions ease, led by luxury beauty, clean beauty, China and skincare.”
In the second quarter ended December 31, 2020, Coty reported revenues of $1.42 billion, down 15.9% compared to the same period in the previous year. Looking forward, Coty has reaffirmed its financial guidance for the full fiscal year 2021, predicting annual revenues in the range of $4.5 billion to $4.6 billion.
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