If you think $3.5 billion in annual revenue is enough to be a top-five global beauty company, think again. To achieve such a prestigious ranking, a company must achieve a revenue base between approximately $7 billion and $8 billion. Such is the goal of Coty Canada, and it’s developed three strategies to get there.
The first is to develop Coty Canada’s core strategic pillars. A division of Coty, Inc., Coty Canada has two divisions: Coty Prestige and Coty Beauty. Coty Beauty distributes to mass- or broad-distribution retailers, while Coty Prestige develops, markets, and distributes higher-end cosmetics and fragranced brands and products to specialty retailers.
Coty Canada’s three pillars are fragrance, color cosmetics, and skin and sun care. To date, the company has achieved its goal in the fragrance pillar, which Jeffery Wagstaff said is a major part of the company’s heritage and one of its core strengths.
“François Coty is the founder of our business, is our namesake, and is considered the founder of the modern fragrance industry,” said Wagstaff, president and general manager of Coty Canada. “It was a natural evolution for us to first focus on the fragrance pillar, and now we are the number one fragrance company in the world.”
Coty Canada has strong positions in its prestige fragrance division with brands like Marc Jacobs, Chloé, and Calvin Klein, and with broad distribution brands like Tim McGraw, Adidas, Faith Hill, and Beyonce. In addition, the founder of Lancôme started his career working for François Coty, and René Lalique, the crystal glass designer, started off designing bottles for François Coty.
“Our strong position in all major markets throughout the world of fragrance makes sense as a tribute to our founder and to our heritage,” Wagstaff said.
In raising Coty Canada’s last two divisions, cosmetics and skin and sun care, to the same level as its fragrance pillar, the company uses three vehicles. One is organic growth, and for cosmetics, that growth is coming from the development of the Rimmel brand.
Rimmel is the number one cosmetics brand for broad distribution in the UK, is a strong number five in Canada, and is expanding in markets across the world, from Latin America to Eastern Europe. Wagstaff said geographic expansion is the second vehicle the company is using to reach its top-five goal.
Third is acquisition, another tribute to the company’s heritage. Coty was created in 1993 through a series of acquisitions of private companies and divisions of pharmaceutical companies and through organic growth. When looking to expand cosmetics, the acquisition of Calvin Klein, Unilever’s cosmetics business, and the Del Laboratories’ beauty business made perfect sense.
“Particularly in North America, these acquisitions have helped to consolidate our broad distribution color cosmetics business with the brand Sally Hansen,” said Wagstaff. And when striving to become a top-five global beauty company, focusing on brand is key not only in the business community but also with consumers.
As consumers continue to look for more value from the purchases they make, establishing individual brand recognition is important. Wagstaff said the unique climate of the worldwide recession is such that it’s not so much about the absolute price point of a product but more about the value a consumer perceives. By taking the time to not only boost the Coty Canada brand but also the individual brands under the corporate umbrella, the company is setting itself up to be a favorite among consumers across the globe.
“Brand equity is a major component of value,” said Wagstaff. “Brands are very critical in today’s environment where times are more uncertain.”
A focus on brand isn’t quite enough to erase Coty Canada’s biggest challenge, which is increasing the value proposition of its products. Brands are still important, but what has accelerated is the need to have integrated communication programs that work not only through media channels but also through the store environment to get the maximum ROI on marketing programs.
Wagstaff admits it’s impossible to have all ads reach 100% of a company’s target audience, so Coty Canada focuses on not only reaching its customers but also getting a message to them that makes them react. As younger generations age and become the target demographic, it is no longer enough to simply expose them to ad and give them information.
“It’s more important to communicate to them and allow them to participate in that communication,” Wagstaff said. “Areas of consumer-generated content and asking consumers to send in videos or modify part of a product or participate and somehow be more engaged in the brand are big challenges.”
Coty Canada also focuses on targeting the in-store shopper segment, which often has too many marketing messages coming at it at once. By training and educating sales people, the company positions its brands as solutions rather than just items for sale.
Although these strategies may seem formulaic, keep in mind the biggest challenge facing retailers: the shortened lifecycle of advertising strategies. Wagstaff said the company’s strategies used to work for a year or a year and a half. Today, that time frame has decreased tremendously, which puts more pressure on Coty Canada to break the mold.
One of Coty Canada’s most successful fragrance launches in 2008 was Harajuku Lovers from Gwen Stefani. The product itself smelled fantastic, and the marketing campaign added value by giving consumers a chance to buy collectible dolls and participate in Japan’s Harajuku culture.
“These were all new, fresh, exciting ideas that had never been seen before in the fragrance market,” said Wagstaff. “It was by far the most successful launch in Canada last year, but that was last year. Now we have to do something else to keep that momentum going behind the brand and our business to try to repeat the level of sales and marketshare.”