WWD.com/beauty-industry-news/beauty-features/designing-a-powerhouse-701941/
government-trade
government-trade

Designing a Powerhouse

NEW YORK — Bernd Beetz has no lack of ambition. <BR><BR>The company that François Coty founded a century ago is being re-engineered with the express purpose of conquering the world of beauty. The architect of this grand plan is Bernd Beetz,...

NEW YORK — Bernd Beetz has no lack of ambition.

The company that François Coty founded a century ago is being re-engineered with the express purpose of conquering the world of beauty. The architect of this grand plan is Bernd Beetz, chief executive officer of Coty Inc.

Earlier this year, Beetz left no doubt as to what his ambitions are for Coty’s next few years. “I want to establish Coty in the top 10 worldwide,” he told WWD in February. At that time, Beetz said the company ranked 13th worldwide — but that he thought Coty could crack the top 10 globally in two to three years. In order to join that select club, Coty’s volume would need to grow to $2.5 billion.

And Beetz has a clear idea how he’ll take Coty to that lofty level: by continuing to build global power brands and continuing to beef up the mass and class sides of the multinational company’s business.

Looking at the world view is something Beetz is well used to. He took on his current role in May 2001, succeeding Peter Harf, who moved up to chairman. Prior to joining Coty, Beetz served as president and ceo of LVMH Moët Hennessy Louis Vuitton-owned Parfums Christian Dior. Before joining Dior, he spent 20 years at Procter & Gamble, where he oversaw several European businesses, including health and beauty care, for the consumer goods giant’s European market.

These days, Beetz is responsible not only for Coty Inc.’s eponymous mass brand and its Celine Dion, Mary-kateandashley, Adidas, Healing Garden and Rimmel brands, he also oversees a wide range of prestige businesses — including the fragrance licenses of Marc Jacobs, Kenneth Cole, Jennifer Lopez, Joop! and Davidoff.

While Beetz noted that future acquisitions aren’t unlikely, he also expects significant organic growth — at least 5 percent — from both sides of the business, particularly in the Americas and Europe, which together accounted for 89 percent of Coty’s $1.7 billion in net sales in 2003. Asia and the rest of the world accounted for the remaining 11 percent.

Beetz has often spoken of his desire to create global power brands. “They follow a development process,” he explained in an August interview with WWD. “We nourish them on a regional level, then look at their global potential.” For instance, European powerhouses Rimmel, Davidoff and Lancaster have hopped the pond to the U.S., while Beetz is poised to grow American phenomenons Marc Jacobs and Kenneth Cole in Europe. He also has plans to bring Lancaster’s color cosmetics brand, which was revamped in Europe last year, to the U.S. “in the not too distant future,” and to further expand Rimmel’s reach in the U.S., Canada and Australia.

This growth hasn’t happened by accident, but via a clearly defined set of strategies, some of which Beetz shared with industry leaders at WWD’s most recent Beauty CEO Summit, held in Miami in May. “Leadership styles must evolve to keep pace with changing times,” he said. “The problem is that we often don’t notice when times have changed. When that happens, we find ourselves leading in a way that’s no longer appropriate for the times.” And that, he noted, is likely the root cause of some of the problems the beauty industry currently faces.

Certainly, it’s a problem that Beetz doesn’t have. As mass fragrance’s top player, as well as one of prestige fragrance’s powerhouses, Coty under Beetz follows one simple strategy in both markets: long-range planning and investment for each of the brands. “We believe in brands, and we believe in them for the long term,” he said. “[In today’s market] there is much too much in-and-out thinking.”

Whether it’s selling a $41 bottle of Glow by JLo or a $15.25 bottle of Lady Stetson, one thing unites his brands, believes Beetz: paying attention to the customer’s needs, regardless of the price point. “It’s all about serving that consumer’s needs, and realizing what the consumer in that particular market is looking for,” he said.

And it isn’t always about something new. Pointing to Stetson and Jovan, Coty mass fragrances that are both more than half a century old, Beetz said, “These are brands which have been in everyone’s lives over generations. They are part of the consumer’s world, and we continually invest in them. It is this type of long-term commitment which makes us successful in the market.” This is true on the prestige side as well, Beetz said, pointing to one example — the popular Davidoff Cool Water brand, on the market since 1988, and Jil Sander, a license that Lancaster has held since 1979 and which is earmarked for a U.S. expansion campaign. “You have to have the commitment,” Beetz said. “We are brand freaks. We have passion for marketing them.”

That doesn’t mean that Beetz doesn’t have a strong fix on what’s up-and-coming in the market. “In the last three years, we’ve defined our corporate culture — which, in addition to nurturing brands, is to be fast to realize and implement trends.”

And that does mean not being afraid to be ahead of trends. Many retailers were skeptical when Beetz announced that Coty’s Lancaster division had signed a deal with songstress Jennifer Lopez two years ago — and even more skeptical when they heard of the fragrance’s notes. “Jennifer wanted a fresh, clean scent — a soapy smell, like she’d just emerged from the shower.” Beetz freely admitted that perfumers and retailers alike raised eyebrows at that one, but with first-year global sales of $84 million, Beetz had the last laugh. In fact, the pebble he threw into the pond sent ripples throughout the industry as A-list celebrities from Sean “P. Diddy” Combs to Beyoncé Knowles rushed to sign their own scent deals.

But while he’s clearly enthusiastic about the celebrity fragrance trend, Beetz was quick to point out that doing a successful version isn’t simply about slapping a celebrity’s name on a bottle. “If you just put a famous name on [a product], it doesn’t sell,” said Beetz. “You have to carry it further on each element. That’s what we do. We take the personality and then take the concept deeper — we explain the brands to the consumer.

“For us, Jennifer Lopez and Celine Dion aren’t only celebrities, they are brands, and we develop all aspects of them as brands,” continued Beetz, adding that while no other celebrity deals were currently planned, he wasn’t averse to the idea of adding more down the road. “I think that’s our hallmark, and how we are able to take more mileage of the brands. We don’t look at it as ‘We’ll do this celebrity today, and which one should we do tomorrow?’ We look for a few brands with very big potential, and we develop them for the long-term — from a concept, packaging and product point of view. It’s about bringing authenticity and passion — and a great product — to the market.”

Beetz also beefed up his prestige business with two brands owned by his previous employer when he added the beauty licenses of designers Marc Jacobs and Kenneth Cole to his portfolio in May 2003. LVMH Moët Hennessy Louis Vuitton sold the licenses to Lancaster for a tidy sum — neither party would comment on the exact amount, although industry sources estimated that it topped $45 million.

Beetz has also set a new standard for speed to market with many of his most recent fragrances. While most scents take a minimum of two years from idea to finished product, Beetz set that standard on its ear first with Glow by JLo, trimming the development time to a little less than a year. He did it again with the Kenneth Cole division’s latest launch under Lancaster ownership, Reaction Kenneth Cole, which went from concept to bottle in about nine months.

Aside from adding new brands to his portfolio, Beetz is determined to streamline business units globally. As an example, in July Coty Inc. entered a joint venture with its distributor in the Middle East in order to consolidate its operations in the region. The beauty company formed a new Dubai-based subsidiary, called Coty Middle East FZCO, via an agreement with a unit of Michel Chaloub Trading Co., which has distributed Coty Beauty and Lancaster Group products in the Middle East for seven years.

“Our strategy is to build a leadership position for Coty in new areas,” Beetz said. “We recognized the enormous potential of the Middle East fragrance and cosmetics market.” Coty appointed Hani Jabbour to general manager of Coty Middle East FZCO; Jabbour had been general manager of Fitra International FZE, a distributor of international fashion, accessories and fragrance brands. Before joining Fitra, Jabbour worked at Michel Chaloub Trading Co.

For the future, Beetz hopes to keep breaking rules — to a point. “We’re giving a lot of freedom and empowerment to our teams, which makes for a very unique cocktail. That’s us — that’s our recipe for success. It allows us to enjoy what we’re doing. It is the very soul of Coty, and it will continue.” And while he seems to embody the beauty equivalent of the phrase “think globally, act locally,” Beetz does say there are some brands that will remain regional offerings rather than global powerhouses. These include Calgon, Vanilla Fields, Aspen and Jovan in the U.S., Chopard in France, Joop! in Germany and Nikos in Greece.

As for the long-standing rumors that the company might go public, Beetz doesn’t rule it out — but on the other hand, there are no current plans for an IPO, he says. “We’re very happy where we are, and we’ve had several extremely strong years,” he said. “I wouldn’t rule it out completely, but there is no financial need to implement the strategy right now.”