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Sanofi Beaute Powering Up U.S. Launches

NEW YORK -- When Elf-Sanofi SA of France acquired Yves Saint Laurent Parfums last year, the move abruptly transformed its U.S. subsidiary, Sanofi Beaute Inc., into a major player in the American fragrance market.<BR><BR>Now Sanofi Beaute has entered...

NEW YORK — When Elf-Sanofi SA of France acquired Yves Saint Laurent Parfums last year, the move abruptly transformed its U.S. subsidiary, Sanofi Beaute Inc., into a major player in the American fragrance market.

Now Sanofi Beaute has entered the new year with an armload of launches, including the U.S. debut of YSL’s controversial Champagne, aimed at further enhancing its roster of core brands.

At the same time, Sanofi is making its final moves in the takeover of YSL’s $50 million U.S. fragrance and cosmetics business, the acquisition of which pushed Sanofi’s volume to $200 million.

By March 31, the firm expects to have moved YSL’s distribution operation into Sanofi’s more than 200,000-square-foot facility in Edison, N.J. That will cap a 10-month drive in which YSL’s fragrances, including its 1977 mainstay, Opium, were integrated into Sanofi’s European fragrance division.

A year ago, Sanofi had created separate marketing and sales forces for its European and American brands after acquiring Nina Ricci’s U.S. business.

As part of the latest takeover, Sanofi sprouted a cosmetics division by pairing YSL’s Beaute cosmetics and treatment division with Ricci’s equivalent — the fledgling Le Teint line.

“We are a major force in the prestige fragrance arena,” said Lawrence J. Aiken, president and chief executive officer of the American subsidiary.

But where there is expansion, there is also contraction. As a byproduct of these reorganizations, the company has begun weeding out weak performers, yanking Stendhal from specialty and department store distribution, even though it continues as a viable brand in the rest of the world, Aiken noted.

He declined to give specifics, but the Stendhal business in the U.S. has been estimated at $7 million to $10 million wholesale. Aiken indicated, however, that the cosmetics and skin care brand simply could not attain profitability.

“At that volume level,” he said, “it’s difficult to be profitable at the operating margin level, just because of the sheer expense of that type of business versus fragrance.” Aiken also cited a number of smaller volume lines that could eventually be eliminated: Oscar de la Renta’s Pour Lui men’s fragrance, Perry Ellis for Men, and YSL’s Y and Rive Gauche women’s scents and Jazz men’s fragrance, as well as Nina Ricci’s male Ricci Club.

YSL’s American operation was not profitable prior to its acquisition, Aiken said, but plans call for reaping a “respectable” return this year.

As for Sanofi itself, Aiken dismissed industry speculation that the subsidiary is in the red, stating that it made a profit at the operating margin level in 1991, 1992 and 1993. Aiken joined the company in 1989.

In addition to shuffling the lineup, there also will be a new face at the top, as reported. Aiken’s boss, Claude Saujet, chairman of Sanofi Beaute SA and YSL Parfums, said this week that Aiken will join him in Paris in June as part of Sanofi’s international management team. Aiken said he will be the worldwide president of Sanofi’s American brands and he will retain the title of ceo of Sanofi Beaute Inc. of North America.

Aiken hopes that by March he can name a U.S. president who will report to him.

As for the 1994 launches, here are the initial plans:

The new Van Cleef women’s fragrance, which was introduced in Europe on Nov. 1, will bow in the U.S. in mid-March with an extremely tight distribution, consisting of Bergdorf Goodman and 27 Neiman Marcus doors, plus high hopes that it will bolster the Van Cleef brand, which includes the women’s scent First and the three-year-old men’s fragrance Tsar.

Aiken declined to break out individual volumes, but sources estimate that Tsar does $10 million at wholesale, while 19-year-old First does only $5.5 million. He characterized the brand, particularly First, as underdeveloped in this country.

Aiken plans to unveil the scent with the same pampering given to the Lalique launch last year. The specialty stores were chosen because their clientele tends to spend more on perfume, and the Van Cleef line is skewed to the higher concentrations, which will be priced dramatically below the market average.

There are three perfumes in the line: a 1.7-ounce, $150 at retail; a 1-oz. for $100 and a 0.17-oz. for $20. There also will be three eau de parfum sprays, ranging from a 1.7-oz. for $65 to a 3.3-oz. version for $90.

Industry executives are normally satisfied if perfume generates 8 to 10 percent of a fragrance line’s volume, Aiken said, adding, “In merchandising Van Cleef, we should do 30 to 35 percent. Our belief is that women prefer to wear perfume, but don’t want to spend $300.”

According to industry sources, Sanofi hopes Van Cleef will hit $5 million within two years after a mid-1995 rollout to no more than 600 doors. An accompanying Van Cleef bath line will be introduced in September.

At one time it was standard industry practice to wait a year after a fragrance introduction before launching bath extensions, Aiken acknowledged, but manufacturers are no longer waiting as long to cash in on the launch and reinforce the line with extensions.

“You’re judged on your figures as a total number,” Aiken said, referring to how retailers evaluate brands. “The sooner the bath line hits the counter, the more quickly your numbers compare with the competition.”

That philosophy was also followed when Sanofi launched a bath line this month as a sequel to last fall’s launch of 360° by Perry Ellis.

For the launch of Van Cleef, Sanofi reportedly has a support budget of $1 million, which includes scented pieces in bill enclosures and regional magazine advertising in Texas Monthly, Chicago, Los Angeles and The New Yorker.

The company also is planning to use a TV commercial, which was shot in a castle in Warsaw and designed for use with any of the three Van Cleef brands. Aiken said current thinking is to run the spot in the Dallas market in May and June between Mother’s Day and Father’s Day to hype both Van Cleef and Tsar.

Referring to the Van Cleef launch, John Stabenau, vice president and divisional merchandise manager at Neiman’s, said, “It’ll be fine. We do a big job with perfume. Our sales associates have no problem selling better merchandise.”

As for the state of Sanofi itself, he said, “They’re in a major transition, but I think they’re settling in.”

Following YSL’s recent legal defeat in Paris, where the local vintners succeeded in stopping the company from using the name Champagne in France, Sanofi is pressing ahead with the an unrestricted U.S. debut in June.

As noted, plans call for an exclusive introduction at Saks Fifth Avenue, then a rollout to 700 department stores, beginning Sept. 15.

Sources indicate that Sanofi will back the launch and roll out with about $10 million in advertising and promotion. The first year’s campaign will include heavy print advertising and a barrage of scented strips, Aiken said, adding that TV is an avenue still being explored. Estimates of the second year sales target range as high as $20 million.

In October, Sanofi will launch a Perry Ellis sequel, 360° for Men. Slated for 1,400 doors, the sales projection, according to industry sources, is $8 million to $10 million for the launch season.

When the women’s scent was launched last fall, it ran into a clutter of stiff competition in a year known for a record number of launches. Citing the heavy traffic, Aiken said the scent performed well, but it made only 90 percent of its projection, which originally was estimated at $20 million.

“It was an important brand,” said Allen Burke, divisional merchandise manager of Dayton’s, Hudson’s and Marshall Field’s. He described the launch as “coming close” to his expectations.

Elsewhere in the Sanofi stable, Oscar de la Renta’s 1977 signature scent, which sources estimate at $30 million wholesale, remains the company’s best-selling fragrance. It is followed in Sanofi’s volume rankings by YSL’s Opium. That scent reportedly does $25 million of YSL’s $50 million total U.S. volume.

“Opium is a timeless classic,” Aiken said. “It’s still alive and doing very well. In some department stores, it ranks in the top 10, and in most others, the top 15. It still has a lot of potential to grow. We’ll put more money in terms of promotion and advertising behind Opium.”

Aiken estimated that Opium could continue to show growth of 3 or 4 percent a year. He plans to increase the proportion of money spent on advertising and promotion from 18 percent of sales to 23 or 24 percent.

Aiken said he plans to upgrade the Opium gift-with-purchase promotions to include four or five products. He also plans to increase national advertising.

Sanofi also expects to increase the advertising this year for Oscar and Volupte, Oscar de la Renta’s 1992 women’s scent, by about 15 percent. Aiken declined to disclose the budget, but sources estimate that the increase would translate into expenditures of about $3 million for each fragrance. Some retailers have said Volupte turned sluggish in the fall.

For the past three years, Sanofi has experimented with backing Oscar with TV spots. But, Aiken concluded, “We haven’t been as pleased with the results as we would have liked.” He is cutting the TV budget in half.

Sanofi will do more scented inserts in store catalogs and Sunday newspaper magazines, which have proven more effective than TV, he said.

Aiken’s overall plan for the fragrance business is to pick winners within the brand families.

“Each brand has a significant player, which will get a majority of the focus,” he said. “For example, among the European fragrance brands, the focus is going to be on Opium, [Ricci’s 1948 classic] L’Air du Temps, Tsar, the new Van Cleef and Champagne. The American brand sales force is going to focus on Oscar de la Renta signature, Volupte, women’s 360° and then, going forward, the new 360° for Men.”

Among the YSL brands, Opium is Aiken’s first priority, but his second is the Beaute cosmetics and treatment business that does $10 million at wholesale, according to industry estimates. Aiken said Beaute was running increases of 20 percent last year.

The business has a distribution of 125 doors, mostly in specialty stores — Saks, Neiman Marcus, Nordstrom and I. Magnin.

Ricci’s Le Teint, which was launched into an extremely tight distribution of 21 doors last March, does an estimated $3 million.

Le Teint is positioned to compete on the basis of its tight distribution, product efficacy, the unusual design of its packaging and what Aiken claims is the lowest pricing of any European designer cosmetics line. Price points range from $15 for a nail polish to $52 for a moisturizer.

Eventually, Aiken would like to expand Le Teint to the 125 doors in which YSL Beaute is marketed.

“That would be good distribution for both lines,” he said. “It would allow our sales force to cultivate both cosmetics lines in the same doors. That’s something we would like to see, but there’s no action calendar for that.”