By and  on October 9, 2006

NEW YORK — Coty Inc. has served notice that it intends to double in size by 2010 to sales of more than $5 billion, which would rank it among the world's top five players.

And that isn't an idle threat. In the last five years, since Bernd Beetz took the helm as chief executive officer, the company has already doubled its sales.

Upon Beetz's arrival from Parfums Christian Dior in 2001, Coty had sales of $1.4 billion and a portfolio of 24 brands. Today, its revenues are $2.9 billion, driven by 40 brands including a bevy of celebrity fragrances —and industry sources indicate there are more to come. While the company declined to comment, Coty is said to be working with actress Lindsay Lohan and singer Gwen Stefani on new fragrance brands.

And when it comes to the future, Beetz isn't ruling anything out: He's made a point of turning conventional wisdom on its ear since arriving at Coty.

At a press conference Friday morning, Beetz made it clear Coty will lean more heavily on color cosmetics and skin care to grow its business. "We were number 31 in size in 2001 and we are number eight now," said Beetz, referring to total beauty business, including skin care and color cosmetics. He noted the company's credo is innovate or die. "We believe we will be number five worldwide by 2010."

Several in the investment community — who noted that celebrity fragrances have been detrimental to the economics of the category — approved of Coty's plans to shift its focus to more profitable businesses. Fragrance currently drives 65 percent of the company's sales, with color cosmetics and skin care accounting for 17 percent and 4 percent, respectively.

Beetz said skin care offers major growth potential, particularly in dermatological and organic products. The company also has widened the scope of its Lancaster skin care brand beyond Europe, and introduced the skin care brand to select Bath & Body Works stores in the U.S. Coty plans to open four Lancaster counters in China, and named skin care as a way to significantly increase its size in Asia.

"Prestige skin care could be an opportunity for Coty," said Alexander Panos, managing director of TSG Consumer Partners. "It can be a linchpin business for any top beauty player because it offers high margins." Panos added that a move into other channels, such as television retailing, Internet and specialty stores, also could bolster growth.

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