SANOFI SHIFTS SALES FORCE, BACKS CORE BRANDS
Byline: Pete Born
NEW YORK — Sanofi Beaute Inc. has shaken up its U.S. sales force and drafted a new marketing strategy focused on core brands, including Oscar de la Renta.
The presence of the Oscar business in the lineup indicates a new willingness by management to keep the brand, following weeks of discussion about its future by executives at the parent company in Paris.
“We want to keep Oscar,” said Pierre Berlancourt, who succeeded Lawrence J. Aiken in September as president and chief executive officer of the U.S. subsidiary. “The only thing that would change our mind is if we were made an outstanding offer.”
He added that the firm would not be interested in a sum reflecting merely the market value, which some market sources estimated at $65 million to $70 million. A month or so ago, Sanofi reportedly was asking $120 million for the brand, but Berlancourt declined comment on all of those estimates.
In Paris, a spokesman for the parent Sanofi, a pharmaceutical company, said, “The pendulum has swung toward keeping the beauty brands.”
He was referring to Oscar as well as some other brands Sanofi had considered divesting. Sources familiar with the company said Sanofi has also decided to retain the Nina Ricci fragrance and cosmetics business.
Sanofi’s decision could have dampened an interest voiced in early September by de la Renta to regain his fragrance license. Since then, the designer has said he was waiting for Sanofi to make up its mind. He was traveling in Hong Kong Thursday and could not be reached for comment.
David Horner, who had originally been organizing a bid with de la Renta, said he saw no point in paying a premium and entering a bid in excess of the market value, which he estimates at $70 million to $80 million.
Berlancourt declined comment on copious reports that Procter & Gamble Co. had shown an interest in de la Renta. P&G executives could not be reached for comment.
Berlancourt underscored the importance of the de la Renta fragrance business in the American market. Oscar, the scent that was launched in 1977, the 1992 entry Volupté and the Pour Lui men’s fragrance do about $85 million worldwide, about 60 percent of it in the U.S. Last year, the worldwide volume was an estimated $100 million.
Sanofi executives had no comment on the industry estimates.
Berlancourt asserted that the signature brand, which does the bulk of the de la Renta volume, is “doing well.” He also plans to shore up the Volupté business, which reportedly is struggling.
Oscar is one of Sanofi’s four core brands. The others are Yves Saint Laurent’s Opium and Champagne and L’Air du Temps from Nina Ricci. That quartet does 64 percent of the company’s $200 million in annual sales, and Sanofi’s marketing muscle will be flexed behind them.
As an example, Sanofi’s co-op TV budget for the four lines next year is $21 million — half of it paid by the stores — compared with $225,000 this year, according to Donald J. Loftus, executive vice president. Some of that huge increase is being transferred from other promotional vehicles, such as remittance envelopes.
Sanofi’s noncore brands include Van Cleef & Arpels, Roget & Gallet and the cosmetics brands YSL and Ricci. Perry Ellis was sold this week to Parlux Fragrances Inc., and Geoffrey Beene remains up for sale.
The overhaul of the sales force is aimed at achieving greater efficiency and impact on the selling floor. Sanofi previously had three sales staffs — one for the American fragrance brands, another for the European scents and a third for the YSL and Ricci color cosmetics and treatment lines.
Berlancourt said the sales effort was fragmented, noting that “people spent more time traveling than being at the account.”
Individual salespeople often lacked leverage in dealing with stores because they could speak only for their particular brands, he added, and retailers sometimes had trouble finding the right Sanofi executive to fix the given problem. Even worse, the retail presentation suffered, Berlancourt indicated.
The solution involved a shakeup that resulted in 47 layoffs among the 102-person field force, according to executives. But an additional 40 employees will be hired by the first week of January with the mission of spurring product sell-through on the retail floor.
With the advent of electronic inventory control and computer-driven reordering, the role of the traditional account executive has changed.
“There is less order taking and more need for a business person to negotiate with the stores,” Berlancourt said.
On the other side of the new equation, more people are needed in the stores to increase the impact on the selling floor by helping department managers organize events, produce visual displays and make sure the image of each Sanofi brand is projected properly and protected.
“We’ll start with 40 people to do a better job of bringing our products to the consumer,” Berlancourt said.
The objective of all this is to focus an organization that has been strained by eight major launches in four years. The result of the breakneck pace can be felt on Sanofi’s bottom line.
Berlancourt declined to divulge figures, saying only, “I would like to stop the losses and break even — as soon as possible.”