MON DIOR! POTIER LAYS OUT U.S. GROWTH PLAN FOR LUXURY BEAUTY BRAND
Byline: Julie Naughton
NEW YORK — After just over a year at the helm of Christian Dior Perfumes Inc., Bernard Potier thinks the underdeveloped U.S. business of the venerable Paris luxury goods house is poised for takeoff.
Potier, president and chief executive officer, has a high-profile skin care launch on tap and is still enjoying strong sales from J’adore, one of Dior’s best-selling fragrance launches in memory.
His strategy is to accelerate development of all three branches of Dior’s beauty business — fragrance, color cosmetics and skin care — at once. In the process, he will be reaching for an ambitious 20 percent sales increase. Industry sources estimate that Dior now does in excess of $100 million in the U.S.
Potier, who succeeded Bob Brady in November 1999, has been with Dior for more than 26 years, most recently as international managing director of Christian Dior Parfums in Paris. And now, he finds himself with some challenging goals to achieve.
While Dior’s worldwide clothing and accessories businesses generated an estimated $225 million in 2000, the beauty and fragrance end raked in an estimated $805 million in the same time frame, proving that beauty is an essential part of the company’s business. In fact, parent company LVMH Moet Hennessy Louis Vuitton reported a 35 percent leap in sales for 2000 to a record $10.9 billion, with sales of fragrances and cosmetics increasing 22 percent. When it released those numbers, LVMH attributed that growth partly to the success of several fragrances, most notably Dior’s wildly popular J’adore — whose global sales last year exceeded $122.2 million.
In 1997, former president and chief operating officer Brady — who held the post for two years — outlined some of the challenges in setting a straight course for the brand, which at the time had a somewhat tarnished U.S. image. Brady decided to steer the business out of the gray market, cut back on distribution, cut promotional spending and channel the money back into long-term strategies, as well as try to put Dior on a healthier footing with its retailers, including opening secondary points of sale within department stores by returning the brand to the fragrance bar. Brady was following the lead of Bernard Arnault, chairman of LVMH in Paris, who earlier had begun a worldwide cleanup of Dior’s gray market problem.
Brady also attempted to eliminate diversion by cutting $30 million in sales that had seemed destined for the parallel market.
Industry sources say the campaign, particularly to clean up gray market distribution, has been largely successful and has set a good base for the brand to build on. And several industry sources believe Potier can keep that momentum going: “We’ve spent a lot of time with Bernard and he’s just the man to get it done,” said Deborah Walters, senior vice president and general merchandise manager for fragrances and cosmetics at Saks Fifth Avenue.
Now, Potier is addressing yet another concern: keeping the image up while going forward. While he admits that keeping the profile of a classic luxury brand high can be tough, he believes his team’s strategies for the coming year will put them in “a good position for maximum growth.”
Potier has perhaps the highest hopes for NoAge, an antiaging product which he expects to become Dior’s top-selling skin care stockkeeping unit worldwide. Potier said: “We’re hoping to grow the skin care business 30 percent this year, and I believe this will be a major driver of that growth.” Skin care accounts for about 18 percent of Dior’s U.S. business, and more than 50 percent of Dior’s U.S. skin care business is currently done in antiaging products, he added.
NoAge will be launched in France next month and then will hit the U.S. in April. It is targeted at younger consumers than those of traditional anti-aging products. “In our research, we’ve discovered that our cosmetics customer is younger than our current skin care customer, and we want to draw her into our skin care offerings,” said Diane Miles, senior vice president of marketing for Christian Dior’s U.S. beauty business, who said she expects consumers 18 and up to buy the product.
NoAge is a technology-based skin serum that is said to keep cells younger for longer by combating the effects of environmental aging. The ingredient behind these miraculous claims is optitelomerase, which is combined with two antioxidants to form Dior’s proprietary Ageproof Complex.
NoAge will be available in two sizes: a 30-ml. bottle for $50, and a 50-ml. bottle for $72.50. Industry sources have estimated that NoAge will do $25 million at wholesale globally during its first year.
Other Dior skin care additions this spring are Body Model Ultra-Firming Multi-Sensory Gel, a skin-tightening gel retailing for $46, and Hydra-Corps Satin Intense Body Moisturizer with Calcium, which retails for $30. Both are due on-counter in March. Dior is also test marketing a skin-lightening line, Dior Snow, in West Coast doors this spring. If it is successful, it will roll out to larger U.S. distribution, said Miles.
Another of Potier’s immediate goals is to build the strength of the men’s fragrance business in the U.S. Currently, 55 percent of Dior’s overall U.S. beauty business is done in fragrance — but just 7 percent of that is men’s scents, while the remaining 48 is women’s. “Our men’s fragrance business is very strong abroad — for instance, we’re number one in France with Eau Sauvage — but it has a lot of room to grow in the U.S.,” admitted Potier. Fahrenheit is currently Dior’s men’s bestseller in the U.S., and Potier’s first step in growth is promotional packaging for Fahrenheit, which launched on Valentine’s Day and will be on counter “until it sells out.”
However, Potier is pinning his hopes on a new men’s scent launching in September. While he declined to give specifics, he did mention that “it is not a men’s version of J’adore,” although it is reportedly “very U.S.-friendly.”
“We will launch it globally at the same time, which is the first time we’ve done that in my memory,” he noted.
Color cosmetics comprise the remaining 27 percent of Dior’s U.S. beauty business, and several new products are planned, including a nail color with a brush-on adhesive and powdered color to create a stained-glass effect on the nail. But Miles is especially excited about Duostyl, a collection of lip and eye pencils. “They have a stick color on one end and a liner on the other — they’re totally portable and great for the modern woman,” said Miles. There will be 10 shades for lips and six for eyes, each retailing for $21. They will be on counter in May.
But with all the growth planned, one thing Potier doesn’t plan to do is add U.S. doors. “In fact, we’re getting more selective,” he said. “We started last year with 800 doors, and we closed 50 last year — mostly due to image and profitability issues. Our aim is to be in about 700 to 750 U.S. doors.”
He plans to heighten Dior’s profile with a stepped-up advertising schedule. “As a company, we’ve been a little sleepy in advertising, and we’ve decided to wake up,” he said. “We’ll be making a significant investment in advertising, especially for our men’s brands — it’s the first time we’re really supporting men’s fragrances in a major way. For instance, we’ll be doing more than 20 million scented strips this year for Fahrenheit.” While Potier wouldn’t comment on the advertising budget or sales projections, industry sources estimated that Dior would spend upwards of $15 million in the U.S. this year on advertising — which will reportedly include TV and print initiatives, and that the new product launches, excluding the new men’s scent, would add more than $30 million to the U.S. business this year. The men’s scent could do at least $20 million in its first year, according to sources.
In addition, Parfums Christian Dior is revising the packing of eight of its fragrances’ bath and body lines to project a more uniform global image, a move it announced in December. Before the redesign, the ancillaries for fragrance like Dolce Vita and Miss Dior did not follow the same pattern and bore no resemblance to each other. Now, each line will have a scented body moisturizer, shower gel and soap. Packaging, which varies according to each brand’s color code, will be introduced in France in April and is set for a global rollout between April and June. It is expected to hit the U.S. in late May, said Miles.
The price points on the ancillaries, however, will take a plunge: due to the uniform stock packaging, price points on the ancillaries will be about 70 percent lower than they are at present, said Miles. “The flacon will now be common to the four brands, which means we can bring the price down due to economies of scale,” Miles said. “We also are planning for a 150 percent increase in volume due to the lower prices, which U.S. business is definitely headed in the right direction.
“We’ve just embarked on a major focus on the Dior business with Bernard,” said Saks’s Walters. “It’s a fabulous business that’s done well for us, and it also has tremendous potential — particularly in treatment and color — going forward.”
One Saks initiative includes examining the synergies between the Dior apparel and beauty businesses. “We’re partnering to capture the powerful momentum that’s happening in the couture business,” Walters said. Others include artistry, in-store events and more exclusive product launches. In fact, Saks — which launched the blockbuster J’adore exclusively in the U.S. last year — has a U.S. exclusive on Dior’s Lily scent beginning in April. “We’re very interested in Dior’s classic boutique fragrances, like Lily,” she said. “And J’adore has been fabulous for us.”
Walters is perhaps most bullish on Prestige, a Dior skin care line that she recently put on counter. “It’s a fantastic luxury treatment line that gets them into a category that is very important to the Saks customer,” she said.
“J’adore was a very nice success for this past year — it’s been trending in the top five,” said Kelly Bown, divisional merchandise manager for fragrances at Macy’s West. “And I think that Dior has done a nice job this season in promotion to make sure we anniversary the success, which is exciting. It’s a nice, classic scent and we think it’s going to do well. Overall, our business in Dior has been trending very nicely.”
“Macy’s East has seen a real turnaround in the Dior Beaute business,” said Gail Gordon, vice president of cosmetics for Macy’s East. “We are very pleased with the new marketing direction and our partnership with the team at Dior. Also, we believe that they have some revolutionary news with their treatment sector — in particular, we are most excited to exploit the new NoAge treatment item.”