Coty, which will celebrate its 120th anniversary next year, detailed its strategy and outlook for European investors on Thursday July 6 in Paris. The event follows the company’s recently announced intention to explore a dual listing on Paris Euronext. It comes only two months after it presented its ambitions for ultra-premium skincare and scenting at an event in Grasse, France.
However, the group’s CEO, Sue Nabi, said the project of listing on Paris was still in the “exploratory phase”. At the same time, she also announced the company is significantly increasing its guidance on Q4 FY23 revenue growth to +12-15% on a like-for-like (LFL) basis, up from its previous outlook for +10% growth. Coty now expects FY23 adjusted EBITDA of USD 965-970 million.
Premium and ultra-premium segments
Coty, which has an extensive portfolio of brands covering "all price ranges and all beauty categories and trends", sees significant growth potential in its prestige division (63% of its current sales). “Premium skincare and makeup each account for less than 5% of the group’s sales", said Sue Nabi.
The success of Lancaster in China and the announcement of new innovations for the ultra-premium brand Orveda go in this direction.
As far as fragrance are concerned, the strongest category within the prestige division, the group is engaging a “luxification” strategy, with in the launch of the Infiniment Coty Paris collection in 2024. “Designer brands still dominate the market but niche pure players are performing the best,” emphasized Caroline Andreotti, Chief Commercial Officer Prestige.
As consumers in the United States and in Europe are increasingly buying fragrances for themselves, rather than for gifting, and as the frequency of purchases is increasing, they are preferring more prestige products.
In a recent report, McKinsey forecasted a luxury boom in the beauty industry, saying the premium and ultra-premium beauty segments had the potential to double by 2027, from around USD 20 billion today to around USD 40 billion.
China, Latin America and travel retail
Present in 125 countries, Coty also believes that it has significant growth opportunities in several geographical areas.
The group wants to rely on its prestige brands to expand in China, a country which represents 12% of the global beauty market but generates only 4% of Coty’s turnover. Prestige brands will also be instrumental to expand the group’s sales in travel retail, which represent 8% of Coty’s turnover.
Geographically speaking, Coty is also focusing on emerging markets (Latin America, Middle East, Southeast Asia, and Africa), in particular through the rationalization and modernization of its solid portfolio of consumer brands such as Covergirl, Rimmel, Bourjois Max Factor or adidas.
In Brazil, for example, Coty has powerful local brands (Monange, Risqué, Paixão, Bozzano) and intends to accelerate its growth by increasing its number of points of sale and developing its perfumery offer.
“Our differentiated business model stands on an innovative Prestige as well as rejuvenated, focused and increasingly strong Consumer Beauty portfolio, global reach in developed and emerging countries, strategically located centres of R&D excellence, award-winning IP, and leading end-to-end capabilities,” concluded Sue Nabi.