Coty riding high in China despite pandemic

An omni-channel approach must be taken to address the needs of the increasingly sophisticated Chinese consumers who are more inclined to buy green beauty products, said Sue Y. Nabi, CEO of multinational fragrance and cosmetics company Coty.

The company, which is making its debut at the fourth China International Import Expo, is showcasing its latest products from its 10 iconic brands operating in China, including Gucci beauty, Burberry beauty and skincare brand Lancaster.

In line with its theme of sustainable development, the Coty booth is also highlighting the company's partnership with Illinois-based gas fermentation technology provider Lanzatech to turn industrial carbon emissions into ethanol that is suitable for use in fragrance production.

"The CIIE is an event that is known across the world and a key moment in the beauty industry calendar which gives us the opportunity to showcase the diversity and strength of our luxury portfolio. We know that consumers in China are among the most knowledgeable and discerning shoppers of fragrances, skin care and make-up products," said Nabi.

Nabi pointed out that the pandemic has also sharpened consumers' focus on health, well-being and sustainability. Those from the millennial generation, she added, are especially interested in clean and sustainable products and are expected to become a major growth driver for the company's China operations. Catering to the demands of these consumers would hence be imperative.

Brick-and-mortar stores have played an important role in the expansion of Coty's presence in China. From July 2020 to June 2021, the company opened 15 new Gucci beauty stores in eight Chinese cities across six provinces.

The importance of online stores in a digitally savvy market like China hasn't been lost on Coty either. In March, the company launched its flagship Gucci beauty store on Tmall. In June, Max Factor - the makeup brand under Coty - opened an online store on short-video platform TikTok and saw its view count triple to 6 million just one month after the launch. A livestreaming event held with a Chinese beauty influencer in July also resulted in more than 6,700 Max Factor products sold in just one hour.

Although the global beauty market has been disrupted by the COVID-19 pandemic, especially in terms of consumption made during overseas trips, Coty's travel retail within China has in fact been thriving due to domestic travel to destinations such as Hainan, where duty-free stores have helped to boost sales, said Nabi.

Since the beginning of 2021, the company's travel retail business in China has posted triple-digit growth on a yearly basis, mainly driven by the burgeoning sales of premium beauty brands such as Gucci. This momentum will continue when international travel gets back on track, Nabi noted.

This confidence is supported by the findings of a survey released by market consultancy McKinsey & Company in August. According to the survey, 61 percent of those who traveled to Hainan intend to return even after international travel resumes.

For the company's 2021 fiscal year that ended on June 30, 2021, Coty China reported a sales revenue of $181 million, up 31 percent year-on-year. The annual growth rate in China for the first quarter of fiscal year 2022, which ended on Sept 30, 2021, was 47 percent, the company announced on Nov 8.

Given China's stable economic growth rate and the rising affluence of Chinese households, Coty is projected to triple its sales in China by 2025, said Nabi.