“Speed is absolutely part of the [Coty] culture,” said Camillo Pane, CEO of Coty, during a recent CEW Newsmaker Forum in New York. “This can be a differentiating factor and a competitive advantage.”
Further reading: Coty x Beauty Story & the Future of Retail
He added, “The beauty business no longer gives us the luxury to do things in a sequential way. Those times are gone.” In effect, he said, there is much less time to review data before making key decisions.
Pane noted that this pace of business advantages small, nimble brands and that large companies like Coty need to “challenge themselves” to keep up.
“This is going to be the biggest merger in the beauty industry—and a complex one.”
“In beauty, you have to start with your emotions—with your heart and gut,” Pane said of his decision-making process. “This is how we began the conception of [the CoverGirl revamp] idea, when the team started working with a new agency [for CoverGirl], Droga5. You have to hit the core with the consumers first. Then you have to do the disciplined work to confirm this approach with consumers to have the right feedback and refine it to make sure you do it the right way.”
He added, “I’m definitely somebody who likes to play with creativity and allow the team to work with it … and then of course there will always be the quantitative confirmation with consumers.”
Inside Coty’s Massive Brand Integration
“It’s important to make the integration successful,” said Pane. “This is going to be the biggest merger in the beauty industry—and a complex one.” Indeed, the 2015 $12.5 billion deal spanning salon professional, hair styling, retail hair color, cosmetics and fine fragrance, comprised 43 brands, including:
Wella Professionals (and its sub-brands), Sebastian Professional, Clairol Professional, Sassoon Professional, Nioxin, SP (System Professional), Koleston, Soft Color, Color Charm, Wellaton, Natural Instincts, Nice & Easy, VS Salonist, VS ProSeries Color, Londa/Kadus, Miss Clairol, L’image, Bellady, Blondor, Welloxon, Shockwaves, New Wave, Design, Silvikrin, Wellaflex, Forte, Wella Styling, Wella Trend, Balsam Color, Hugo Boss, Gucci, Lacoste, bruno banani, Escada, Gabriela Sabatini, James Bond 007, Mexx, Stella McCartney, Alexander McQueen, Max Factor and CoverGirl.*
Pane noted that the P&G merger took place through a Reverse Morris Trust structure, which meant that P&G had to carve out the companies to be integrated into Coty and set them up as an autonomous entity before Coty took ownership.
"I believe the new campaign is an anchor of a fundamental truth, which is you can be who you want to be."
The deal represented a split-off transaction in which P&G shareholders could elect to participate in an exchange offer to exchange P&G shares for shares of Coty. P&G shareholders also had the option of exchanging all, some or none of their P&G shares.
“Because we organize ourselves in three different divisions with three different headquarters … we had to decide where we put [each] division,” said Pane.
Coty ultimately decided to decrease its seven locations to four, housing consumer beauty in New York, luxury in Paris and professional in Geneva, in addition to a corporate headquarters in London. This required a relocation of hundreds of employees, ensuring the company had proximity to the right players for each division, as well as the right location from which to draw relevant talent.
Pane also discussed the revamp of the iconic CoverGirl brand, which had lost market share in recent years under P&G ownership. Pane noted that CoverGirl’s essence had remained relatively unchanged since its founding.
“When we took [CoverGirl] over a year ago … we tried to understand if the emotional connection of the brand with consumers was still there,” said Pane. “We had an amazing slogan that had been relevant for so many years. A lot of people would have decided that it was a sacred cow that couldn’t be touched. But for us, what is important is to truly connect emotionally with consumers. I believe the new campaign is an anchor of a fundamental truth, which is you can be who you want to be. This is much more profound and relevant with the world now.”
"We’re at the beginning of a complete overhaul of the brands.”
The brand’s reinvention began with a new purpose statement, “I Am What I Make Up," and pledged to help people "embrace their unique identities and unapologetically create any version of themselves.”
CoverGirl also introduced an array of diverse women as spokespeople, including pop star Katy Perry, 69-year-old dietitian Maye Musk, actress and producer Issa Rae, Ayesha Curry, motorcycle racer Shelina Moreda and personal trainer Massy Arias.
“There is an authenticity at the core of our [spokesperson] choices,” Pane explained. “They are real people who have a real point of view, they have independence and authority with how they want to run their lives.”
“There’s a great intersection of e-commerce and social media."
“In leading the relaunch, we started with the insight that people no longer strive for a singular standard of beauty, but use makeup as a tool for self-expression and personal transformation,” said Ukonwa Ojo, senior vice president CoverGirl. “CoverGirl has always been inclusive and is known for pushing the boundaries of what it means to be beautiful, which means we have a responsibility to elevate how we connect and communicate with people. This is bigger than a new campaign or a tagline. We hope to spark a provocative dialogue that shifts cultural assumptions about when, where, how and why people wear makeup.”
“There is a true insight at the core of this campaign,” Pane added. “This is just the beginning. We’ll reveal much more in the coming months. We’re at the beginning of a complete overhaul of the brands.”
He added, “This is the biggest change in CoverGirl history. It doesn’t stop at positioning.”
Making the Leap into Social Selling
Coty acquired a 60% stake in social selling beauty brand Younique in January for about $600 million in cash (2016 net revenue: ~$400 million), making a leap into mobile-first social selling platforms.
Younique’s founders have retained the remaining 40% of the company, which is run as a separate business within Coty’s Consumer Beauty division and headed by founder and CEO Derek Maxfield and chief visionary officer Melanie Huscroft.
“This is a company that was built purely based on purpose,” said Pane. “It’s fully purpose-driven, and the purpose of Younique is to uplift and empower women.” The company had 200,000 active presenters and more than 4.1 million consumers in 10 countries at the start of 2017. Pane said that Younique has actually grown its presenters/brand ambassadors to more than 800,000.
"I believe in the talent we have now in the division because the ability to combine the portfolio of Coty and P&G has absolutely given us the ability to attract some fantastic talent."
“There’s a great intersection of e-commerce and social media,” said Pane. “You have this individual connection between the brand ambassadors and the consumers … Most of the interaction is individual. That’s where you create the best connections, where you’re really able to express who you are to … a friend or a friend of a friend or a social contact …”
He continued: “When you do individual connections—which I think is a big trend in beauty at the moment—there is some magic that happens. That’s why I believe Younique is successful.”
Coty hopes to leverage its R&D and innovation and Younique’s direct-to-consumer model to further expand the brand’s SKU range and geographic reach. including in markets like the United States, United Kingdom, Canada, Australia, New Zealand, Germany, Mexico, France, Spain and Hong Kong.
Luxury Fragrance Prowess
Pane also discussed Coty’s high profile fragrance launches, Gucci Bloom and Tiffany & Co.
“They’re two beautiful launches and we have great confidence in them. I believe there are [several] key elements that are allowing us to succeed and perform in luxury and fragrance. One is the relationships with the fashion houses. I believe in the talent we have now in the division because the ability to combine the portfolio of Coty and P&G has absolutely given us the ability to attract some fantastic talent. That gets translated as a much stronger way of working with the fashion houses.”
This included Coty’s close collaboration with Alessandro Michele, Gucci’s creative director, leading to a successful creative partnership.
Pane added, “This will allow us to work very well with high end and premium fragrances because that’s what the team is super-skilled at.” ]
A New Coty Culture & Boosting Diversity
“The way we work [now] is very, very different from the old Coty was working on fragrances, and same is true for consumer beauty and professional,” Pane said.
With his base in London, Pane spends roughly half of his time on the road: “The three divisions are autonomous … but it’s important for me to have the pulse of the business and that I interact with the team. Because that’s how I’m able to prioritize and make choices, by understanding the impact of these choices on the business.”
He is also embarking on a “culture tour” to meet with local teams in Italy, Spain and elsewhere to discuss company culture and understand what’s working and what’s not.
Pane added that Coty’s recent acquisitions had led to a larger, more diverse organization, representing 107 nationalities. The company’s workforce is 56% women; 42% of its top 600 leaders are women. Pane acknowledged that there is work to be done in making the executive committee more diverse.
*This piece is updated to remove the Dolce & Gabanna and Christina Aguilera brands from the list of brands included in the deal. -Edit