Coty eyes further expansion in China market with distribution agreement

The company has carved out a name for itself in the luxury segment with license agreements to produce fragrance and cosmetics for some of the names in both the fashion, sports and entertainment fields.

Those agreements include names such as Calvin Klein, Marc Jacobs and Davidoff, but in China the company is hoping to build on the success of a number of already top selling brands, including adidas, Rimmel and Playboy.

However, the company has also said that as part of the distribution agreement, it is taking the opportunity to weed out its weaker performing brands, and will now discontinue distributing the TJoy brand in China.

Partners to accelerate China mass market expansion​

"We expect our partnership with Li & Fung to accelerate the expansion of some of our international brands in the mass channel, strengthening Coty's position in this fast growing market,"​ said Michele Scannavini, CEO, Coty.

The company says that the agreement with Li & Fung represents a shift in its go-to-market strategy for the brands it sells in the country mass market channels by tapping into the distributors broader distribution network in that channel.

While Coty says it will continue to oversee its development, production, marketing and brand building strategies for the country, it says it will build on that by tapping into Li & Fung’s strong go-to-market capabilities in China.

Li & Fung will help connect Coty with China consumers​

“Li & Fung provides its expertise to Coty in different areas of the supply chain, including sourcing, manufacturing and now distribution,”​ said Gerard Raymond, senior executive at LF Asia, a business unit of Li & Fung.

"LF Asia is uniquely placed to give Coty's power brands access to the Chinese consumer and throughout our network in China.”​

Earlier on this year, the company had communicated its intention to re-focus its business in the mass market category, and this distribution serves as a considerable part of the restructuring plan, which ultimately should serve to grow Coty China’s skin and body care segments.

The distribution partnership is due to start on July 1^st​, when the handover of all the business activities is expected to take place.