Full steam ahead: Coty aims to ride premiumisation and ‘healthification’ trends to grow China skin care business

Speaking during Coty’s second quarter (Q2) earnings conference, CEO Sue Nabi said the firm had “We have robust plans underway to accelerate our skin care business”​ in China.

She highlighted that rise of premiumisation and healthification would be significant for the company as part of efforts to double down on its skin care business, especially in China.

“We see the premiumisation trend accelerating and becoming more radical, if I may say, and building into all categories on one side. And we see on the other side, the healthification trend stronger than ever,” ​she said.

The US-headquartered firm is scheduled to launch Lancaster Ligne Princiere, a premium skin care brand, in China this March.

This followed Coty’s debut of premium skin care brand Orveda at the China International Import Expo (CIIE) in November 2022. Coty is also scheduled to make the brand available in China this year.

Additionally, Nabi said luxury consumers in China are more open to exploring new brands, which will benefit the entry of Orveda and Lancaster Ligne Princiere.

“Something very important that we are seeing in the country too is that shift from heritage brands towards new brands active in the Chinese market is stronger than ever. The highest end consumers are now more open than ever to try new brands, new innovation, versus the traditional loyalty that we have seen in the past towards more classical and traditional brands.”​

While China has traditionally been known for being a big skin care market, Nabi said that she believed that Chinese market was “rebalancing” ​and allowing all categories, including makeup and fragrance, to grow.

“We are starting to see this, which is really great information for us at Coty as a company, because it would mean that we will be able to really run on our three legs in China, of course, fragrance, makeup and skin care with the upcoming launch of Lancaster Ligne Princiere in March.”​

Coty’s successes in China

The launch of Lancaster Ligne Princiere will ride on the success of its existing popularity in China

In the first quarter (Q1), the Monegasque brand recorded a 20% sales increase, with sales multiplying five times​ on Hainan Island alone.

Nabi said this signified that the brand had “a great demonstration of the desirability of the brand towards the most demanding Chinese customers.”​

However, China’s COVID-19 woes in Q2 impacted Coty’s prestige beauty division driving double-digit declines in sales overall.

Excluding China, nearly all APAC markets delivered double-digit growth during the quarter.

As such, APAC net revenues dropped 5% as reported but grew 2% like-for-like to USD$185.8m.

The company is confident that China will recover from this setback.

Coty CFO, Laurent Mercier said: “We are betting on acceleration definitely in Q3 and Q4.”​