Coty Inc (US)

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Coty is now the world's biggest fragrance manufacturer, and among the leaders in both the mass and prestige cosmetics markets. The portfolio is led by the worldwide Calvin Klein fragrance franchise, acquired from Unilever in 2005. Other key brands include major licenses on behalf of Adidas and Davidoff as well as celebrities as diverse as Jennifer Lopez, David Beckham, Lady Gaga and Katy Perry. The group's cosmetics products include Rimmel and Lancaster. However, expansion has been on Coty's mind for some time. In 2012, it launched an unsuccessful offer to acquire troubled rival Avon for $10.7bn. Three years later, it had more luck with French cosmetics brand Bourjois, acquired from Chanel for $240m in stock. There have been many other such purchases, but its biggest deal by far was the acquisition for $12.5bn of a huge chunk of Procter & Gamble's beauty business, including Cover Girl and Max Factor cosmetics, Clairol and Wella haircare and fragrance licenses for Hugo Boss and Gucci, among others. That deal, which more than doubled the size of the company, completed towards the end of 2016, but Coty has been struggling to manage its enormously expanded portfolio ever since. Coty is controlled by JAB Investments, the investment vehicle for the Reimann family of Germany. Other interests include luxury goods and coffee roasting and retail.

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Adbrands Company Profiles provide a detailed analysis of the history and current operations of leading advertisers, agencies and brands worldwide, and include a critical summary which identifies key strengths and weaknesses. Adbrands Account Assignments tracks account management for the world's leading brands and companies, including details of which advertising agency handles which accounts in which countries for major markets. See also:

P&G Prestige
Wella
Clairol

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Brands

Adidas Marc Jacobs
Rimmel London Davidoff Cool Water
Lady Gaga OPI
Philosophy Playboy fragrances
Sally Hansen Chloe
Bourjois Jennifer Lopez Beauty

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 12th October 2017: Ads of the Week: "Welcome To Shetopia". Lots of great ideas and striking images in Anomaly's supposedly global - but clearly America-centric - campaign for Coty's nailcare brand Sally Hansen. It's certainly some kind of call to arms, but we're not sure that just having nice nails will be the key to women winning full equality to men. No disrespect to the ad, but it's in danger of trivialising what is arguably quite an important issue, especially in a week dominated by the sordid revelations surrounding Harvey Weinstein.

Adbrands Weekly Update 24th Aug 2017: Coty reported its first full year results since the acquisition of much of P&G Beauty as well as multiple other businesses. The numbers were disappointing, with revenues down by 1% on a like-for-like basis to $7.65bn (though up by 76% against Coty's reported revenues for the year before). The group reported a net loss of $422m after over $1.2bn of exceptional acquisition and restructuring costs and a hefty depreciation charge against acquired assets. Coty admitted it had over-estimated the health of several of the mass-market brands acquired from P&G, notably Covergirl, Clairol and Wella. Its existing Sally Hansen nailcare business also performed poorly. By comparison luxury fragrance brands including Hugo Boss and Gucci seem to holding firm and the group's professional beauty division was its strongest performer. However, Coty's shares took another tumble following the announcement, having fallen by more than 40% over the past year.

Adbrands Weekly Update 6th Apr 2017: Cosmetics juggernaut Coty also added to its collection, acquiring rights to Burberry's fragrance and beauty portfolio. The British fashion group has been producing these products inhouse since it bought them back from InterParfums four years ago. Coty will pay £50m for Burberry beauty's inventory and assets, plus a global license fee of £130m. The business generated revenues of just over £200m last year.

Adbrands Weekly Update 9th Mar 2017: Unilever's EVP global haircare Laurent Kleitman is moving to Coty to become president, consumer beauty. He takes over from Esi Eggleston Bracey, the ex-P&G beauty executive who accompanied her brands to Coty, but is now leaving the group for personal reasons.

Adbrands Weekly Update 23rd Feb 2017: Following news that Droga5 had been appointed as the new creative agency for cosmetics brand Covergirl, Grey disclosed that it had resigned its role on all the former P&G brands now owned by Coty a few days earlier. In addition to Covergirl, Grey had handled Clairol, Wella and Hugo Boss fragrances. Grey's statement cited financial differences as the reason for its resignation. Coty is known to be a tough bargainer on terms. In its 2015 global media review (subsequently won by Zenith) it specified 150-day payment terms as a condition of contract. Incumbent agency OMD had declined the opportunity to repitch for the business on that basis.


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Background

Free for all users | see full profile for current activities: The original Benckiser company was founded in 1823 in Germany by Dutch chemist Johann A Benckiser. For the first 130 years of its existence, the company restricted itself to the manufacture of industrial chemicals, such as ammonia and hydrochloric acid. Much of this work was overseen by Ludwig Reimann, who became Benckiser's business partner in the 1850s, and eventually acquired Benckiser's shares. His grandson Albert Reimann became head of the business in the 1930s and oversaw its diversification into into household goods in 1956, adapting its industrial products for consumer use. Calgon Water Softener was launched that year, and the group went on to exploit the spread of new household appliances such as the washing machine and dishwasher in the 1960s with the introduction of Calgonit dishwashing detergent in 1964 and Quanto fabric softener two years later. 

During the 1980s, Benckiser expanded rapidly through acquisition, spending more than $200m on companies including St Marc in France, Mira Lanza in Italy, Ecolab in the US, and in particular Beecham household products in 1990, following that company's merger with SmithKline Beckman. The latter acquisition included the well-known Astor-Lancaster perfumes business. Lancaster had been founded in Monaco in 1946, named by its founder Georges Wurz after the bomber aircraft he had piloted during World War II. It was acquired by Beecham in 1966 and merged with the existing Margaret Astor business. The purchase of Astor-Lancaster established Benckiser into one of the world's major cosmetics companies.

Rather than sell off the fragrances - an odd fit alongside household cleaning products - Benckiser set about building up that side of the business as a separate operation. In 1992, the group acquired US-based Coty from pharmaceutical group Pfizer. Coty had been one of the world's first commercial fragrance companies. Born in Corsica in 1874, Francois Sporturno moved to Paris in the late 1890s, adopting the name Coty as a variation on his mother's maiden name. He created his first fragrance, La Rose Jacqueminot, in 1904 and opened a shop in Place Vendome four years later. He revolutionised the industry the same year, commissioning jeweller Rene Lalique to produce fine glass bottles for his perfumes. Other cosmetic products followed as well as the hugely successful Chypre perfume. During the 1920s Coty established offices in New York as well as other European capitals. Although he died in 1934, his family retained control of the business. With the outbreak of World War II, they spun off Coty's operations outside France as Coty International, which floated in New York in 1962. The business was acquired the following year by Pfizer and had become North America's leading mass-market fragrance company by the 1990s, when it was purchased by Benckiser. 

The group made a series of other purchases following Coty, including Quintessence in the US (makers of Jovan and Aspen), Beauty International in the UK, General Cosmetics in the Netherlands and Unilever's Rimmel-Chicogo cosmetic business. However, a bid for Maybelline in 1996 was topped by L'Oreal. Previously a separate unit, Lancaster Group was absorbed into Coty the same year. Also in 1996, the company formed a joint venture in China with local cosmetics company Yue-Sai Kan. Meanwhile, the household goods business gradually expanded its business through acquisition or launch with a careful strategy of operating in underexploited niche markets, rather than competing head-to-head with the likes of Procter & Gamble or Unilever. By the 1990s the Dutch business was the world's #1 in automatic dishwashing products, claiming a 34% share of the global dishwashing detergent market, and 85% of the water softener market. Sales had grown from $200m in 1970 to almost $3bn in 1998.

In 1997 holding company Johann A Benckiser GmbH, spun off Benckiser cleaning products as a separate company and floated a quarter of its stock in New York and Amsterdam. That business later merged with UK company Reckitt & Colman to form Reckitt Benckiser. This left Coty as the holding company's main operating business. The cosmetics group continued to expand its international presence. In 1999, Coty was rumoured to be one of the companies preparing a bid for troubled US cosmetics firm Revlon. (It didn't materialise). The company also launched a series of new fragrances under the Isabella Rossellini, Esprit and Adidas brands. In 2001 it formed an unconventional alliance with Spanish confectioner Chupa Chups to launch a new line of fragrances and beauty products. In late 2003 the group sold its Chinese-American cosmetics brand Yue-Sai to L'Oreal for an undisclosed amount.

Following the acquisition in 2005 of Unilever's fragrance business, including the Calvin Klein portfolio, for $800m, Coty rebranded its Lancaster Group under the new name Coty Prestige. See full profile for current activities


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