In recent years, China has seen a steady shift toward domestically produced brands.
Color Key, Judy Doll and Flower Knows are among the brands generating the most hype among Chinese consumers.
“The reality is that competition between international mass brands and local brands is fiercer than ever. And this is a real question mark for those who have big brands.” Coty CEO Sue Nabi said this at the company’s second quarter (2nd quarter) financial results conference.
However, Nabi said this phenomenon currently remains primarily in the mass market segment, with Coty’s presence relatively small compared to brands such as Max Factor and Adidas.
“We’ve seen very well-known mass-market brands looming over there. At Coty, this part of the business is very small.”
On the other hand, the C-beauty trend has not yet penetrated the local luxury and skin care market.
“For the prestige market and the skin care market, we are yet to see it. We are seeing a kind of coexistence of new local players, especially in the niche parts of the market…I cannot say that this phenomenon is happening in this part. yeah. [of the market],” Navi said.
She observed that the downward price trend in China is causing local consumers to seek discounts and promotions rather than moving to more affordable brands.
“The reason why trade in China has been down for so many quarters in this case is because of the ‘promotional nature’ of the market. I’m looking for promotions to buy.”
Nabi asserted that she is confident in China’s high-end beauty market.
“What remains very resilient in China’s skincare and fragrance sector is the high-end and luxury end of the market. This is what is being protected.”
Promoting China’s strong performance
According to Coty’s latest financial report, Asia Pacific revenue rose 16% in the second quarter and 17% in the first half.
This was primarily driven by the strong performance of the China Prestige segment, which grew double-digit in the second quarter.
“We also performed very well in China, particularly with Prestige accounting for the majority of our net revenue. We obtained Beauty Research figures on sell-outs for the quarter ending in December, and Coty was 30 points ahead of the market. That’s why we get along so well.” Navi said.
She added that high-performing fragrances from brands such as Burberry and Chloé Atelier des Fleurs helped drive the success.
Nabi also highlighted the company’s early successes in the skin care sector in China with Orveda and Lancaster.
For Olveda, a significant milestone was reached at the end of December with the opening of the brand’s first boutique in Shanghai.
“The brand is off to a very, very good start over there. We are reaching out to the right consumers, high networks and high network individuals,” Nabi said.
Meanwhile, the strength of Lancaster’s Ligne-Princiere line was reaffirmed by the five awards the company won in China, Nabi stressed.
“[Lancaster] is also doing very well and is now adding a second leg to the brand. We’ve been doing skin care, and now we’re adding a sun care part to our skin care. It’s not that we didn’t have it, but we focused our investments on skin care. And we’ve found that supporting both greatly improves productivity. ”