EXCLUSIVE: Coty’s Guilhem Souche interview

By Charlotte Turner |

According to Guilhem Souche, Coty’s Managing Director for China, and SVP for Global Travel Retail, despite passenger traffic remaining 10-30% below levels in 2019, Coty is ‘outperforming’ the industry as a consequence of its diversification into cosmetics and skincare.

 

In this trade exclusive interview, he tells TRBusiness how Coty views its future in China and why it is investing more heavily in R&D and digital services. We also dissect some of the company’s success stories, such as the rising demand for its private fragrance collections and Kylie Cosmetics’ convincing early performance in travel retail.

 

“Coty has been outperforming the industry, in the three regions where we are present, Europe, Asia and North America,” Souche tells TRBuisness. “This is because we have expanded our offering to three categories (fragrances, cosmetics and skincare) vs just fragrances pre-pandemic.

 

“In Q1 FY23 we were able to grow our revenues in all regions fuelled by significant travel retail momentum and double-digit growth across most markets.”

 

 

Speaking specifically on China, Souche maintains that there is still a huge appetite from Chinese consumers to purchase luxury and beauty products.

 

Honing in on Hainan with reinforced fragrance portfolio

“We’ve seen new categories emerging, for example, fragrances in China have been growing in the past years, and becoming more and more sophisticated. So we can see that we are doing very well and there is demand. Coty is equipped to serve the Chinese customers on the mainland as well as in Hainan.

 

“We continue to see great opportunity for Coty in China and need to be ready for when China reopens. We’ve significantly reinforced our portfolio and presence in Hainan so it means we are very prepared.”

 

TRBusiness asked Souche if the temporary closures of stores in Hainan earlier this year is concerning for Coty and its long-term strategy on the island. “Overall Hainan did very well over the last two years and I am quite confident that Hainan will keep thriving. The question is more, ‘where will consumers purchase when China reopens?’.

 

Chinese singer and actress Cheng Xiao at the Coty Travel Retail Around the World multi-brand fragrance pop-up at Haikou GDF Plaza.

Engaging influencers: Chinese singer and actress Cheng Xiao at the Coty Travel Retail Around the World multi-brand fragrance pop-up at Haikou GDF Plaza.

 

“Hainan has been developing a lot in the past three years; diversifying its hospitality and shopping offer to attract a wide array of customers, especially prestige travellers. We believe that it is now and will remain a strong travel destination for Chinese consumers.”

 

Skincare and cosmetics focus

Caveating this, Souche says that the pandemic has also provided Coty with ‘a good opportunity’ to refocus on its customers in other Asian countries; such as the Koreans, Japanese, Singaporeans and others based in Southeast Asia.

 

Indeed, over the last three years Coty has re-evaluated its portfolio, as it has more meaningfully diversified into categories outside of its core fragrance business. “If you were looking at Coty three years ago, there were mainly fragrances,” adds Souche.

 

A prime example of one of Coty's multi-dimensional brands, Gucci.

A prime example of one of Coty’s multi-dimensional brands, Gucci.

 

“Now, what we have done is premiumised our fragrances, introducing private collections, such as Gucci’s Alchemist’s Garden, Burberry Signature, Chloé Atelier de Fleur and the Boss collection. We see that consumers respond to premiumisation in the channel as well as the addition of our makeup and skincare portfolios to the category.”

 

Souche believes the premium and niche segments are benefiting from a shift in consumer preferences, which have been heavily influenced and accelerated by the pandemic.

 

“We call it ‘the fragrance effect’…as you can see people more and more using fragrances and developing more sophisticated tastes and preferences. Consumers are also treating themselves to items which provide an emotional uplift without breaking the budget.

 

Coty's private fragrance collections, such as Gucci's Alchemist's Garden range, are performing well as consumers tastes and preferences become increasingly sophisticated.

Coty’s private fragrance collections, such as Gucci’s Alchemist’s Garden range, are performing well as consumers tastes and preferences become increasingly sophisticated.

“Fragrances help to boost the mood of both men and women, especially now that they are going out to events and socialising more as well as returning to the office; at least part of the time.”

 

Souche highlights the success of Chloé Atelier des Fleurs – one of its high-end fragrance lines – which he says is performing ‘extremely well’ in Asia, and is currently rolling out to the rest of the world.

 

Another strategy deployed by Coty in recent years, is transforming its prestige perfume pillars into multi-dimensional brands. “We have moved our brands from pure players in fragrances, enriched them with the private collections, and then further expanded them with makeup.

 

“Gucci and Burberry are good examples of two-axes brands, which are key to success in Asia…Sometimes makeup can represent half of the sales, or even more.”

 

This also encourages further engagement with Coty’s end-consumers who can experience new aspects of a brand, which they are already loyal to. “You can tell more stories, you can link-sale, so this is also helping us to grow,” adds Souche.

 

“All of this is making us quite confident for the future, but there are new categories for us to reach.”

 

Looking ahead for Lancaster…

While fragrance remains at the heart of Coty’s beauty empire, skincare will play an increasingly important role in the coming year; particularly for travel retail as the company continues to drive the growth and footprint of its Lancaster brand in Asia, whilst launching the ultra-premium Orveda into the market.

 

“Looking ahead, we are really excited by a new ultra-premium offering from Lancaster which will be coming to the market in 2023,” teases Souche, who tells TRBusiness it can offer no more details on this just yet. [TRBusiness will return to Coty for an update on this development in due course].

 

There is more to come from premium skincare brand, Lancaster, in the coming months, says Souche.

There is more to come from premium skincare brand, Lancaster, in the coming months, says Souche.

 

“Then we have Philosophy, which is a leader in the US and North America, and has potential to go beyond this region.”

 

What will underpin Coty’s renewed vigour in skincare, is its increasing focus and investment in research and development. Souche highlights that Coty’s current success and strategy draws upon a 75-year heritage of ‘innovation in skincare’. “Our patented technologies and deep formulation know-how are central to our success,” he adds.

 

“You will see this in all the new products that we are launching…especially in skincare.”

 

Keeping up with Kylie Cosmetics

On the topic of innovation, Coty’s new juggernaut brand, Kylie Cosmetics, has certainly been making waves in travel retail. Souche explains that the brand is performing well in markets where it has little or even no domestic presence.

 

“In the past, there was this thought that travel retail was the place where you could only succeed if the product was already a success in the local market. We introduced Kylie for example, in markets where the presence was extremely small. In the distribution where we launched it, Kylie is now one of our top brands. We showed the brand to the customers at the airport and it became a huge success.

Kylie Jenner's cosmetics brand is making waves in travel retail.

Kylie Jenner’s cosmetics brand is making waves in travel retail.

“We first launched Kylie as a D2C brand, and then we realised that there is strong potential for this brand in travel retail.”

 

This particular brand is a prime example of the power that can be leveraged from social media and influencers in expanding business potential beyond borders. Created by young female entrepreneur, Kylie Jenner – who shot to fame after starring in hit reality TV show, Keeping up with the Kardashians – Kylie Cosmetics has now been recognised as the leading celebrity beauty brand, by global women’s fashion, beauty, and wellness platform StyleCraze.

 

Digital enhancements and personal contact

It is no surprise then, that Coty has sought to invest in enhancing its digital services elsewhere in the business. “We are getting smarter about knowing our customers; for instance we have a partnership with Ant Group (Alibaba) in China, which allows us reach more precisely the customer and anticipate what they want. Furthermore, we enhanced our customer experiences with virtual reality, diagnostics online and so on.”

 

When asked if the metaverse is something that Coty will look to leverage further in the future, Markus Stauss, VP Global Marketing Travel Retail, reminds TRBusiness that Coty was among the first of the major beauty players to make use of gamification.

 

“For example, with the retailtainment of the Gucci Flora fantasy world, the users were able to discover the ingredients and products in the metaverse, inspired by the campaign,” says Stauss.

 

Lancaster proves that digital services and human interaction can co-exist and elevate the customer experience.

Lancaster proves that digital services and human interaction can co-exist to elevate the customer experience.

 

“In some of our other interactive experiences users were allowed to select a character in a gamified experience. We work closely with the fashion houses to create a different world and experience for the consumer.”

 

Stauss outlines that digital services, such as magic mirrors, can allow retailers to serve customers quicker in their language via a customised experience; something which is especially important for travel retail.

 

“There is no limit to what digital can bring to the brand universe and product interaction,” adds Souche.

 

“Perhaps you could record a conversation with a makeup artist so you can recreate the look at home.

 

“However, personal contact remains an important part of the luxury experience. We still are a ‘people industry’. The BAs (brand ambassadors) are really important. Personalised advice remains very important, and is particularly important in skincare.”

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