Coty Acquires Procter & Gamble's Beauty Brands

Changing Tides: Procter & Gamble Returns to its Roots, and the Rise of Coty’s Beauty Empire

Procter & Gamble (P&G) has been the leader in the U.S. beauty and personal care market since the very first edition of Kline’s Cosmetics & Toiletries USA report was published in 1963. That study, which was authored in part by Dr. Charles Kline himself, reported P&G among the leaders in the soap, deodorant, toothpaste, and shampoo categories—a position the company still retains some 50+ years later, now with a new CEO taking the helm.

Once the transaction to shift ownership of 43 brands to Coty, which was announced in July 2015, is complete, P&G will slip to the #2 spot, leaving L’Oréal in the #1 position. Meanwhile, Coty will jump to fifth place, up from ninth, edging Johnson & Johnson out of the top five.

P&G AND COTY’S RANKINGS IN THE U.S. BEAUTY MARKET, 2005 TO 2015

SOURCE: Kline’s Cosmetics & Toiletries USA annual service.

SOURCE: Kline’s Cosmetics & Toiletries USA annual service.

The move marks an end to an era, when P&G dominated virtually every single category in the market. Being #1 is a vulnerable and fiercely competitive place to be, as newbies, private labelers, and mainstays alike targeted P&G’s leading brands as a place to gain share. P&G will still be in the #1 or #2 spot in oral care, hair care, and toiletries, just as it was 50 years ago. The remaining portfolio of personal care brands that David Taylor will now lead as the newly appointed CEO should be easier to manage since they share synergies of being mass-market commodity categories, where winning is largely dictated by advertising budgets, price, and added value.

RANKINGS IN U.S. BEAUTY AND PERSONAL CARE BEFORE AND AFTER THE TRANSACTION

SOURCE: Kline’s Cosmetics & Toiletries USA annual service.

SOURCE: Kline’s Cosmetics & Toiletries USA annual service.

 

The evolution of P&G’s beauty business has been consistent with the times. When P&G entered the professional hair care business in the early 2000s with its acquisitions of Clairol and Wella, it was during a period when many of the leading players were likewise employing a channel diversification strategy. For example, in 1997, prestige stalwart Estée Lauder had expanded into professional hair care and mass cosmetics with its acquisitions of Aveda and Jane Cosmetics, respectively. L’Oréal was busy with its own string of acquisitions, which included Softsheen, Carson Products, Matrix, and Kiehl’s Since 1851.

Coty gains a spot in the market’s top five and is now among the leaders in color cosmetics and hair care, in addition to fragrances, where the company will continue to rank second behind L Brands, the parent company of Victoria’s Secret and Bath & Body Works.

Until now, Coty’s ascent has been less drastic. Its gradual escalation during the 2000s and early 2010s was characterized by a series of fragrance license agreements (e.g., Celine Dion, Jennifer Lopez) and acquisitions of medium-sized players (e.g., Del Labs, Philosophy). Its failed attempt to acquire Avon in 2012 clearly signaled the company’s desire to be among the market leaders, a position finally attains via this newly announced deal.

The move also earns Coty the #2 spot in the professional beauty world, a place where it previously ranked #11 with OPI, which is the leader in professional nail care. The Wella portfolio of brands ranks second in professional hair care, which is enough to give Coty the #2 spot overall.

COTY’S RANKINGS IN GLOBAL PROFESSIONAL BEAUTY BEFORE AND AFTER THE TRANSACTION

SOURCES: Kline’s Salon Hair Care, Professional Skin Care, and Professional Nail Care annual services.

SOURCES: Kline’s Salon Hair Care, Professional Skin Care, and Professional Nail Care annual services.

These and other insights from the global professional beauty market can be found in Kline’s long-running series of reports covering market sizes and growth, key trends, new product launches, developments, competition, business opportunities and more. Learn more…

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