Coty says it is continuing to make price increases in a “granular and disciplined” manner without seeing major dips in demand.
The beauty business owns brands such as Rimmel, Max Factor and Sally Hanson, and has launched fragrances and beauty products via collaborations with high-end fashion houses like Marc Jacobs and Burberry.
It took action to increase prices in its fiscal year 2023 (ended 30 June) to offset the impact of inflation. Speaking to investors today (22 August) Coty’s chief financial officer Laurent Mercier said these actions “went very smoothly” with both retailers and consumers over the past 12 months.
Increasing prices will continue to be a part of the company’s playbook in its 2024 fiscal year, he said, stating that he expects inflation to remain a major contributing factor, at least in the first half.
The company will continue to be methodical about how it deploys price increases, Mercier claimed.
“We have a lot of data… we know exactly where we can increase price without having any elasticity,” he said.
These price increases will be carried out on a “brand by brand, segment by segment, market by market” basis, he added.
CEO Sue Nabi emphasised the resilience of the beauty category, stating it was the only consumer packaged goods category in the US to grow volumes in the last six months.
Coty itself reported low-single digit volume growth in its fourth quarter and its 2023 fiscal year. It saw a 5% increase in sales in the year to reach $5.55bn (£4.36bn). Price increased by 10% in the year.
While Coty is adamant consumer demand in its category remains resilient, CFO Mercier says the company is also pairing price increases with “value creation for retailers and consumers”.
One way it is doing this is through its “premium” execution of innovation, he said. The company developed its ‘Twist Up’ mascara technology, launched under the Max Factor brand in the UK, and the ‘Lash Wow’ product using the new technology is now the brand’s best-selling mascara.
Nabi said Coty couples “innovative and desirable launches” with “meaningful” storytelling to drive demand. It continued its strategy of investing the majority of its marketing spend behind “key innovation” in both its prestige and consumer categories, as well as behind white space opportunities for the company.
Advertising and consumer promotion spending as a percentage of sales for the full year was 27%. This is slightly down from 2022 levels, when this figure was 28%.
Back in February, Mercier told investors that improving the ROI of Coty’s marketing spend was a “daily focus” for the business.
As well its own brands, Coty works closely with a number of fashion houses on branded skincare, fragrance and makeup products.
Earlier this week, it announced the expansion of its collaboration with Marc Jacobs to include the creation of a makeup range. It has also renewed and expanded several licences this year, including Hugo Boss, Davidoff, and Jil Sander.
Naby said this has solidified Coty’s position as the “partner of choice” for fashion brands. She appealed to any other fashion brands wishing to enter the beauty market to collaborate with the company, citing its “unparalleled” capabilities in areas like marketing and R&D.