‘Fiercer than ever’: Increasing competition from C-beauty brands confined to mass market for now – Coty

In China, the shift towards domestic brands has steadily gained momentum over the past few years.

Color Key, Judy Doll, and Flower Knows are among the brands generating the most hype among Chinese consumers.

“The reality is that the competition between international mass brands and local brands is fiercer than ever. And this is really a question mark for those who have big brands over there,” ​said Coty CEO Sue Nabi during the firm’s second quarter (Q2) earnings conference.

However, Nabi said that this phenomenon is currently contained mainly in the mass market segment, where Coty has a relatively small presence with brands such as Max Factor and Adidas.

“We’ve seen some very famous mass market brands closing in over there. This part of the business is very small at Coty.”​

On the other hand, the C-beauty trend has yet to hit the local prestige and skin care market.

“Regarding prestige and skin care market, we don't see this yet. There is a kind of cohabitation between local new players, specifically in the niche part of the market… I wouldn't say that I see this phenomenon happening in this part [of the market],” ​said Nabi.

She observed that the trading down trend in China is pushing local consumers to seek out discounts and promotions, rather than move down to more affordable brands.

“The trading down in China in the case for many, many quarters are because of the ‘promotionality’ of the market. It’s not people moving from an expensive brand to the least expensive brand, its people looking for promotions to buy at a cheaper cost.”​

Nabi affirmed her confidence in China’s luxury beauty market.

“I can tell you that the part that’s still very resilient in skin care or in fragrances in China is the high-end and the higher end of the market. This is the one that's protected.”​

Strong showing China​

According to Coty’s latest financial reports, revenues in Asia Pacific grew like-for-like by 16% in Q2 and 17% in the first half.

This was fuelled in large by the strong performance of its prestige division in China, which grew by double digits in Q2.

“In China, we had also a very good performance, specifically driven by prestige, which is the immense majority of our net revenue. We just got the beauty research figures about the sell-out during the quarter ending in December and Coty is thirty points above the market. So we are doing very well,” ​said Nabi.

She added that the success has been driven by its fragrances, with stellar performances from brands such as Burberry and Chloé Atelier Des Fleurs.

Nabi also highlighted the early successes it has had in China’s skin care space with Orveda and Lancaster.

Concerning Orveda, the end of December signified a significant milestone with the unveiling of the brand's first boutique in Shanghai.

“The start of the brand over there is very, very good. We have the right consumers reaching out, the high networks and as high network individuals,” said Nabi.

Meanwhile, the strength of Lancaster’s Ligne Princiere line has been reaffirmed by the five awards it has received in China, Nabi highlighted.

“[Lancaster] is doing also very well and we are now adding a second leg to the brand. We did skin care and now we are adding the sun care part to the skincare. It’s not that it was not there, but we were focusing our investments behind skin care. And we are realising that by supporting both, we are increasing the productivity in a tremendous way.”​