Coty CEO Bernd Beetz's ambition to double the beauty company's revenues and achieve global sales of more than $5 billion by 2010 is likely to require an acquisition. That's the opinion of Raymond Nadeau, past vice president of new ideas for Coty and author of the book Living Brands, which is due out from McGraw-Hill on Nov. 1. It's hard to see how Coty could grow so quickly into a top-five beauty company "organically," says Nadeau, who still consults to the company. In his remarks earlier this month, Beetz said he sees most of the growth potential coming from color cosmetics and skin care, but at the present time most of Coty's global revenues come from fragrance. While Coty's color cosmetics brand Rimmel is the No. 2 color brand in Europe, Coty has seen much of its recent growth from celebrity-licensed fragrances. Most notable is Coty's license with singer/entertainer Jennifer Lopez on Still, and her first fragrance, Glow by JLo, which brought in $80 million in sales its first year. Coty's other licensed fragrances include Sarah Jessica Parker's Lovely, Celine Dion Parfums, Shania Twain's Shania by Stetson, and David Beckham's Instinct for men. While more licensed brands are forthcoming, Nadeau (who was responsible for many of Coty's current licenses), says at this point it could be dangerous for the company to rely heavily on licenses, since he believes their time may have peaked. Where celebrities are concerned, he says, he'd rather see Coty and other companies shift to endorsements or licenses with "abbreviated life cycles." Because of the aging population and the category's higher profit margins, Nadeau's bet is on skin care, with a possible acquisition by Coty in that area--possibly abroad. Indeed, Beetz said skin care offers the best growth potential for Coty, and he's looking to expand that market, especially in Asia. Coty's Lancaster skin care brand was restricted to Europe, but the company recently introduced the brand in some Bath & Body Works stores in the U.S., and also plans to introduce it in China. Of Coty's total $2.9 billion in revenue, the privately held company says half its sales come from Europe, a third from North and South America, 4 percent from Asia, and 13 percent from the rest of the world. Beetz said by 2010 he expects Asia to account for 15 percent of the company's sales.
One reason department stores have lost their hold over America is the scorn of Generation Y, that affluent Millennial crowd that cut its ultra-consuming teeth at such specialty stores as Abercrombie & Fitch and American Eagle. But a study released this week by the National Retail Federation found department stores may get a boost, both from Santa and Gen Y. Some 61.6 percent of shoppers plan to shop at department stores for holiday items, the poll found--up from 53.1 percent in 2003. And 79.1 percent of young adults plan to shop there--up from 72.9 percent last year and 65.9 percent in 2004, according to NRF's annual Holiday Consumer Intentions and Actions Survey. "This is a trend we noticed with back-to-school shopping," said Kathy Grannis, a spokesperson for the NRF. "Department stores seem to be getting the right merchandising mix, and are attracting younger shoppers." Discount stores are still the most popular destination, with 70.3 percent of all respondents saying they plan to shop there, followed by department stores (61.6 percent), specialty stores (48.4 percent), grocery stores (49.3 percent), drugstores (21 percent), and crafts or fabrics stores (20.5 percent). Almost half (47.1 percent) of consumers said they plan to shop online this year, up from 36 percent three years ago. All told, consumers say they are expecting to spend $791.10 this holiday season--up from $738.11 last year--as well as spending $99.22 on themselves. It looks like that will be a little easier to do this year: Women's Wear Daily is reporting that more stores and malls all across America plan to open their doors at midnight on Black Friday. (The nickname for the day after Thanksgiving, normally the most important retail day of the year, doesn't come from the foul mood of shoppers who dread the day, said Grannis, but because traditionally, it was the day that pushed retailers into the black for the year.)
The recent softening of gasoline prices may have a positive ripple effect on pickup truck and SUV sales. A J.D. Power & Associates study on owner retention released yesterday suggests that truck and SUV owners who are shopping for new vehicles are returning to those kinds of vehicles, rather than opting for more fuel-efficient models. According to real-time transaction data culled from the consultancy's Power Information Network, owner retention rates for large pickups and large and mid-sized SUVs are all up for a seven-week period beginning in mid-August. Those three vehicle categories constitute about 25 percent of new-vehicle sales in the U.S., according to the consultancy--and include such models as Dodge Durango, Ford Explorer and Expedition, as well as the F-150 pickup truck and Nissan Armada. During the latest period studied, gasoline prices dropped to an average of $2.66 per gallon, versus an average of $3.04 per gallon for the prior seven-week period. During that earlier summer period, 65.1 percent of pickup owners, 37.2 percent of large-SUV owners, and 23.5 percent of mid-sized SUV owners traded in for vehicles in those segments. The more recent seven-week period saw those numbers nudge upward to 68.9 percent, 39.6 percent and 26.9 percent, respectively. Tom Libby, senior director, industry analysis at the consultancy, said it's too early to call the loyalty numbers a bellwether. "We need more time, but in the short term, it's one measure that shows some strength in these segments; and they are important because they are high profit and high volume segments," he said. Still, in September, overall SUV and truck sales were down; luxury and full-sized SUV sales were down 7 percent, SUV sales overall were down around 10 percent and pickup sales were down 3 percent, according to Car Concepts, Los Angeles. "Sales haven't improved," said Todd Turner, president of the consultancy, but the hemorrhage has slowed. "We knew [pickup sales] were going to plateau because the market comprises people who have to have a pickup for utility, regardless of gasoline prices."
Restaurants traditionally tout preparation methods or flavor profiles to market seafood dishes. Beginning Nov. 15, customers at Bon Appetit Management Co.'s 400 U.S. food service locations will be able to order seafood based on how much mercury it contains. The Palo Alto, Calif.-based food service management company will post signs in cafes directing customers to GotMercury.org, a Web site that calculates the amount of mercury found in seafood. Customers enter their weight and the type and amount of fish they plan to eat; the GotMercury calculator reveals how much mercury they will ingest. The Web site also includes information on mercury contamination in seafood, and includes a link to a Spanish-language GotMercury site. "Americans deserve to know the truth about what's in their food," said Fedele Bauccio, CEO of Bon Appétit Management Co., in a statement. Bauccio said the company's cafes serve about 200,000 guests per day, many of them women of childbearing age; studies have suggested that mercury can disrupt a fetus's neural development. "Their health remains our first priority," Bauccio said. Bon Appetit also buys organic and locally grown produce and meat, and serves eggs from free-range chickens. GotMercury.org was founded by the Turtle Island Restoration Network, an environmental group. Seafood was back in the news this week when The National Academies of Science released a report called "Seafood Choices: Balancing Risk and Benefit." The report calls evidence that links seafood to health benefits or detriments "preliminary or insufficient." However, the report did confirm a link between eating seafood and a lower risk of heart disease--and also confirmed that women of childbearing age should avoid consumption of lean, predatory fish such as swordfish, shark, king mackerel, and tilefish, and limit their consumption of albacore, or "white," tuna. "Seafood Choices," online at www.nationalacademies.org, was sponsored by the National Oceanic and Atmospheric Administration, with additional support from the U.S. Food and Drug Administration.
For two days this month, Sirius Satellite Radio will offer all 75 of its channels free over the Internet to guests who sign on to listen to fare from the likes of Howard Stern and Martha Stewart. Beneficiaries of the two-day promotion (on Oct. 25 and 26) will include Sara Lee Food & Beverage--the latest blue-chip marketer to sign on with Sirius, which also counts Procter & Gamble, Panasonic, Heineken beer and Sony among its advertisers. No. 2 Sirius is locked in head-to-head competition with XM Satellite Radio, which this week launched a new brand campaign that asks "Are you on?" XM, which twice this year has lowered its forecast for subscriber growth, says it signed up 285,000 subscribers during the most recent quarter, while Sirius added more than 441,000 subscribers. XM now claims nearly 7.2 million subscribers. Sirius--which positions itself as "the best radio on radio"--has added more subscribers than XM for four straight quarters, and says it has 5.1 million subscribers. To pump up the number of subscribers, Sirius also said it would provide listeners with the option of paying a monthly fee of $12.95 to play its 75 channels over the Internet without having to purchase a separate receiver. XM radio already streams its 70-plus channels on the Internet for $7.99 per month. As part of its deal with Sirius, Sara Lee will promote "The Joy of Eating," the tagline of its first corporate cross-brand marketing campaign, which launched in August. That's also the name of the contest it will promote in ads and on specific programs featured on Martha Stewart Living Radio through Nov. 10. Meanwhile, Sara Lee is looking for Martha radio to incite more conversation about how food plays a central role in our lives. Listeners will be asked to submit recipes featuring Sara Lee products and stories about how food enhances their lives during the daily talk show, "Whatever with Alexis & Jennifer," hosted by Alexis Stewart and Jennifer Koppelman Hutt. Recipes, photos and the stories will be featured on the Joy of Eating Web site, and the best of them will be singled out with a prize.
Philips Electronics has placed its reported $600 million global media account in review, and incumbent Carat will defend. The Netherlands-based company has gotten a great deal of buzz from its "Sense and Simplicity" media campaign, but that hasn't translated to global success, according to reports in the trade press. One high-profile media strategy from Carat has been to buy an entire television program's ad time, but use only a portion of it, so viewers get more programming. It has done similar efforts in movie theaters--allowing patrons to get to the feature more quickly without pre-film commercials--although with less success. "The pace of change we have seen within the global media environment requires us to continuously challenge the way we deliver our brand promise of 'Sense and Simplicity' to our customers through the media they consume," Geert van Kuyck, senior vice president of global marketing at Philips, said in a statement. "While we have made important steps forward in this area over the past year, we also believe that fundamental to this challenge is the way clients and agencies collaborate effectively in this new environment." Two or three other media firms will be invited to pitch the account. A decision is expected by April 2007.