Su Ge an from Coty: High-end Colored Makeup and Technology Skincare is a New Growth Pole

Coty, a globally recognized perfume giant, has entered China since 1996. Coty Group has also contributed to the opening of the Chinese perfume competition.

Technology drives industry development.

Editor’s Note

As the leader of global economic growth, China’s beauty market is booming. The market breaking through trillions of dollars in volume will soon become the top in the world. Looking into the future, international beauty giants prepare for the competition while domestic enterprises are following. Whether the big ship proceeds smoothly without a hitch, the helmsman is responsible for an important mission. CHAILEEDO holds a column “CEO on Trends” and we interview CEOs from well-known cosmetic companies at home and abroad to discuss the future increment and trends of the Chinese market.

Coty, a globally recognized perfume giant, has entered China since 1996. Coty Group has also contributed to the opening of the Chinese perfume competition. In order to further show the importance of the Chinese market, Coty Group participated in the 4th China International Import Expo for the first time this year with its ten star brands such as GUCCI, BURBERRY, Chloe, Lancaster, Max Factor, Adidas and so on. Its participating brands covered the three main lines of perfume, color cosmetics and skin care.

Through Coty Group’s line-up at the Expo and exchanges with Coty Group’s General Manager of China, Su Ge’an, Coty’s insight of China and future trends can be clearly seen.

Three aspects to promote high growth

Coty Group, founded by Francois Coty in 1904 in Paris, France, is known worldwide for pioneering the modern perfume industry. The group is divided into two divisions: luxury brands and consumer brands. It is the world’s largest perfume company and a recognized manufacturer in the global beauty industry with its products sold in 130 markets worldwide.

On August 26, Coty Group released its fiscal year 2021 in fourth quarter financial results and full year financial results (July 2020 to June 2021). Coty’s fiscal year 2021 revenue reached $4.63 billion with 59% year-over-year growth in Asia Pacific, 147% growth in the high-end beauty business and 38% growth in consumer business. The data shows that Coty Group outperformed fiscal years 2020 and 2019 in the China market.

“So far this year, Coty Group has been growing at a better-than-market pace every quarter,” said Su Ge’an. He contributed the growing performance to three things.

A rich brand matrix. According to the financial report, sales in the luxury division GUCCI, BURBERRY and Marc Jacobs rebounded 160% year-over-year to 3.641 billion yuan. While the customer division with brands such as CoverGirl and Max Factor rose 44.4% year-over-year on revenue to 3.142 billion yuan in the fourth quarter of fiscal 2021.

For the luxury division, the fragrance business of each brand developed rapidly in fiscal 2021, Su Ge’an said. Meanwhile, Coty Group drove performance growth by accelerating product innovation and advancing the speed of new products under the fierce competition in the color cosmetics. GUCCI and BURBERRY both launched a number of new products .

Accelerating channel construction. Su Ge’an believes that offline channels enable consumers to experience perfume and color cosmetics products on their own. In 2021 fiscal year, Coty Group has been accelerating the opening of offline stores. Next, GUCCI beauty will also be present in eight new provinces in China and Coty Perfume will open its first flagship store in Dayuecheng, Xidan District, Beijing at the end of November.

Compared with offline channels, online channels can show the brand image directly to more consumers without geographical restrictions. Su Ge’an stated that “Coty Group started online channel very late but we accelerated our transformation in e-commerce in the past year. For example, GUCCI and BURBERRY both entered the Tmall flagship store last year and Max Factor also tried to open the TikTok flagship store.”

Su Ge’an said that he hoped to do long-term brand planning for each brand. It will also try to make the online and offline performance ratio reach a balanced state.

Focusing on the Chinese market. Since 2016, Coty Group has started to pay attention to the development in the Chinese market which reflected in the fact that COTY Group remains a distributor business model in China before 2016. But in 2016, it switched to the direct operation model of the headquarters. A year ago, we even made the China market as one of its core strategies. Su Ge’an said that the group’s headquarters gave strong support to Coty China in many aspects such as assisting in the strategic planning of key brands, specifically designing the image of the exhibition hall, giving to more media publicity, and helping the team to expand.

The Overall Accounting of Perfume is Moving up

At present, perfume still takes the lion’s share among the three categories of Coty Group: skincare, color cosmetics and perfume but high-end color cosmetics has become the growth engine.

For the whole big market in China, perfume is the fastest growing among the three categories of skincare, color cosmetics and perfume,, but the fastest growing is color cosmetics for Coty Group. Su Ge’an told CHAILEEDO that this is mainly because color cosmetics of Coty Group is newly developed and color cosmetics is the growth engine.

For the skin care category, Coty Group will focus on developing the brand Lancaster. It is reported that Lancaster was born in Monaco in 1946 and has strong strength in the high-end sunscreen market, as well as a long heritage of skin care technology. Coty Group is helping this brand to transform from a sunscreen-focused to a technology-based skin care brand. Its first new global retail concept store is also open in Hainan.

In addition, Coty Group will also reposition the skin philosophy skincare brand, according to Su Ge’an, this is a more natural and environmentally friendly brand. Because of registration regulations, this brand is currently mainly selling through cross-border e-commerce channel. In addition, Adidas is mainly in sports style but also has considerable potential in the field of skin care.

As for the perfume category, Su Ge’an introduced that the current perfume brand portfolio of Coty Group is balanced and diversified.

In high-end market, two brands GUCCI, BURBERRY performed well in China. In addition to regular products, the two both have Haute Couture line, such as GUCCI’s The Alchemist’s Garden series, BURBERRY classic series, are more popular in the market. In high-end niche market, Chloé brand, as a representative, its new series name is Wonderland Garden. The theme of whole collection is flowers and many young women like this brand which has great potential for development. Designer perfumes brand such as Miu Miu and Tiffany are all exclusive with Sephora in China, which basically also maintain a two to three digit growth rate. As for lifestyle perfume options, we have CK and MARC JACOBS. In the customer market, our Adidas sporty perfumes is available.

From high-end to customers categories, Su Ge’an believes that Coty has a very complete brand matrix that can meet the diverse perfume needs of consumers. And the current rapid development of the Chinese perfume market is also an opportunity for Coty.

At present, the whole perfume market is moving up in value. Su Ge’an said that Chinese consumers’ priority for perfume has developed rapidly in recent years. Fewer people bought perfume 3 years ago but now perfume has developed into one of the fastest growing categories in the beauty market. Today’s Generation Z, in particular, is very knowledgeable about perfume and some have a penchant for collecting it. This trend has pushed Coty Group to keep working on product innovation, as well as pushing the brand to research how to tell the story behind the product and how to explain the brand values and so on.

Technology is an important driving force for beauty

As for the combination of beauty and technology, Su Ge’an said that technology is an important driving force for the development of the beauty industry.

In skincare, technology is crucial to skincare. The development of technology directly drives the development of skincare brands and the performance of their products. For example, Lancaster is recognized as the inventor of retinol, the highest active anti-aging ingredient in the industry.

The same is suitable for fragrances. In the days when Coty was first created by its founder, Mr. Coty, perfumes were generally made directly from natural ingredients. But Mr. Coty combined natural ingredients with synthetic ones to create chemically synthesized fragrances and invented modern fragrances. What supported him behind it was the technological nature of fragrance technology.

In addition, technology has also helped Coty to make new initiatives in sustainability to drive this strategy forward. For example, Coty is using carbon capture technology to purify the carbon waste emitted from the factory to obtain ethanol, the main raw material for perfumes through a partnership with Lanzatech. Currently, Coty is reportedly the first company in the fragrance industry to introduce sustainable ethanol production through carbon capture technology in its fragrance products. Coty aims to use ethanol produced by carbon capture technology in the majority of its fragrance products by 2023.

In Su Ge’an’s view, the Chinese beauty market will continue to grow at a high rate and fragrance is supposed to be one of the fastest growing categories. While skin care will certainly continue to be strong and color cosmetics will return to double-digit growth rates as it becomes less and less affected by the pandemic.

He believes that the brands that will be successful in the Chinese market in the future must have a strong brand image, brand value and communicating well with consumers at the same time in addition to their products. Such brands can be born abroad or locally in China, said Sugean.

“The Chinese beauty market is already important to the global beauty market”, Su Ge’an believes that China will have a stronger voice in the beauty market in the future and will become a leader in the global beauty market to lead the development of the entire beauty industry.



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