Coty Inc. marches toward its goal of becoming a $7 billion beauty company, diversifying its fragrance-heavy portfolio with the Nov. 23 acquisition of prestige skin-care, bath and body brand philosophy.

New York-based Coty purchased the brand from The Carlyle Group, a global alternative asset manager, reportedly for $1 billion.

The acquisition fills gaps in Coty’s product offering and strengthens its overall skin-care presence, “which is one of our key strategic objectives,” Coty CEO Bernd Beetz says in a Nov. 23 release.

"Philosophy is one of the beauty industry's most prestigious brands and a fantastic addition to the Coty family,” he remarks.

"This acquisition will allow Coty to strengthen its presence in the skin-care category, which is one of our key strategic objectives.” – Coty CEO Bernd Beetz

The news comes at the tail-end of a busy November for Coty. The firm purchased German cosmetics company Dr. Scheller Cosmetics AG Nov. 12 and is rumored to be in the market for nail color marketer OPI Products Inc. (Also see "Coty Diversifies Its Cosmetics Portfolio; Is OPI Acquisition Far Behind?" - HBW Insight, 22 November, 2010.).

Founded in 1996, Phoenix-based philosophy is built around “celebrating the beauty of the human spirit.” It will become part of the Coty Prestige division, which is currently packed with designer and celebrity fragrances including Jennifer Lopez, Vera Wang, Marc Jacobs, Kenneth Cole, Lady Gaga and Sarah Jessica Parker.

Fragrances currently account for 59% of Coty’s portfolio, while color cosmetics are 22% and skin, sun and personal care make up 19% of the pie, according to the firm.

Philosophy would enhance Coty’s skin-care portfolio, which currently is dominated by its Lancaster brand. Marketed mostly in Europe, Lancaster offers anti-aging, fragrance and sun-care products.

Lancaster prices range from $25 for the Shimmering Bronze Self Tanning Creamy Gel to $135 for the Retinology Night Cream, which has an “innovative Lancaster Intra-Cellular System to help deliver retinol to your skin to maximize benefits.” Both are featured at HSN.com.

Philosophy’s products fall within a similar prestige price range with kiss me very emollient lip balm retailing for $10 and miracle worker miraculous anti-aging skin-care collection for $110.

Philosophy is expected to generate $200 million in sales for 2010, according to Coty. It sells at premium retailers including Sephora and Ulta.

Ken Stevens, CEO of philosophy, says the firm looks forward to growing as part of Coty’s brand portfolio.

“We thrive on innovation and are extremely excited to join Coty, a company that shares our passion for delighting consumers with superior products,” he says.

Among philosophy’s most popular products are its miracle worker anti-aging concentrate ($62) with “breakthrough peptide technology” that “bolsters the skin’s ability to self rejuvenate as it helps support natural collagen,” and on a clear day retinol clarifying lotion ($40), which has a “patented microsponge system for gradual retinol release,” according to the firm’s website.

Philosophy is launching a commemorative, limited-edition hope in a jar moisturizer for the holidays to honor “25 seasons of hope, joy and love” of The Oprah Winfrey Show, according to a Nov. 23 release. The product will come in a sparkling red glitter box and retail for $105 for an 8-oz. jar. Winfrey chose hope in a jar as one of her Favorite Things for 2010.

Coty is focusing on skin care at a time when the category is on the rise. According to NPD, high-end skin care is up 11 percent in 2010, compared with the same period last year (Also see "Retailers Discuss "What's Working" In Galvanized Prestige Beauty Sector" - HBW Insight, 1 November, 2010.).

By Suzanne Blecher

Coty's Philosophy: Expand Portfolio With Higher-Growth Skin Care

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