Business of Beauty: Coty's CEO on What's Heading for Your Makeup Bag

Nail polishWhat do shimmery blue nail polish and Lady Gaga's perfume have in common?

You'll find the polish in the makeup bags of countless American women who will also be making room in their kits for the new fragrance from the iconoclastic singer, predicts Bernd Beetz, the CEO of Coty, the $4.1 billion beauty company that is nation's biggest seller of nail care, nail polish and fragrances.

Beetz gave DailyFinance a peek at some of the beauty products he says have captured -- and will capture -- the imagination of female shoppers, and industry analysts weighed in on the beauty trends behind the items.

And Beetz knows what he's talking about: Since taking the reins as CEO in 2001, he has doubled the size of Coty. A string of successful product launches, including a roster of celebrity and designer fragrances from the likes of Jennifer Lopez, Sara Jessica Parker and Marc Jacobs, lifted earnings "from close to zero in 2001 to $500 million by the end of 2007," according to a Harvard Business School report.

Nailing It

Shoppers are hot on Sally Hansen Salon Effects nail polish strips, which have tapped women's creative impulses, Beetz says.

Women are buying up the strips, which come in funky prints and patterns like leopard, florals and tie dye, because they offer a new form of self expression, he says. "They're a joyful way to decorate your nail ... and express your emotions and moods."

nails

But Salon Effects also brings "nail art," which has been trending at beauty salons nationwide, to everyday drugstore shoppers at a mere $8 to $10.

Vivienne Rudd, head of beauty and personal care for market research firm Mintel, says the nail-art trend is largely being driven by younger shoppers. "It takes a little courage to wear stripes and spots," she says.

Still, women of all ages are experimenting with the strips as consumers look for fun "at affordable prices," Karen Grant, vice president and senior global industry analyst for market research firm the NPD Group, tells DailyFinance.

Overall, nail care product sales have been booming in today's shaky economic climate. Women have been skipping the salon and playing at-home manicurist, while consumer products companies have been injecting innovation into the business with products like Salon Effects and the hologram, crackle and magnetic nail finishes on the market, analysts say.

In turn, nail care generated $735 million in sales at U.S. discount stores, pharmacy chains and supermarkets last year, up 6.5% from 2010, according to Mintel.

"Estee Lauder founder Leonard Lauder talked about the 'lipstick index' " -- why lipstick sales rise even as the economy sours, Rudd says. "As far as we're concerned, it's been the nail index." The economy has put "the consumer in charge of her own beauty treatments without having to go to the nail bar."

Beetz also pointed to the success of Coty's new Holland nail polish line from OPI, which features neutral hues like Gouda, Gouda, as well as highly-pigmented, edgy shades such as Thanks a WindMillion, a breezy sea green.

Success of the off-beat greens and blues means that "the unusual colors that you don't usually associate with nail varnishes are being picked up more more mature women -- it's not just a teen thing anymore," Rudd says.

MascaraFlashy Lashes

Coty's Rimmel Scandaleyes mascara, which debuted in January, is another big seller, Beetz says. The product reflects a "revolution" in a mascara brush that gives the impression of extending the lashes, he says.

Over-the-top lashes are hot these days, as false eye lashes have made a comeback, and are "almost mainstream," Rudd says. Now mascara "must pick up the slack where that's concerned." Indeed, promotional material for Scandaleyes urges women to "ditch those falsies."

Mascara makers now also must compete with eyelash lengthening drugs such as Latisse, she says.

A Spritz of Gaga, Calvin Klein Lipstick, Headed for Your Makeup Bag?

Lady GagaCoty will launch a Lady Gaga fragrance this fall, and while it won't smell like raw meat (her famous dress notwithstanding), Beetz was tight lipped on product details. All he'd say is that the fragrance will boast a "very unique execution." Coty promises the fragrance will break boundaries that will "allow people to experience beauty in a different and unique way."

One can only imagine what that means when it refers to the larger-than-life performer, whose memorable fashion statements have included that dress made of steaks, one that made her resemble a toilet brush holder, and of course, her stage turn as a scantily clad nun.

If you're rolling your eyes at the thought of yet another celebrity fragrance, Beetz understands why: Many of them are flashes in the pan, he says.

But Coty, which markets fragrances from celebs like Jennifer Lopez, Celine Dion and Gwen Stefani, seems to have gotten the star-scent formula figured out: J.Lo's fragrance, for example, has been a brisk seller since its 2001 launch.

lipstickCoty makes celebrity fragrances work by directly appealing to a star's target audience, putting massive marketing muscle behind them, and timing a perfume launch just so.

Gaga's fragrance will arrive just as the singer embarks on her "Born This Way" tour.

"Lady Gaga is a smart signing because she has such a wide fan base," Rudd says. "She has a strong personality, and the latitude to bring out a male fragrance with her transgender and gay fan base. She's the post-modern Madonna."

Also this spring, Coty will launch a new 130-item color cosmetics line from Calvin Klein. While Beetz is convinced the line will be a hit, this is the third time the tony fashion brand has tried to make the leap from the clothing rack to the cosmetics counter. Analysts are of mixed opinions about whether the third time will be the charm.

"They've got a challenge, because there might be a confusion with their previous incarnations," which fell short because one line was too safe, while the other didn't have wide enough distribution, Rudd says.

But Grant says the time is ripe for a line of Calvin Klein makeup. That's because along with makeup artist cosmetic lines like MAC and Bobbi Brown, beauty lines from fashion designers, such as Giorgio Armani, Dior and Chanel, "are the fastest growing brands" today, Grant says. "So there's an opportunity for Calvin as well."

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