Coty to bite into celebrity-led ‘winning formula’ with KKW stake: GlobalData

Earlier this week, the US beauty major announced it was set to acquire a 20% stake in KKW for $200m (€178m) in a move it coined a “strategic transaction”​ designed to further develop Kardashian West’s business globally.

“Together, Coty and Kardashian West will focus on entering new beauty categories and global expansion beyond her existing product lines,”​ Coty said.

Under the partnership, Coty said it would be responsible for portfolio development in skin care, hair care, personal care and nail products whilst Kardashian West maintained creative lead.

The move mirrored Coty’s earlier tie-up with Kardashian West’s younger sister Kylie Jenner​ in which it said its 51% controlling stake in Kylie Cosmetics and Kylie Skin would be used to take the two lines deeper into Europe.

That deal had also been touted as a move by Coty to edge into “areas that have high growth and high-growth potential”​​, notably beauty that appealed to Gen Z and millennial consumers, according to Euromonitor International.

Coty to benefit from ‘powerful consumer relationships’ built by Kardashian West​

Coty said the stake in KKW was “another step”​ in the company’s renewed emphasis on a beauty business transformation and acknowledged it was now working with one of the “world’s most recognised personalities”​ and an “an influential voice among beauty consumers”.​

Data analytics firm GlobalData said: "Coty’s stake in KKW will leverage the winning formula of personality-driven beauty brands."​

Adding detail, Yamina Tsalamlal, associate analyst at GlobalData, said the 20% stake was a clear move to delve deeper into KKW’s highly personalised and consumer engaged business model.

“These personality-driven brands bring a more human touch and provide the sense that the consumer is having an authentic experience with the brand and influencer. This allows large corporations such as Coty to benefit from the powerful consumer relationships these brands have built,”​ Tsalamlal said.

Personality, influencer and celebrity particularly powerful during COVID-19​

And this, she said, was particularly important during the ongoing coronavirus (COVID-19) crisis that had put big beauty brands under pressure, including the likes of Coty.

GlobalData’s COVID-19 tracker consumer survey showed that 59% of consumers spending more time on social media during the crisis, for example, were aged 16-24 years – “a key demographic for influencer-led brands”,​ Tsalamlal said.

“…With something as personal as beauty, consumers want to feel as if they’re being offered something made for them or that is recommended by a ‘friend’. This is the appeal of celebrity-led brands as these beauty icons are more than the traditional brand ambassador used by legacy beauty brands – they have built their business empires on their influence, personality and style, as well as through authentic engagement with their audience online.”​

“…Ultimately, multinationals and established beauty companies should take influencers and smaller brands seriously – if they don’t capture these passionate consumers, then the competition will,”​ Tsalamlal said.