Kylie Cosmetics, founded by Kylie Jenner, marked a significant moment in the makeup and skincare industry with its sale to Coty Inc. for $600 million. This move not only highlights Kylie Jenner’s influence but also underscores the hefty value of Kylie Cosmetics sales in the competitive beauty market.
With a commitment to expand the brand’s global presence and a keen focus on leveraging social media prowess, the deal between Kylie Cosmetics and Coty Inc. is poised to reshape the landscape of the makeup and skincare sectors. This article delves into the intricacies of the sale and its implications for both entities.
The Deal with Coty
In a landmark deal, Kylie Jenner sold 51% of her cosmetics and skincare brand, Kylie Cosmetics, to Coty for $600 million. This strategic partnership values Kylie Cosmetics at an impressive $1.2 billion and marks a significant milestone in the beauty industry. Key aspects of the deal include:
Expansion and Growth:
- Coty’s acquisition aims to leverage Kylie Cosmetics’ strong market presence for global expansion and entry into new beauty categories.
- The partnership is designed to be accretive to Coty’s top-line growth, with expectations to exceed its cost of capital by the third year.
Strategic Partnership:
- This long-term collaboration between Kylie and Coty focuses on building Kylie’s existing beauty business into a global powerhouse brand.
- Kylie Jenner retains a 49% stake in the company, ensuring her continued involvement in creative efforts related to products and communications.
Innovation and Market Penetration:
- Coty announced the relaunch of Kylie Cosmetics with new, improved clean and vegan formulas, alongside refreshed packaging.
- The deal facilitates Kylie Cosmetics’ entry into Macy’s Inc. stores, the Dubai market, and the introduction of new products like the Kylash mascara, contributing to significant sales growth.
This partnership not only capitalizes on Kylie Jenner’s vast social media following, with over half located outside the U.S., but also aligns with Coty’s expertise in working with celebrity brands, promising a synergistic boost to Kylie Cosmetics’ sales and brand value.
Impact On Kylie Cosmetics
Kylie Cosmetics has experienced a dynamic journey in terms of sales and market presence since its inception. The brand’s revenue and engagement metrics provide a clear picture of its impact on the beauty industry:
Revenue and Profitability:
- Generated approximately $177 million in revenue over the last 12 months, maintaining an impressive EBITDA margin of over 25%.
- Annual revenue peaked at around $360 million in 2018, with total sales hitting $1.2 billion from 2015 to the majority sale in 2019.
Market Engagement:
- Holds the second-highest number of followers and the highest engagement rate among all beauty brands on Instagram.
- Kylie Skin, launched in May 2019, saw a remarkable 50% repeat purchase rate among skincare customers, tripling its sales in Q4 2020 compared to the same period in 2019.
Challenges and Adaptations:
- Despite high social media engagement, there has been a noted decline in sales, with Rakuten Intelligence data indicating a 14% decrease during the first five months of 2019.
- The brand faced production challenges due to the coronavirus pandemic in summer 2020, impacting its sales figures.
- More than half of Kylie Cosmetics customers (60%) made only a single purchase from June 2016 to May 2019, highlighting challenges in customer retention.
This analysis underscores the brand’s significant achievements in revenue and social media engagement, while also acknowledging the hurdles it has faced, such as production challenges and fluctuating sales figures.
Role of Social Media in Kylie Cosmetics’ Success
Kylie Cosmetics’ unparalleled success is deeply intertwined with its strategic use of social media, spearheaded by Kylie Jenner’s influential online presence. The brand’s approach to digital marketing and customer engagement through various platforms underscores its dominance in the cosmetics industry, particularly among millennials and Gen Z consumers.
Instagram Mastery:
- Follower Engagement: Kylie Cosmetics leverages its 25.8 million followers by showcasing products in Instagram stories with direct purchase links, making shopping seamless.
- Influencer Collaborations: Partnering with influencers not only extends the brand’s reach but also builds trust and authenticity.
- Behind-the-Scenes Content: Sharing the creation process humanizes the brand, fostering loyalty.
Twitter Tactics:
- Educational Content: Posts featuring influencers educate on product use, emphasizing quality.
- Customer Interaction: Engaging with customers through questions provides valuable insights, while sharing testimonials bolsters credibility.
- Promotions: Announcing deals and offers keeps the audience informed and interested.
Facebook and YouTube Strategies:
- Video Marketing: High-quality, engaging videos on both platforms enhance visibility and drive sales.
- Exclusive Groups and Content: Maintaining a Facebook group for loyal customers offers a space for interaction and exclusive benefits.
Kylie Jenner’s personal promotion of Kylie Cosmetics across her social channels, coupled with a well-orchestrated content strategy, exemplifies the brand’s adept use of social media to amplify sales and brand loyalty. This digital savviness, combined with strategic product launches and influencer marketing, cements Kylie Cosmetics’ position as a social media juggernaut in the beauty industry.
Conclusion
Through the strategic partnership with Coty Inc., Kylie Cosmetics has not only expanded its global footprint but has also underscored the power of celebrity influence in catapulting a brand to unparalleled heights in the beauty industry. This deal, valued at $600 million, fortifies Kylie Jenner’s status as a formidable force in the cosmetics sector and highlights the brand’s significant achievements in revenue, social media engagement, and market penetration. It is evident that Kylie Cosmetics’ success story is intricately woven with innovative marketing strategies, a robust social media presence, and quality product offerings, propelling the brand toward sustained growth and global recognition.
The implications of this partnership extend beyond the immediate financial gains, offering valuable insights into the evolving dynamics of consumer engagement and brand development in the beauty industry. As Kylie Cosmetics continues to navigate the challenges and opportunities presented by the market, its journey serves as a compelling case study on the synergistic potential of celebrity branding and strategic corporate alliances. Moving forward, the brand’s trajectory will undoubtedly provide a rich tableau for further research and discussion on the impact of digital marketing and celebrity influence in driving brand growth and innovation in the competitive landscape of the beauty industry.
FAQs
What is the valuation of Kylie Cosmetics following Coty’s acquisition?
In November, when Coty acquired a 51% stake in Kylie Cosmetics, the transaction valued the company at approximately $1.2 billion. This valuation also elevated Kylie Jenner’s personal net worth to surpass the billion-dollar threshold.
How much did Kylie Jenner invest in the initial production of Kylie Cosmetics?
Kylie Jenner invested $250,000 from her earnings as a model to produce the first 15,000 lip kits through Seed Beauty. The brand, which was later renamed Kylie Cosmetics in February 2016, ramped up production to 500,000 kits. By the end of its first year, Kylie Cosmetics had generated over $300 million in revenue.
What is the projected worth of Kylie Cosmetics’ online sales by 2024?
Projections indicate that the e-commerce net sales for Kylie Cosmetics’ online store will continue to decline, dropping from $68.7 million in 2017 to an estimated $29 million by the year 2024.
What was the reason behind the lawsuit against Kylie Cosmetics?
Kylie Cosmetics faced a lawsuit from a model named Sasha Palma, who alleged that she was contracted for photo shoots for the brand’s cosmetic products. She claimed to have been hired for a one-day shoot in June 2020 with a daily rate of $2,000.