BW Confidential - Issue #4 - October/December 2010 - (Page 28)

Interview BPI president Rémy Gomez Long-term vision BPI president Rémy Gomez talks about changes in company strategy, his new license, plans for growth, and offers a frank view on the challenges facing today’s fragrance market by Oonagh Phillips B eauté Prestige International (BPI) seems to have recovered from the crisis. The Paris-based fragrance subsidiary of the Shiseido group, which markets the Jean Paul Gaultier, Issey Miyake and Narciso Rodriguez brands, reported a 10% increase in first-half sales—an even higher growth rate than that of the same period in 2008. The company may have recovered, but it was still hit by the recession (sales in 2009 were down by less than 5%) and has learned from it. This learning takes the form of a change in strategy, which includes putting increased focus on its pillar brands and slowing the number of new lines and launches. BPI will also add growth through the latest addition to its portfolio, couture house Elie Saab, with whom it signed a license in October last year. The first Elie Saab fragrance for women will launch in September 2011 and the aim is to reach and stay in the top-20 in Europe, following the same longterm strategy that has become a hallmark of the company. BW: How have you changed your strategy due to the crisis? RG: In 2009, sales decreased by less than 5%, which by market standards is good, but for us was painful. In the second half of 2009, we changed our model for growth. We did this taking into account the most important lesson of the crisis, which is that today the magnitude of the ups and downs is much bigger. This means the return on investment can be much bigger and much faster and the corollary of that is that the degree of risk is increasing. So we adjusted our strategy to make our pillars—Classique, Le Male, L’Eau D’Issey, L’Eau d’Issey pour Homme and Narciso Rodriguez—the central part of our growth strategy. This means we invest more in them and push them harder. The second change is to slow down the number and the speed of new lines and new big launches, and third factor is our decision to launch a new brand, Elie Saab. So now the strategy is three-legged and is more complex. BW: Is launching a new brand a gamble, especially as the degree of risk has increased? RG: Yes, of course. However, although we signed Elie Saab in the second half of 2009—in the midst of the crisis—the crisis did not influence our decision. When 28 we work with a brand we think long term—for 10 years and beyond, and you can’t predict the economy in that time. We’re aiming at the top-20 in Europe with Elie Saab in a relatively short period of time. BW: How will you develop the pillar brands? RG: We also have a three-legged approach to geography: the first area is Europe, where we still have substantial room for growth. In Europe, Miyake has a 1.5% market share and Gaultier a 3.5% share. In the UK we’ve not grown as much as in continental Europe over the past four years because of internal reasons, and there is catch-up to do there. The second market is North America. Miyake has a 2% share in the US and Le Male a 2.4% share. Five years ago Le Male in the US was at the bottom part of the top 15, but we have now reached number eight, through basic sampling and advertising, and there is room for Le Male to keep growing. We will apply the Le Male model to L’Eau d’Issey and L’Eau d’Issey pour Homme there. For Narciso, the brand is in the top-five in the stores where it is present. It is in one third of the market’s distribution and it’s not unthinkable that within three years it will be in 50% of the distribution. The third area for growth is travel retail, which is very important and where we have higher share than in local markets. There is a degree of professionalism and partnership that is working very well in travel retail and the return is faster than the local market, as the trade is more reactive to crisis. There is also a substantial growth in traffic, which is not the case in local markets. Travel retail accounts for more than 20% of sales. BW: Is Asia a focus? RG: China aside, Asia isn’t a big fragrance market and so it isn’t a strategic area of development for us and we do not have a big cosmetics business and don’t plan to at this stage. China has changed in that until three years ago it was all about promise and dreams. It is not the Eldorado today for fragrance, but things are becoming more solid. What’s important is that the Chinese consumer’s attraction to fragrance is real and they are using fragrance, so the market will grow. It is already bigger as a percentage of the total than October-December 2010 - N°4 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #4 - October/December 2010

- Brand & retail news recap
- Digital digest
- Companies on the move
Take note
- Market facts, figures & trends
Best of BW
- Highlights from our e-publication
- The latest in fragrance, skincare & make-up
- BPI president Rémy Gomez
Insight: fragrance
- Category overview
- Retailing
- Industry viewpoint
- New opportunities
- Launch roundup
- Airport Spas
- Spa case studies
- New store concepts
Travel retail
- Market overview
- Retail strategies
- Interview: World Duty Free & Aldeasa
Show preview
- TFWA World Exhibition
- Six up-and-coming beauty brands
Market watch: India
- Country overview
- Industry roundtable
- Retailing analysis
- Sector outlook
- Sustainability
Last word
- Mintel head beauty consultant Nica Lewis

BW Confidential - Issue #4 - October/December 2010