We're really excited to have a lunch keynote here with Coty. I'm excited to host Stefano Curti. He's the Chief Brands Officer for the Consumer Beauty Group at Coty. At TD Cowen, we're very excited about Coty's abundant growth opportunities, which leverage fragrance, distribution, and innovation expertise. And we also are monitoring Coty as it continues to execute in prestige skincare and cosmetics brands, and grows double-digit in China and travel retail. A quick introduction on Stefano. Stefano leads Coty's consumer beauty brands worldwide, with a strong focus on strengthening brand equity, global positioning, and innovation performance. He's a beauty and skincare expert, having spent almost 30 years working in the beauty and health industry in the U.S., Europe, and Latin America. From his time at Markwins Beauty Brands and Johnson & Johnson, Stefano has built a deep expertise in brand building and channel expansion. Stefano, it's a pleasure to have you here. I'll have you join me. Thanks, Stefano. Thank you. Thank you. Oh, thank you. Come on up. You're going there? Yeah. Thank you. Good afternoon, everyone. Good afternoon. Stefano, just to start, for those who are less familiar about Coty's beauty brands, could you talk about key brands under the portfolio and the competitive strengths of your brands in the mass beauty category? Great. I brought a couple of slides to help us in the conversation. Now, I love, I love to talk about Coty, especially in the recent years, because this is one of the greatest American comebacks, and Americans like comebacks. These are the key numbers for Coty. The most recent, almost $6 billion in revenue. We're distributing in over 120 countries. We have a manufacturing plant, so we are fully integrated with manufacturing internally, approximately 80% of our products. We have 11,000 employees, and we enjoy some very strong positions in the marketplace. So we are number one in fragrance globally, number two or three on color cosmetics, and one of the fastest growing ones in skincare. This year, we are actually celebrating 120 years of history. We were founded, the company was founded in 1904 in Paris. Today, we are one of the few companies that are dual listed in Paris and in New York. And to celebrate 120 years, we have, we're launching a new collection of fragrances called Infiniment Coty Paris. That is gonna be, you know, a super premium, amazing collection of 14 fragrances. So this is Coty, at a high level. We have two division, Prestige and Consumer Beauty. I, I am the president, I lead the Consumer Beauty division. In Prestige, we have from the top, more expensive brands, Orveda, Infiniment Coty, Gucci, Chloé. So, as you can see, this is a history of acquisitions, as well as a lot of licensing and partnerships. On the other side, consumer beauty. We have a big brands in order of probably a size. COVERGIRL is one of the top leaders in color cosmetics in the U.S. and Canada. Rimmel is market leader in the U.K. and across Europe. Adidas, so we partner with Adidas to bring the beauty products and many other. Max Factor is another one, and then we work with Vera Wang, the fashion designer, David Beckham, these days quite popular thanks to the Miami Football Club. So that's Coty in a nutshell. Stefano, you've done a really spectacular job innovating and staying culturally relevant across a lot of these brands. Could you talk to some of the changes you've made? How have you been able to reposition some of these major brands? What are some milestones as well? Very, very good. Yes, remarkable growth. We have been growing the consumer business at 9% CAGR in the last three years, and we've been gaining market share. The company had gone through some transformation, so the new executive committee has been in place now for three and a half years, some parts of that, and we brought a lot of transformation. Probably the biggest transformation that we brought has been the repositioning of some of our brands, because Coty is a company of legacy brands, brands that have been around up to 140, 150 years. So the biggest challenge in life for us is how do you keep relevant. It's the cool factor, basically. I wake up every morning thinking of the cool factor. These are some of the largest brands. So what we did, three and a half years ago, two years ago, was to relook at our brand positionings. I like to say that we look back to move forward. So we relooked at what the brand stood for, and we tried to bring those values back. It's always more economically attractive, actually, to build on existing memory structures of consumer rather than inventing a new ones. So for instance, we looked at COVERGIRL. COVERGIRL was the first brand to introduce healthy foundations, healthy makeup decades ago. And we brought it back as the clean, healthy alternative to regular makeup. Rimmel was created in the undergrounds of London, so it's more punk than pink, and we brought that the edginess back. Max Max Factor, that is very popular in Europe, is actually not in the United States anymore, although it was born in Hollywood, has been, for decades, the makeup of makeup artists. So we looked at the brand positionings, we built new campaigns. We tested all the campaigns, so I'm not gonna bore you, but we have executed campaigns that are three times more effective than the campaigns that were produced in the past. And it's easier when you reconnect with existing memory structures. Gen Z is another obsession. So I mentioned the healthy makeup, but healthy and clean today is a way to connect well with Gen Z. So we brought these positioning of clean and healthy across a number of our brands. You can see the clean color for COVERGIRL there. Yummy Gloss. Yummy Gloss is one of our most viral brand. Actually, it's edible. It's an edible product. I have a couple of them here. It's this one here, and you can actually eat it. It is so clean, you could eat it. We brought clean products- How many calories are in that? What's that? Is it sugar-free? No. Have you really tried it before? Yeah. Have you eaten it? Yeah, I've eaten. Yeah, of course. Why did you need to make it eatable-- edible? Because, well, it's vegan, by the way. Oh, yeah, right. For all religions and all cultures- Yeah ... it's acceptable. You can actually- Yeah ... ingest it. No, but being ingestible is a torture test for cleanliness. Yeah. And clean is really a big value for Gen Z, for everyone, but for Gen Z especially. It's been a hot topic, clean in general. Yeah. How do you speak to it? How do you define it? Consumers could be confused about what clean really means. Absolutely. There is not actually a legal definition of clean, and that's one of the challenges. So, you know, it's we act based on purpose, based on our purpose, what we think is the right thing to do, then we create a policy, a line, guidelines, and we follow them. We also try to understand the guidelines for clean of major retailers like Sephora and Ulta, and we navigate through that. Yeah. And then we brought clean to other brands. So this is the third picture is Rimmel Kind & Free. It was the largest actually launch that I've personally done across Europe, and we brought also in Sally Hansen in nail polish. And what else? No, that's it. That's it. Another question we had, innovation and beauty has been vital to growth. As you know, speed is so important, and the consumer is changing quickly. What's your innovation cycle like? And what percentage are from new products, and what should we understand about timing? Okay. First, we brought a lot of rigorous testing to new product development, both in terms of conceptually as well as products, product performance, because in the end, a brand is nothing without a product, without being obsessed, obsessed with the product itself. So a lot of regular, rigorous testing, and that increases your chances of success, basically. We have, over time, to your question, we have actually doubled in the last two years, the consumption of brands coming from new products. The participation on new products three years ago used to be in the high single-digit percentages- Yeah ... and now we are in the mid- to double-digits. My objective is really between 20% and 25%, because innovation is not just for revenues, as you know, it impacts your brand equity, your brand development. So it's a very important signal to consumers. Speed of development, in my life, at parity, at parity regulatory level, I worked in an organization that took 36 months to develop a product- Yeah ... down to organization that that spent 6 months in developing products. When I started at Coty, our average time was between 18-24 months, and today we're down to 6 months in some cases. So, we can, we can, we can develop a big disruptive technology, and takes a longer time, or reactive products and takes 6 months. Also, the other thing that we brought was guidelines in product development to engineer virality. Engineer virality is the dream of everyone. It's a hit and miss sometimes, but we now understand some of the elements that gives you better chances of virality. I remember decades ago, it was about a white cream in a jar, and it was 10 years back, and that was the claim, and today it's not like that. So we have a guidelines that we embed in the product development, like, social listening, for instance. Everything that you want to know, you don't need to run a usage and attitude study anymore. It's out there. Just depends on how you read it. Social listening, important. We started developing now products with influencers. In fact, I might start writing the name of some of them on the back of the pack to make them even more personal. We need striking claims, we need striking package, we need visual transformations. Visual transformation and before/after, before and after, very important, because all of these elements embedded in the product development actually will create advocacy and will create storytelling for the influencers and creators. I'll give you a couple of examples of our major innovation just in the last literally six weeks. Wonder Bond, this is the Rimmel mascara. I have got everything on me, by the way. Good. I love it. This is Wonder Bond. Are you familiar with the with the bonding technology that is very very famous in in hair care with a brand that ends in Plex? So we are the first- Rimmel is the first one, Coty is the first one to bring the bonding technology to mascara. Customers are super super excited. The product that that you were holding before we launched this. This is a COVERGIRL Skin Perfector Essence, 70% water. It's actually super super cool. Yeah, I'll show you how it works. Yeah, it's basically... Can you see can you see the beads? So it's it's beads in in a jelly. It's it's hydration and foundation at the same time. So you apply like this, beads come out, and then they transform on your skin... The transformation is very important. This is, you know, at the heart of the storytelling. I brought you one- Thank you very much. One, I think it's your shade, actually. Yeah. Perfect. Um, also- Part of this is so that visual efficacy is so important. The visual efficacy is so important. Yeah. Exactly. So we try to engineer virality from the very beginning of the- Yeah ... product development. This is Queen Latifah. You remember Queen Latifah was with Coty, with COVERGIRL, years and years ago. She says that she knows more about COVERGIRL than I do. Her opinion. We brought her back to bring this product to life. Hey, COVERGIRL. COVERGIRLs need no filters. With the new Simply Ageless Skin Perfector Essence. Where skincare meets makeup, first and bling, for bare skin filter effect that is all you. The new Skin Perfector Essence from COVERGIRL. So this is an example of this visual transformation that makes the product even more viral. Yeah. Related to your comments, marketing strategy. So what's the current level of marketing as a percentage of sales? Where do you see this trending? A big topic here is 10-year-old customers, too. What about younger customers? What's happening there? Numbers first. At Coty, we invest approximately 25%-26% of our top line, of our net revenues in consumer and advertising, consumer promotion and advertising. In terms of where it's going, I don't think it's gonna go above 30%, but what's really changed is the composition of this 26%. The world, I don't have to tell you, but it's moved from a communication of one to many, into managing billions of one-to-one conversations. So the shift, I remember decades ago, it was about producing a 15-second commercial, 30-second commercial, single page and a double page, and that was it, and you would hit the 350 million people. And today is about managing these billions of one-to-one conversation, make them genuine, authentic, et cetera. So we're moving more investment from traditional to social, digital, and advocacy. Today is the big buzzword. Another important topic is authenticity and being human. What does that mean to heritage brands and how you're thinking about authenticity? In a number of ways. We mentioned influencers and content creators, so I cannot do business anymore with just Queen Latifah, for instance. You have to hit a number of different formats, different conversation. Community management is very important. You have to answer 100% of the comments and questions. Just putting a smile under a comment will give you more trust or will communicate more trust and more genuineness with the people that are following you. Claims, very important. People are becoming skeptical. A lot of consumers know more about skincare, about skincare ingredients than our brand managers, because they do a lot of research. We actually call it Triple O. It starts online research. Offline, you go and purchase, and maybe you reconnect online. So it's a multi-channel with multiple way of communicating. Yeah, rethinking and very much conversational in terms of- Very much conversational- the future ... you know, the story is also very important. Yeah. After COVID, today, the story is more important than ever. So in the last three years, we have refreshed all our merchandising material, merchandising walls, and we continue. This is really an investment. It's an investment. It's not about display, it's about experience. We're excited about TikTokification of retail. In many ways, short-form video is very important. Is that important to your business? What role do you see that playing over time? TikTok, as you know, has really disrupted the industry, has had a major impact on beauty. The way we have approached TikTok, we're doing organic and we're doing a lot of partnerships. I remember when I started with Coty, we used to send out approximately 300-400 PR kit to content creators every launch. Today, we are at 5,000. So, you have to learn to... how to scale this one-to-one conversation. Mm-hmm. 5,000, my aspiration is probably like 10,000 globally for a, for a new product launch. We have created the TikTok or content development studios within our offices. We have two in the United States, one in New York, one in Miami, so that we can connect better with the Hispanic community. We allow them to use our facilities. We have one in London, one in Paris, and so on and so forth. We allow them to use our facility also for their other customers, provided that they are not competitive. So if they also endorse fashion, for instance, we like them to use our facility, our equipment, again, for this genuineness, to build this relationship. Stefano, incoming questions about e-commerce. The trends have been stellar. What are drivers here? What percentage of sales - Coming. Oh, I'm going to die. Sorry, sorry, sorry. That's pretty cool, too, that viral moment. Let me, let me switch to e-commerce. Yeah. Would love your thoughts on penetration over time, how this may trend, and also, what about the margins? It's a different cost structure, e-commerce, in terms of fulfillment and marketing costs, too. Yes, it's our growth on e-commerce has been spectacular in the last three years, above our growth in store, actually. Today, a third of the growth contribution comes from our e-commerce business. So we are growing at almost 30% in the last few months. We have now achieved 11% penetration, so 11% of our consumer beauty business is through e-commerce, and that is 1.5 points above what it was just a year ago. I think where it's gonna go probably is the mid to teens. 15% is probably my objective, and we continue to gain share. We gain share primarily with the mass fragrances. So consumers are actually starting shopping fragrances online, which was something that five years ago was unheard of. You have to test and try, et cetera, and today is not necessary. So they do replenishment, but also again, through content creator, I can make you fall in love with a fragrance, so you haven't even smelled it, by, by, by, you know, through the storytelling. So, we have also increased our penetration on Amazon. Amazon tends to be, to your point, a little bit less profitable. So I think our U.S. e-commerce customers are less profitable than our European e-commerce customers, but you have to be there. Yeah. So you have to find a way to shop where the... to offer where the consumer shop. Amazon's been a key topic today. How do you storytell on Amazon? What are some general parameters you're looking at to communicate the logic and magic? Well, one of the biggest reasons for the growth, actually, is that we have improved our experience online. Yeah. We call it CARS. It's a way of for us to track the specialness, the quality of our execution online. That from the number of assets, you know, of pictures, the search engine optimization, the description of the product, the videos. So we're trying to recreate the experience of the brand online. Actually, I do believe that we've been more successful of creating... In creating this experience for consumers online than we are in store. So you have to create this little microcosm within Amazon or within Notino in Europe, et cetera, to be able to speak to consumers. What about Brazil? It's been an important growth driver. What's happening in this market? How might your market shares trend and what- Yes. What are some key drivers of what makes Brazil different from other markets? So Coty, Brazil is very important within our portfolio, within my portfolio. A number of reasons. You can see there in terms of market size for beauty, first of all, Brazil is the fourth largest beauty market in the world after U.S., China and Japan. It's also the fastest growing. Brazilians are obsessed with beauty, and it's not just face, it's face and body, and sun protection, and color cosmetics, nail very important. Of these market in Brazil, approximately 30% is door-to-door, is what you see there with Natura, Avon, and Boticário. Within the non-door-to-door, we are the third largest company. We are the fastest growing company in Brazil. In terms of a branded portfolio, we have a very interesting brand portfolio that is almost for Brazil only, because these are all native Brazilian brands, and they connect very well with the Brazilian community. For instance, Risqué. Risqué is our nail polish brand, market leader in Brazil. We have a couple of other brands, Monange and Paixão. Paixão means in Brazilian, in Portuguese, means passion. This is a very sensorial brand that starts with oil and goes across the whole body and face. Monange is a more functional brand. We have achieved the number one position in body oil, number two position in body lotion. So... And we have the number one penetration as any company in Brazil. However, and one more minute on Brazil, Brazil is way more important than business for us. We have launched, a year ago, a center of excellence for melanin-rich skin, in Brazil. You know, so Brazil is probably one of the most diverse country in the world. You have all shades of color. It's also an environment that is very humid. We have created, therefore, a center of excellence in research and development for melanin-rich skin and one for climate change. And through that, we are looking at improving product offering pillarization for the next decades. Remember that in two or three decades, there will be more darker skin tones in the world than Caucasians. For us, Brazil is that avant-poste into the future of our society. Climate change has been an interesting topic, also sun protection, and Coty has unique patents with vectorization of molecules. What should we know about what's happening there and how you're thinking about innovation? What, what's going on? So climate change is impacting consumers, the industry. We are developing technologies. I can't disclose too much, but we are developing technologies today that will minimize sweat, that will lengthen the stay of a moisturizer, that will lengthen the stay of a foundation. And this is gonna be long wear, long wear in the Western world is as important as in the emerging markets. But in the emerging market, in southern markets, this will become an absolute need. Some protection, there is the debate between chemical and physical filters. We are developing technology more and more in the camp of physical filters to be able to offer to consumers what they want, which is to move away as much as possible from chemical. So we are looking at holistically at climate change, and see how we can offer products that really we believe will hit the majority of humanity in the next two decades. Another topic, Coty's performed much better than competitors in China. What do you see happening in China, and what are some key dynamics that you're following? Look, so we're growing very fast in China, but we are very small, which has been a blessing in disguise. Other companies, two other of our friend companies, that were more exposed to China, they have suffered a lot during the COVID time and the closure and the slow recovery. So from that perspective, we really have benefited from our small size. But China is very important. China is very important in terms of absolute value of consumption. It's one of the two significant ultra-premium, ultra-prestige market in the world, together with the US. Everywhere else is very small, very small in Italy, very small in France. So we have two approach in China, one, through our portfolio of prestige fragrances and prestige skincare. We just launched Orveda, our ultra-premium, skincare brand, biotech, a French biotech in China, and relaunched Lancaster. In mass market, it's all about Adidas. We're actually number one in body cleansing among male and athletes. Max Factor is also very important. So again, small growth, rapid, very rapid growth, a major focus for us. As we zoom out a bit, and for the investors in the room, of Coty's stock, what's most underappreciated and/or misunderstood? Yeah, no, I love this. I find myself speaking about color cosmetics all the time, and I've become a big beauty advisor, actually, beyond being a business person. But two categories that we hardly speak about, one is nail, and the other one is fragrance. In nail, Coty is actually the market leader in nail. We have over 20% of global market share through a portfolio of 5-6 brands, including Sally Hansen. Sally Hansen, in this country, has 45% market share. The number two in the market has less than half of that share. Rimmel is market leader in the UK, Risqué is the market leader in Brazil, and then Bourjois and Max Factor. And we also cover all needs, because it used to be all about nail polish, and now, The market is fragmented, and nail are the new face, huh? So now is we compete in nail polish, we compete in nail care, treatments, et cetera, super important, artificial nails, jewelry, stones, et cetera. So nail, nail is a very important category for us and also financially is supports investments in color cosmetics. The other one is scenting. Coty is the number one company in fragrances in prestige, so our mass market retailers appreciate very much the insights, the technology, the olfactory territories that we bring from prestige into mass market, that we like to say, luxury experiences at affordable prices. I'm going to flip through some of our brands in fragrances, like, this is adidas, one of our largest fragrance brand globally. Nautica, you will know, it's a license, it brings the inspiration of the ocean, of the water, to the world of fragrance. Vera Wang, a very close friend, and, you know, brings this elegance and edginess to us. David Beckham, semi-naked here, used to be less relevant, and then through the Miami Football Club and Messi, et cetera, it's become incredibly popular. We can't keep it in stock in the last year. Jovan is a very old brand that we are reviving. Jovan used to be the way people used to meet and attract other people before the dating sites, and we're bringing that that sort of dating and attraction attitudes back to the market. We don't speak about Bruno Banani, but Bruno Banani is Bruno Banani is a major is actually the market leader in Germany in fragrances, and outside of Germany very few people know it. Bruno Banani starts with underwear. It's basically the Calvin Klein of Germany, and we're taking that Calvin Klein underwear equity into fragrance. Another nice brand is Mexx. So all in all, nail and fragrances are two things that we are less known for, and actually incredibly important from a market position perspective, and how financially they contribute to the portfolio. Yeah, very powerful, this whole portfolio. That's very compellingly diversified as well. Yes. So we're asking every attendee this, a few lightning rounds. What do you think about the health of your consumer on a scale of one to ten? I think the beauty consumer has never been so involved in beauty as they are today, and I believe they will be even more tomorrow. I think COVID has helped the love for brands that are most trusted. People are experimenting, but they are going back to the brands that they trust and love. I think self-care has been a very important outcome of COVID. Mental health has been another very important... So I'll give you an example. Fragrance, for instance, has accelerated since COVID, and it's a moment of self-reward, self-care. It's also a moment to feel part of a world. So not everyone can afford $4,000 Gucci suit, but most people can afford to be part of the Gucci world, spending $120 on a fragrance. I think the beauty consumer has never been so sophisticated as today, and it will be even more sophisticated, more involved tomorrow. Mm. What number on a scale of one to 10? I think today is 10 of relatively to today, and tomorrow will be 10, and it will be 10, but they will be different 10s. Okay. Related to this question, very exciting comments, what are a couple of major growth drivers you're focused on for the industry? It was said also by the previous speaker, I think innovation. Mm-hmm ... remains at the heart of what we do. I believe beauty is not an industry of demand. It's an industry of offering. What I mean with that, our companies are all full of business intelligence, CMI, market research, all looking in the rear view mirror, and I believe we have to move our focus in disrupting. So you actually create the demand. You don't try... We are stopping looking at forecasting the future and rather refocusing resources, money, and human capital on disruptions. Mm. Yes, the spirit and essence of innovation and creating new kinds of categories, too. Last question, what are brands that you like that aren't your own? I can probably answer this for you because I kind of know. I like an old brand of mine, and it's... Now I'm gonna do some advertising, but do you know RoC? Yeah. RoC is the skincare brand. I bought it actually when I was at Johnson & Johnson in 1995, which is gonna help date me a bit. And it's the only skincare brand that I actually buy, in spite of everything that I receive for free, and because it's about efficacy, and we are applying this efficacy mentality to Orveda and to our skincare equities as well. I do believe in skincare. People are looking for efficacy first and foremost, and the bar of efficacy continues to go up. Yeah, this theme of transparency and luxury intertwined with efficacy and performance, as well as purpose and storytelling, is constant. Stefano, thanks for taking us on a journey around the world and also throughout your portfolio, which has many, many exciting things happening. Great to have you. Thank you. I appreciate it. Thank you very much.