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Why Coty Bought a Majority Stake in Kylie Jenner’s Kylie Cosmetics

Jenner is selling a 51 percent stake of her Kylie Cosmetics line, the latest instance of a beauty conglomerate paying big bucks for a brand that appeals to younger customers. 
Kylie Jenner visits an Ulta Beauty store in Houston to promote the exclusive launch of Kylie Cosmetics with the beauty retailer. | Source: Getty Images
  • Rachel Strugatz

NEW YORK, United States – "With a single post she's able to reach more than double the number of people who watch the Super Bowl every year."

This was part of Coty Inc.’s rationale in forking over $600 million for a 51 percent stake in Kylie Jenner’s Kylie Cosmetics brand, said Pierre-André Terisse, the cosmetic giant’s chief financial officer, in a conference call on Monday. The all-cash deal valued the youngest Kardashian-Jenner sibling's business at almost $1.2 billion.

The 22-year-old launched her namesake Kylie Cosmetics line in November of 2015 with "Kylie Lip Kits" in three shades. They sold out almost instantly, crashing her e-commerce site and making Jenner a bonafide beauty entrepreneur at the age of 18. In March, Forbes declared Jenner the world's youngest self-made billionaire.

The world's biggest beauty companies have gone on a buying spree over the last year, shelling out hundreds of millions of dollars to snap up brands that appeal to younger customers who take their beauty cues from Instagram rather than department stores. In October, Shiseido bought Drunk Elephant for $845 million. Also on Monday, The Estée Lauder Companies bought the remaining two-thirds of Dr. Jart parent company Have & Be. Co. for $1.1 billion.


Coty has largely stayed out of the fray, having struggled to integrate the 43 brands it acquired from Procter & Gamble in 2016 for $12.5 billion. The company's revenue declined slightly last year, to $8.6 billion, as mainstream brands like Covergirl have struggled. The company is looking to sell some brands, including Clairol.

An earlier effort to win younger customers, the $600 million acquisition of a 60 percent stake in multi-level marketing company Younique in 2017, ended badly. In August, Coty reportedly sold its stake for just $78 million.

“This exposure to much younger consumers is something currently lacking in Coty’s portfolio,” said Terisse, who lauded Jenner for her “unparallelled social media reach” with Gen Z, noting that three-quarters of her followers are between the ages of 18 and 24 and she adds about 7,000 followers per day. Hopefully, Kylie Cosmetics will do a better job at attracting this demographic than Younique.

Some analysts see signs that the fervour surrounding Jenner’s line may be starting to cool. Rakuten Intelligence found sales at the brand dropped by 14 percent during the first five months of 2019, fuelled by a lack of repeat customers. US sales of prestige makeup dipped 4 percent in the first six months of the year. In May, Jenner launched a skin-care line, Kylie Skin, entering the hottest corner of the beauty market. That sub-brand is on track to hit $25 million in sales and is seeing over 50 percent repeat purchases.

Terisse said Kylie Cosmetics has defied the makeup downturn. Kylie's line generated about $177 million in revenue over the last 12 months, a 40 percent increase from the calendar year 2018. The brand's sales received a major boost in November 2018 when it entered all 1,200 Ulta stores. That deal was extended in September, with the introduction of Kylie Skin. Across the brand, sales are evenly split between direct and wholesale, Terisse said.

Coty plans to take its new investment global. Terisse noted that over half of Jenner’s social media following resides outside the US.

“Several international retailers already expressed strong interest in carrying her beauty line,” Terisse said.

Besides serving as a Gen Z acquisition tool, Coty intends to use the high-growth, digitally native label to bolster its presence in prestige cosmetics and skin-care, two sectors Terisse described as “under indexed.” Jenner’s infamous “Kylie Lip Kits,” which include liquid lipstick and a corresponding liner, retail for $29 and eyeshadow palettes with nine shades of “Kyshadow” cost $42. Kylie Skin hits an entry-level prestige price point, with items such as $24 moisturiser, $20 eye cream and a $28 Vitamin C serum.


Jenner’s been credited — or blamed, depending on who you ask – with starting an influencer beauty brand boom. In the four years since she launched her brand, countless influencers have followed her lead, including Huda Kattan, Jet Atkin and Tati Westbrook.

Kattan’s Huda Beauty was valued at $1.2 billion after a minority investment from TSG Consumer Partners in 2017 and Westbrook was said to have done nearly $5 million in sales the day her eyeshadow palette launched earlier this month. But there’s yet to be an influencer who’s topped Jenner’s selling power. According to WWD, her e-commerce site once did nearly $19 million in a single day.

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