The newly created division will be headed by Hans Joachim Hongifort, former president of Coty Beauty Europe.
Using Hongifort's experience, Coty is hoping the new unit will strengthen the success of its portfolio that already includes beauty brands such as Rimmel, Esprit and the Intimately Beckham fragrance range.
Coty has said that the extension of its brands into Asia is also a key catalyst for the move.
Bernd Beetz, chief executive of Coty, said: "Merging Coty Beauty into a unified division further positions Coty to achieve our goal of becoming a top five global beauty company. The strategic alignment will challenge the flourishing portfolio to embrace existing brands while simultaneously developing innovative lines that will fuel new levels of achievement for Coty Beauty."
In 2006, the Reckitt Benckiser-owned company unveiled a similar business model, Coty Prestige, a division specifically created to manage Coty's exclusive perfume brands promoted by celebrities including Jennifer Lopez and Sarah Jessica Parker.
The division also manages Coty's Calvin Klein fragrance range.
Coty Prestige is currently seeking an agency to launch a digital campaign for its Joop! men's fragrance range.
Honigfort said: "The new organisation of Coty Beauty combines the force of Coty's strongest brands on the market with the most talented minds in the industry. Together as one division, Coty Beauty will continue to ignite growth, further globalise our portfolio and strengthen Coty's name in the beauty industry."
Coty was in the news recently as it was speculated that the cosmetics giant planned to drop Kate Moss as the face of its Rimmel London range.
However, Coty now plans to launch a perfume range designed by Moss, which is due to launch in Europe, Australia and the Middle East in autumn 2007.