When it comes to spending sprees, November 2010 was a doozy for Coty, Inc. In rapid succession, the New York-based, publicly held global powerhouse scooped up the German makeup company Dr. Scheller Cosmetics AG for an undisclosed amount; the touchy-feely Philosophy skincare brand from the Carlyle Group for an estimated $1 billion; and OPI, the pro nail care line famous for lacquers with cheeky names like “Skull & Glossbones” and “Wooden Shoe Like to Know,” for another (rumored) $1 billion.

At the time of those purchases, Coty, then a $3.6 billion entity, was billing itself as the world’s largest fragrance company. By rounding out its portfolio with these brands, the plan was to reduce its reliance on the recession-plagued perfume biz, carve off a bigger slice of Germany’s beauty pie, and inch toward its stated goal of $7 billion in revenue by 2015.

While it would be hard to argue which was the splashier score— Philosophy or OPI, both of which are wildly beloved by consumers— the latter allowed Coty to not only tap an entirely new distribution channel, but also expand its foothold in the supernova that was nails circa 2010.

Having acquired Sally Hansen in 2007 (as part of its lock stock and barrel estimated $1 billion purchase of Del Laboratories, Inc.) Coty had already dipped a toe in the retail polish arena. Quickly after that buy, Coty offloaded virtually everything else in the Del lineup except market leader Sally Hansen. The message was clear: “We’re not about to miss out on the hottest thing to happen to beauty since the advent of the alpha hydroxy acid.”

In Sally Hansen, founded by its namesake in 1957, Coty got a line that heartland America has long held dear. (Recent proof: It just nabbed BrandSpark’s 2014 “Most Trusted Award” for nail care, a prize voted on by 86,000 US consumers.) Although it makes a concerted effort to chic up its image—via capsule collections with such New York Fashion Week darlings as Rodarte, Prabal Gurung and Alexander Wang—it is, and may always be, an affordable, bread-and-butter brand.

A highly innovative bread-and-butter brand, that is; nary a month goes by without some change-your-life, breakthrough Sally Hansen product hitting store shelves. For example, it was a first-mover on the DIY gel front, dazzling beauty editors at the 2012 press launch of its Salon Gel Polish Starter Kit, fully loaded with an unspeakably adorable, teensy-weensy LED lamp. This year it unveiled Miracle Gel, which doesn’t require heat curing, thus becoming all things gel to all people.

Still, other Sally Hansen launches can feel a little “day late and a dollar short,” like this year’s “I Heart Nail Art” debut. But when it isn’t first, Sally Hansen goes big: I Heart Nail Art, comprising tools and all manner of glittery, decal-y bells and whistles, is a massive assortment.

Sally Hansen + OPI = Double the Fun?

OPI was another major “get” for Coty, though one could question the timing of that acquisition, which came three years after the Sally Hansen buy, and well into the nail-mania era. Could L’Oréal USA’s April 2010 purchase of Essie—another rock star in the pro arena— have lit a fire under Coty’s M&A team?

Interestingly, L’Oréal hasn’t snapped up any other nail brands before or since the Essie buy. But that may have as much to do with the fact that its flagship L’Oréal Paris brand has healthy polish sales as any clouds on the nails horizon. (We’ll get to those clouds in a moment…)

Like Sally Hansen, OPI is the #1 player in its core distribution channel, offering some 300 polish shades, best-of-breed pro tools, and high-profile promotions.

While most lacquer-lovers could probably care less, the name is short for Odontorium Products Inc, belying its start as a small dental supply company. After buying the enterprise in 1981, new owner George Schaeffer recognized the promise in the acrylic used by the firm to make dentures, and quickly pivoted to nails. Shortly thereafter, he brought Suzi Weiss Fischmann on board as Executive VP and Artistic Director, a second brilliant move. Weiss-Fischmann is the driving force behind a big chunk of the clever names OPI is lauded for, and is a beauty press favorite. Earlier this year, she announced she would step back from her corporate responsibilities, and downshift to “brand ambassador for journalists and clients.”

No doubt OPI will keep Weiss-Fischmann busy; in addition to its seasonal color stories, each year it churns through multiple collections tied to blockbuster movies (everything from “Skyfall” to “Muppets Most Wanted”); celeb collaborations with the likes of Mariah Carey, Katie Perry and Gwen Stefani; and the occasional head-scratcher, like this year’s Coca Cola collection.

It’s a Sister-Brand Eat Sister-Brand World

Though extremely different in vibe—Heartland America vs. Mega-Glitz—there is no question that Sally Hansen and OPI step on each others’ toes.

Here’s how: By buying a Sally Hansen DIY gel kit, which enables consumers to do up to 10 manicures lasting up to two weeks, it could conceivably keep them out of the nail salon for a very long time—not an ideal scenario for OPI.

And while Sally Hansen lacquers aren’t sold in salons, OPI is sold retail. And not in niche-y specialty stores either; we’re talking from Walmart to Sephora and everything in between. According to a recent category overview by market-watchers NPD, the top five nail brands “applied at home” are Sally Hansen, OPI, Revlon, Wet N’ Wild and CoverGirl. The top five brands “applied at the salon” are OPI, China Glaze, Essie, SpaRitual and LeChat.

Quick: Who can spot the “double-dipper”? Why it’s OPI, of course. All of which begs the question: What was Coty thinking when it plunked down $2 billion for two nail brands—each with a clearly defined footprint in a specific distribution channel—only to have them increasingly edge onto each others’ turf to duke it out for the consumer’s dollar? Why not just pick one distribution lane—or a single nail behemoth, as L’Oréal has in Essie—and really focus.

Painted Into a Corner

But the bigger issue for Coty — way beyond brand cannibalization — is the current state of the nails market itself. Remember those clouds we mentioned earlier? They’re looming.

Coty on its fiscal year 2013: “Nail care brands OPI and Sally Hansen remained stable versus last year.” Coty on its fiscal third quarter 2014: “Color cosmetics 6% decline (net revenue for the quarter $334.9 million) reflected continued pressure on the nail category in the US market.”

If you’re a glass half-full type, or a “flat is the new up” sort, you might be tempted to look at the overall numbers in nails and think everything is just dandy. To whit, in its recently published “2013-2014 Industry Statistics” report, Nails Magazine reported a leap of almost $1 billion over last year on “money spent on salon services”—from $7.47 billion to $8.28 billion.

“The way we figure that amount includes a look at the number of nail techs and average prices,” says Hannah Lee, Nails Magazine’s Associate Publisher & Editor. “So that factors in [the total] as much as more people going into the salon.”

Asked if she’s predicting a similar jump for 2015, Lee is unequivocal. “No,” she says. “Things are leveling off. They aren’t in decline; it’s just that the peak for nail care and nail art enthusiasm was so high.”

And now, just maybe, it isn’t so high.