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Dior and Chanel Run Their Own Beauty Lines. Why Not Gucci Too?

Kering’s rumoured plan to someday bring its largest brand’s beauty business in house may take years to pull off, but is already sending shockwaves throughout the industry.
Coty lifts annual profit forecast on resilient demand for luxury cosmetics.
Kering taking Gucci's beauty business in house would be a blow to Coty, which handles the brand's fragrance, llpstick and more currently. (Gucci Beauty)

Kering has FOMO.

Rumours are percolating that the French luxury conglomerate is looking to take at least some of its beauty business in-house. Kering has long maintained tight control over the fashion businesses of its brands, which include Gucci, Bottega Veneta and Saint Laurent. But it’s relied on licencing deals to manufacture, market and sell fragrance, makeup and skin care (Coty for Gucci and Bottega Veneta, L’Oréal for Saint Laurent.)

There’s nothing unusual about a luxury fashion house outsourcing beauty. There are exceptions though: Dior and Chanel own and operate their beauty divisions. Both are thriving, especially in fragrance: the two companies sell more perfume than any other brands in the world.

It makes sense that Kering would want a similar setup. The company wants to build Gucci, which drives just over 50 percent of the group’s revenue and two thirds of profits, into a brand with €15 billion in annual sales. Category expansion, including a new emphasis on beauty, with Kering keeping all of the revenue, is one way to do that (the company is making similar moves in fashion, steering more Gucci sales to its own stores and away from third-party retailers).


This would be a cataclysmic loss for Coty, however.

Gucci is one of the most lucrative brands in Coty’s portfolio, which includes Chloé, Burberry, Marc Jacobs Perfume, Bottega Veneta and Calvin Klein. In May, Sue Nabi, Coty’s chief executive officer, called Gucci’s Flora Gorgeous Gardenia a “fantastic success,” listing it as one of three of the company’s leading fragrances, alongside Burberry Hero and Hugo Boss The Scent.

It’s mostly just industry gossip for now. WWD reported last week that buzz around Kering’s “potential entry into beauty keeps amplifying,” following the group’s earnings call last month and its dissatisfaction with how Coty handled Gucci’s beauty business (which was expressed prior to Nabi’s appointment).

In July, Kering hinted that its beauty business could follow in the footsteps of eyewear, a category it brought in-house through a partnership with Richemont.

“Our success with Kering Eyewear demonstrates that we can create a lot of value for the brands on the one side and as a consequence for the group by taking some disruptive and innovative approaches,” Jean-Francois Palus, Kering’s group managing director, said in a conference call. “So beauty is definitely an area where we could contemplate some in the future and all options are open.”

Kering and Coty declined to comment.

There’s a reason luxury brands that oversee every tiny detail of their fashion businesses typically opt to license their beauty lines, however. Perfume or lipstick costs less than a handbag or shoes, but margins are high and beauty is effective as a way to acquire new customers. Companies like Coty and L’Oréal have the infrastructure to make and sell fragrance, makeup and skin care products, expertise that doesn’t always come naturally to luxury fashion brands.

When it comes to licencing, fragrance is probably the most competitive of the beauty categories with a handful companies — led by Coty and L’Oréal — vying to control the largest brands in the category.


A single fragrance could yield hundreds of millions of dollars in sales per year for one of these companies. It’s rare for a lipstick or moisturiser to do that sort of volume. Typically, a brand launches one big scent per year, spending millions of dollars in marketing, including celebrity ambassadors; TV, outdoor and print ads; in-store activations, influencer campaigns and more.

The pressure to perform is enormous. Once, a president at a multibillion-dollar beauty conglomerate texted me pleading for “front page” placement in WWD for a fragrance launch, the company’s first in a new licencing deal with an iconic luxury brand.

It was an unusual display, but I understand why the executive felt the need to beg for a cover story: If that year’s scent is a dud, or underperforms, the brand’s fragrance ranking tanks. And if the licencing agreement isn’t performing to the brand’s liking, the brand will walk — and either sign another licencing deal with a competitor or take their beauty in-house.

The good news is that Coty has some time to work things out with Kering. Coty confirmed that “no major license [is] up for renewal in [the] next five years” in an investor update last spring, which means the earliest that Kering can bring beauty in-house, if it decides to do so, is in 2026.

Four years is a lot of time, and Coty is working fast to diversify its portfolio. Of course, four years is also enough time for Kering to build a beauty division of its own, too.

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