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Exclusive: Estée Lauder Cos. Nearing Beauty Deal With Balmain

By entering into a rare licensing agreement with the French fashion house, the beauty conglomerate would be looking to repeat the success it had turning Tom Ford Beauty into a billion-dollar business.
The finale of a Balmain show.
Estée Lauder is negotiating a licensing deal that would see Balmain launch a beauty line. (Indigital)

Amid reports that The Estée Lauder Cos. is in talks to acquire Tom Ford, the conglomerate appears to have selected a new luxury brand to turn into a beauty giant.

The company is in the final stages of ironing out a deal to produce a beauty line for Balmain, BoF has learned. The arrangement is said to be a licensing agreement similar to the conglomerate’s venture with Tom Ford, where Estée Lauder would make, market and distribute makeup and other products for the French fashion house acquired in 2016 for an estimated $620 million by Qatar-based investment fund, Mayhoola. Estée Lauder, Balmain and Mayhoola declined to comment.

The Tom Ford Beauty partnership, which started with a single fragrance in 2006, Black Orchid before quickly expanding into makeup, has become one of Lauder’s top brands, with close to $1 billion in revenue last fiscal year. In August, The Wall Street Journal reported that Estée Lauder was negotiating to buy the Tom Ford brand outright, at a valuation of $3 billion or more.

Estée Lauder likely has similar aspirations for Balmain. Like Ford, the brand’s fashion business is relatively small compared to luxury’s giants, but enjoys outsized name recognition with consumers, who love to look at the label’s expensive, flashy clothes and accessories even if they can’t afford to buy them.

Olivier Rousteing, the creative director at the helm of the 77-year-old label since 2011, is also a celebrity in his own right. The 36-year-old designer, who has nearly 8.5 million followers on Instagram, drummed up attention early in his tenure with a “Balmain Army” of celebrities and influential friends who wore his strong-shouldered blazers and mini dresses, including almost every Kardashian and Jenner sibling (and their mother).

Kim Kardashian might have swapped her mirrored, beaded and bedazzled Balmain dresses for Balenciaga unitards, but her early support of Rousteing made the brand’s designs instantly recognisable (and aspirational) to a new generation.

“The brand is recognised — and beauty is really the way to leverage the power of the brand,” said Marie Driscoll, managing director of luxury and fashion at Coresight Research.

Creative License

The timing couldn’t be more ideal for Lauder to try and replicate the formula that turned Tom Ford into a multi-billion-dollar business.

A Balmain beauty line could boost international resonance — the company’s portfolio is heavy on all-American brands such as Bobbi Brown and Clinique — and give its portfolio some much needed sex appeal.

“Balmain is certainly known in US fashion circles, but it’s more relevant abroad,” Driscoll said. “It has a following in the Middle East — and the Middle East is an incredibly vibrant luxury market.”

Driscoll thinks Balmain’s appeal could “easily translate into beauty” — even if the brand has a “softer voice” in North America. The US is a large market — but it’s not the only path to success.

Balmain, like Tom Ford Beauty, would presumably play in the upper echelon of prestige makeup and fragrance, a price point that is thriving thanks to pent up demand for celebrations, events and travel. According to The NPD Group, prestige makeup and fragrance grew by 18 percent and 13 percent, respectively, during the second quarter of 2022, year over year. High-end lipstick and perfume are also relatively recession-proof, with consumers continuing to splurge on little luxuries even as they cut back spending in other areas.

Licensing agreements are a common route for luxury fashion brands with aspirations of global beauty empires. The label provides the cachet, while the cosmetics company handles the tricky business of manufacturing, marketing and selling the products themselves.

Coty holds the license for Gucci among other brands, while L’Oréal has Giorgio Armani. When Mayhoola was looking to expand Valentino’s beauty business beyond fragrance and into makeup, it worked with L’Oréal, releasing 40 shades of foundation and 50 shades of lipstick last year.

Lauder has pursued fewer licensing agreements, and said last year it planned to close its remaining fragrance licensing contracts. It typically prefers to own brands outright, sometimes waiting years to turn a minority stake in a promising business into an acquisition. To date, Lauder’s biggest deal was for Deciem, valued at $2.2 billion last year when the company said it planned to buy the brand, following a minority investment in 2017. In 2016, Lauder paid over $1.4 billion for the cosmetics line Too Faced.

Second Chances

Lauder has tried at least once before to replicate its success with Ford. In 2016, Lauder teamed up with Victoria Beckham on a limited edition capsule collection, which boasted impressive sales and led to a second collection twice the size in 2017. But Beckham chose to go it alone, co-founding Victoria Beckham Beauty with Sarah Creal in 2019.

Balmain has dabbled in makeup as well. In September 2019, Rousteing teamed up with Kylie Jenner on the Kylie Cosmetics x Balmain makeup collection that debuted at the brand’s spring 2020 fashion show. The brand also released lipstick capsule collections with L’Oréal in 2017 and 2021.

But in beauty circles, the brand name is best known for hair products. Nearly 50 years ago, Pierre Balmain commissioned Dick Guliker, a French wigmaker, to create hair pieces to go alongside his fashions. Balmain inked a licensing agreement with Guliker, who founded Euro Hair in 1974. In 2000, Balmain again teamed up with the Guliker family, who changed the name of Euro Hair to Balmain Hair.

Today, Balmain Hair Couture sells hair care, hair fragrance, extensions and tools at Net-a-Porter, Neiman Marcus, Saks Fifth Avenue, Luisa via Roma, Harrods, Browns and on its own site. Prices are at the high end: shampoo and conditioner cost $45 and $49, respectively, and a cordless straightening iron retails for $375. Balmain Hair Couture and Balmain still operate as two separate companies.

Mutually Beneficial

A Lauder-Balmain alliance could be lucrative for both parties.

Lauder has a market capitalisation of over $96 billion and vast global distribution. It has a strong track record of hyper-local personalisation for its products in different markets, even though its largest brands — Estée Lauder, Clinique and Bobbi Brown — still feel distinctly American.

In recent years, the zeitgeist has moved away from the extreme power-shoulder look Balmain is known for, leaning towards another sort of opulent, ‘80s-inspired design popularised by Daniel Roseberry’s revitalisation of Schiapparelli. But its aesthetic is still recognised globally, thanks to the long halo of Balmain’s very public friendships with the Kardashian Jenners. Kim Kardashian and Kanye West starred in Balmain ad campaigns and walked the Met Gala red carpet in Rousteing’s creations; Kylie, Kris, Kourtney and Kim have all worn the brand’s designs; Kendall Jenner walked in Balmain’s runway shows and was one of the faces of the 2015 Balmain x H&M collaboration.

For Balmain, a beauty buildout with Lauder could generate meaningful sales and give Balmain entrée into a category it’s had little exposure in.

The partnership may be missing a critical element behind Tom Ford Beauty’s success. John Demsey, considered the architect behind Tom Ford Beauty and MAC Cosmetics, was suspended and then fired in February for posting a racist meme on Instagram. Demsey was instrumental in MAC’s collaborations with a diverse group of talent, from RuPaul and Mary J Blige to Rihanna and Nicki Minaj, and is credited with turning Ford’s fragrance line into one of the most desirable beauty brands in the world. Following his dismissal, most of the industry swiftly distanced itself from the veteran executive.

Rousteing has enough influence on his own to launch a brand, and soon, Instagram and TikTok may be flooded with a new celebrity and influencer studded “Balmain Army” — this time a beauty one.

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