On the occasion of the publication of its annual results, Kering lifted the veil on the strategy undertaken for its beauty division. Fragrances will be the first category to be developed, positioned in the very high-end segment, with the launch in the second half of 2024 of a first fragrance for Bottega Veneta, followed by Balenciaga and Alexander McQueen. At the same time, the full integration of Creed, the Anglo-French high-end perfume house acquired by the luxury group in 2023, will continue, making the most of synergies.

For the Group’s CEO, François-Henri Pinault, beauty represents a major opportunity for the major players in fashion. Kering Beauté, headed by Raffaella Cornaggia, formerly at Estée Lauder, was set up at the beginning of 2023, bringing together five of the group’s brands. Bottega Veneta, Balenciaga, Alexander McQueen, Pomellato and Qeelin. Kering will concentrate on the first three brands, whose beauty businesses are now entirely in-house, as Gucci CEO Jean-François Palus explained.

He declined to comment on Gucci, whose beauty line is still managed by the American group Coty, via a licence due to expire in 2028, while regretting that there are no new product launches in this category for the Italian luxury house. As far as Kering Beauty is concerned, the focus has been on developing the platform around the integration of Creed and on product development for the first three brands mentioned. “Once we have achieved sufficient mass with Kering’s beauty business, it will give us greater comfort to consider all possible options for the beauty business of our brands that are still outsourced,” explains Jean-François Palus.

Kering’s initial objective will be to focus on fragrances, which will have to be in line with the identity of the brands. The first Bottega Veneta launch will be via its network of directly-operated shops and a selection of retailers. The company wants to start “at the top of the pyramid”, in the high-end and prestige segments. “Perfumes amplify the visibility and desirability of our houses, by widening brand accessibility,” notes François-Henri Pinault.

The global perfume market is expected to reach between 44 and 55 billion dollars over the next few years. The French luxury group is particularly interested in two key segments: top-of-the-range, which accounts for around 15% of the market, and prestige, characterised by huge volumes and wholesale. For the first segment, growth forecasts are for an increase of 10 to 50% over the next three to five years, while the prestige segment is expected to grow by 3 to 5%.

“We have a very desirable brand in the eyes of the consumer. We also have to be desirable when we launch our fragrances (…) We are going to start in the high-end segment with very desirable, very sophisticated products, using the know-how and experience we have acquired through Creed,” explains the Group’s CEO. This first stage will focus on the very high-end and retail distribution. In a second phase, Kering will tackle “the other distribution networks for the prestige segment market, where we will then develop the brands. It’s a two-stage strategy for the beauty market,” he says, preferring to start at the top end, without “rushing” into the larger, more competitive prestige market.

According to sources quoted by the Financial Times, Creed, which was bought for €3.5 billion, was only been integrated into the group’s accounts at the beginning of November. Kering’s management sees significant growth potential for the brand, which has achieved sales of €250 million in 2023. They want to diversify and strengthen its outlets – its penetration in China and Asia is fairly limited, for example – but also its offer, particularly in women’s and other product categories, estimating that its sales “should exceed 300 million euros by next year.”

Founded in 1760 by James Henry Creed, the perfumer has 36 shops and 1,400 retailers, and has benefited from the Group’s support in negotiating the location of a new shop in Paris. But the synergies must work both ways. In addition to its legitimacy and critical mass in the beauty segment, Creed must also bring its expertise and networks to Kering. As Jean-François Palus points out, “the Kering Beauté teams are working very closely with Creed on the development and future launch of the Bottega Veneta, Balenciaga and Alexander McQueen fragrances, particularly regarding the supply of the various ingredients in terms of quality and sourcing.” But also in terms of distribution, relations with retailers, logistics, marketing and sales.

For the time being, there is no question of the Group making any other significant acquisitions in the beauty sector. Kering wants to concentrate on Creed, which it sees as “a pillar of our strategy for the Kering Beauté project, but also for the brand itself. We must now develop it and use the synergies to accelerate and market our own brands in the beauty market,” concludes François-Henri Pinault.