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Magnificence teams L’Oréal and Shiseido have lengthy made waves with their splashy acquisitions, however their little-known Spanish peer Puig has additionally received in on the act by pitching itself to model founders as a “versatile” acquirer.
The wonder and trend group, which bankers worth at €8bn-€10bn, unveiled its eleventh acquisition in 12 years this month because it weighs a inventory market itemizing. Puig is buying a majority stake in a high-end German “molecular cosmetics” model, Dr Barbara Sturm, extending a run of offers together with a majority stake in Charlotte Tilbury, which valued the UK cosmetics maker at £1.3bn.
Puig remains to be a minnow in contrast with the likes of L’Oréal and Estée Lauder, which have market capitalisations of €236bn and $49bn respectively, however its transformation in recent times has been drastic.
Earlier than the spending spree started in 2011 the family-owned group, which sells every thing from fragrance to excessive heels, targeted on only a few key manufacturers together with Carolina Herrera and Nina Ricci, bringing in annual gross sales of €1.2bn.
The Dr Sturm acquisition means it now has controlling stakes in a complete of 14 manufacturers. The Barcelona-based conglomerate has mentioned its 2023 gross sales would surpass €4bn.
As the luxurious sector grapples with the tip of a post-coronavirus increase, Marc Puig, the founder’s grandson who serves as each chair and chief govt, mentioned the corporate was “seeing some slowdown in progress” however remained in fine condition.
That’s partly as a result of Puig doesn’t classify itself as a luxurious participant and as a substitute says it’s in premium magnificence. Puig mentioned that section “has historically been extra immune as a result of the unit value of merchandise is decrease, so it has completely different market dynamics to the luxurious market. This resilience has been confirmed over time and is predicted to stay.”
As the most important cosmetics and trend teams vie to faucet rising demand for magnificence merchandise, they’ve eagerly snapped up or invested in smaller manufacturers.
In 2021, for instance, LVMH acquired Officine Universelle Buly 1803, a historic French fragrance and cosmetics label. L’Oréal final 12 months purchased Australian high-end cosmetics group Aesop from its Brazilian proprietor in a transaction with an enterprise worth of $2.5bn.
Shopper items group Unilever and personal fairness corporations had checked out shopping for Charlotte Tilbury, a model related to its eponymous founder and its YouTube make-up tutorials, earlier than Puig secured it in 2020.
The Spanish firm additionally scored an enormous win in 2022 when it fended off L’Oréal to amass Byredo, a cult Swedish model based by Ben Gorham, a former basketball participant.
Requested why a founder would select Puig, Marc Puig advised the Monetary Instances: “We have now to bear in mind that each founder and each particular person is completely different . . . we have now been capable of finding acceptable formulation for every case. We attempt to be extra versatile than different large homes — I feel that’s what units us aside.”
Charlotte Tilbury herself stays the chair and chief artistic officer of her model and has a seat on Puig’s nine-person govt committee. Jean Paul Gaultier, who bought to Puig in 2011, remains to be concerned along with his label despite the fact that he has retired.
Dries Van Noten, the Belgian founding father of the high-end trend home that carries his title, mentioned his workforce had approached Puig about being acquired in a deal that was finally sealed in 2018. The Spanish group gave his enterprise the “sturdy shoulders” it wanted to develop, together with assist for ecommerce and opening shops in China, he advised Girls’s Put on Each day.
“Like in each good marriage, I feel there are good days, and generally much less good days, however I feel they actually revered us, so that they didn’t need to put the Puig stamp on our firm,” mentioned Van Noten, who has continued as chief artistic officer.
Not all offers within the sector have a cheerful ending. Bobbi Brown bought her eponymous cosmetics model to Estée Lauder in 1995 however left in 2016 after a few bitter years, saying later that “the enjoyable issues go away” if you end up a part of a billion-dollar model.
Puig was based as a fragrance firm in 1914 by Antonio Puig, who reinvented himself after a ship carrying the merchandise of his earlier import enterprise was sunk by a German submarine. The 2 drivers of its progress within the twentieth century have been its distribution of foreign-made merchandise in Spain and its manufacturing of perfumes below licence for different manufacturers. A 1968 deal to make fragrances for Paco Rabanne was a landmark. Puig nonetheless holds the sweetness licences of Comme des Garçons Parfums and Christian Louboutin.
Marc Puig has led the corporate since 2004 however mentioned he could be the final era of the household to go the enterprise, despite the fact that he has no plans to step down.
One of many chair’s large targets has been to cut back the group’s dependence on licensing, which is much less worthwhile than outright possession. The corporate’s personal merchandise now account for greater than 90 per cent of all gross sales. That additionally offers it end-to-end management over product and distribution.
Different teams need a greater presence in high-end magnificence, amongst them trend home Kering and watch-and-jewellery specialist Richemont. They’ve began to construct in-house capabilities, however have additionally contracted third events to make merchandise carrying their model names.
Puig’s chair urged that in the long run his rivals would realise that doing it themselves was a safer guess. “They must get well a few of the manufacturers that immediately have licences,” he mentioned.
Regardless of diversification into trend and skincare, perfume stays the core of Puig’s enterprise. Fragrance has not been badly affected by the luxurious slowdown and Puig is forging forward with a push to promote dearer merchandise.
In an upmarket class it calls “area of interest perfume”, which incorporates its 2015 acquisitions of L’Artisan Parfumeur and Penhaligon’s, Puig says it has grown sooner over the previous decade than every other firm.
What distinguishes it from different luxurious merchandise, and what could protect it in a pullback in spending, is value. Prime-end high fashion or watches can value a number of thousand euros, placing them out of attain for a lot of shoppers, however high-end perfumes stay extra reasonably priced.
It was uncommon to discover a 100ml bottle of fragrance for greater than €100. Now Puig has widened its value vary, however has not gone far past €200 — a stage that buys extra pure components and weird scent mixes.
“There are individuals who say ‘I don’t need to scent like everyone else’,” mentioned Puig. “Folks reply to that want to precise themselves to the remainder of the world.”