With the Acquisition of Creed, Kering Group Up the Ante of Beauty
- Chaileedo Press
- Jun 28, 2023
- 6 min read
The transaction is reportedly the first acquisition move by Kering Group since the creation of its beauty division.
On June 26, the parent company of Gucci, Kering Group, released a statement saying it had acquired the entire stake in fragrance brand Creed from funds held by long-term private equity BlackRock and Javier Ferrán. While the exact amount has not yet been disclosed, industry sources estimate the deal to be for around $1.5 billion. According to the agreement, the transaction will be completed in the second half of the year at the earliest.
François-Henri Pinault, Chairman and CEO of Kering Group, commented, "The acquisition of Creed represents Kering Beauté’s first strategic initiative, and demonstrates our commitment to developing a strong position in the luxury beauty segment"
“The House of Creed is recognized as one of the few leading global luxury fragrance brands, synonymous with exclusivity and creativity,” said Jean-François Palus, group managing director of Kering. “We are confident that this landmark acquisition will facilitate and amplify our development in fragrance. This is a milestone in the development of Kering Beauté, as we believe more than ever in the strong potential of our brands in beauty.”
It is worth noting that Kering Group also mentioned in its statement to accelerate the brand's growth in China and travel retail, as well as to expand its categories in women's fragrances and personal care and home, while retaining Creed's original products and unique positioning, thus realizing the brand's potential in different regions, distribution models and product categories.
Revenue of Creed was $ 273 million in the last fiscal year
Publicly available information shows that the Creed was founded in London in 1760 by James Henry Creed. It was a royal perfume of Europe at the time. The brand's products such as Aventus and Silver mountain water were popular with consumers.
The brand's fragrances are widely recognized and popular worldwide. Its high quality and unique approach to perfumery has attracted many consumers and perfume lovers. In regions such as Europe and North America, Creed's fragrances have a large market share and its sales and popularity are growing.
In addition to reputation and sales performance, Creed's fragrances have received many awards and recognition. For example, the Aventus fragrance won the FiFi Award (the highest honor in the fragrance industry) in 2010 and was named one of the best-selling men's fragrances in the world in 2017. In addition, Creed's fragrances are loved and used by many celebrities and royalty, which adds to the popularity and appeal of its brand.
According to data released by Kering Group, the brand has over 1,400 points of sale and 36 branded shops worldwide. For the fiscal year ending 31 March 2023, Creed's revenue exceeded $273 million, making it the largest independent high-end fragrance brand to date.
At the same time, Creed fragrances have gained widespread recognition and popularity in the Chinese market. Online, the brand has a flagship shop on the Chinese e-commerce platform Tmall, with products ranging in price from 80 yuan ($11) - 2,820 yuan ($389.2). Silver Mountain water is the number one in the collection. Aventus is the number 3 hot seller in the shop. The highest-selling product is a perfume sample with 300+ people buying it. CHAILEEDO data showed that from January to May 2023, Creed perfume sales on Tmall and Taobao platforms were approximately 25.83 million yuan ($3.6 million).
Also in January 2022, Creed announced a partnership with Eternal Group to open its first boutique in China at IFC in Shanghai and has already opened boutiques in Chengdu, Shenzhen, Beijing, Hangzhou and Hong Kong. In addition, to better fit the Chinese market, Creed and ROBBi have collaborated to launch the co-branded fragrance ROBBi in early 2023.
(Credit: Creed's first shop in China)
The first acquisition of Kering Beauty
It is worth noting that the acquisition of Creed is the first acquisition by the Kering Group since the creation of its beauty division.
For a long time, the beauty and fragrance business of the Kering Group has been licensed to other companies under a franchise model. The YSL beauty and fragrance business is operated by L'Oréal, while the Gucci, Alexander McQueen, Bottega Veneta and Balenciaga fragrance and beauty businesses are operated by Coty. And the fragrance businesses of Boucheron and Brioni are operated by Inter Parfums and Lalique Group respectively. However, in recent years, there have been reports in the industry that Kering Group intends to recover the operation of the beauty business from the Coty Group. Although this was later officially denied, the news also revealed that the Kering Group may intend to expand its beauty business independently.
As early as July last year, Kering Group expressed its interest in entering the beauty sector after announcing its first-half results. At that time, Jean-François Palus, Managing Director of the Kering Group, revealed during a conference call that Beauty is a natural extension of its brands, and it currently operates the beauty business on a licensing basis. Beauty is definitely an area where it could consider some initiatives in the future. Industry sources said that Kering Group had been interested in acquiring Byredo (acquired by Puig in late May 2022) and Tom Ford (acquired by Estee Lauder in December 2022).
Just this February, Kering Group announced the creation of its own beauty division and appointed Raffaella Cornaggia, former senior vice president and general manager of Estée Lauder International, who had also worked for L'Oréal and Chanel before her stint at Estée Lauder, as CEO of the division. Kering Group has said that Raffaella Cornaggia would help develop the beauty category for luxury brands Bottega Veneta, Balenciaga, Alexander McQueen, Pomellato and Qeelin, supported by a team of experienced professionals. This also means that Kering Group was officially moving into the in-house beauty sector, competing head-to-head with international beauty groups such as LVMH and Estee Lauder.
(Credit: Raffaella Cornaggia, CEO of Kering beauty division)
The "dream" of beauty from luxury group
According to incomplete statistics from CHAILEEDO, so far in 2019, brands including Prada, Hermes, Valentino, Gucci, Burberry, Belgian haute couture brand Dries Van Noten, French luxury brand Balmain and others have ventured into beauty and makeup for the first time or increased their presence in the beauty sector.
Hermes, known for its luxury leather goods, entered beauty as early as March 2020. And this entry has lived up to the brand's expectations. According to Hermès' financial report, sales in the fragrance and beauty division grew 21% year-on-year in the first quarter of 2021. Hermès also noted that the lipstick range contributed significantly to that. Also according to the 2022 financial report, the Hermès fragrance and beauty division reported sales of €448 million ($490.8 million), up 16.4% year-on-year. In addition to the new fragrance driving the division, the new facial primer collection Plein Air also contributed to the division's growth. In March this year, Hermès also announced that it would launch its first eye make-up range in the autumn.
In February this year, LVMH, the world's largest luxury goods group, made a major change in its beauty division, appointing Stephane Rinderknech, formerly CEO of L'Oréal China, as the leader of the beauty division. Stephane would manage the LVMH group's 15 beauty brands, including Dior and Guerlain. The CEOs of Dior and Guerlain fragrances have also been replaced. In the first quarter of 2023, LVMH's fragrance and cosmetics division reported revenues of $2.3 billion, up 11% year-on-year.
CHAILEEDO found that most of the luxury brands' beauty businesses are run by large cosmetic groups and now have a strong voice in the beauty sector. For example, L'Oréal Group holds the beauty business licenses of several luxury brands, including YSL, Armani and Valentino. Armani and YSL Beauty moved into the L'Oréal China $1 billion club as early as 2018. While the Tom Ford brand acquired by Estée Lauder is officially expected to break $1 billion in sales in the next few years. Coty is responsible for operating the beauty businesses of Gucci, Burberry and other luxury brands' beauty businesses, all of which are also performing strongly.
Although Kering has been relatively late to the beauty game compared to other luxury groups, the acquisition of the high-end fragrance brand further demonstrates Kering's commitment to the beauty sector as a company that already has a presence in the luxury group. The addition of Creed will also bring more opportunities and advantages to Kering Group, and will further expand its influence and brand awareness in the global market.
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