What Happened: Following French luxury conglomerate Kering, which formed the Kering Beauté department and acquired niche high-end fragrance Creed earlier this year, Richemont is the latest to venture into the burgeoning luxury fragrance market.
The Swiss group’s new division — Laboratoire de Haute Parfumerie et Beauté — is headed by fragrance veteran Boet Brinkgreve, former president of ingredients and procurement at fragrance manufacturer DSM-Firmenich. Brinkgreve boasts three decades of industry experience and is knowledgeable about the Chinese market. Between 2015 and 2017, he helmed DSM-Firmenich’s China ingredients division.
Brinkgreve took up the role on September 1, reporting directly to Richemont Group chairman Johann Rupert. He is tasked with scaling up the fragrance business across six brands — Montblanc, Van Cleef & Arpels, Cartier, Dunhill, Alaïa, and Chloé — to reach “critical mass in this highly competitive field, where scale is crucial,” said Rupert.
The news sent Interparfums’ shares down 9.4 percent. The fragrance manufacturer produces scents for Richemont’s Dunhill, Van Cleef, and Montblanc. The last two contributed 30 percent of Interparfums’ sales last year. Coty, which makes perfumes for Chloé, is also under threat.
However, according to insiders quoted by BeautyMatter, the creation of the new division does not mean Richemont will bring the fragrance business in-house, but it will maximize the portfolio’s potential.
The Jing Take: The world’s three largest luxury giants, LVMH, Richemont, and Kering, have all established independent beauty and fragrance departments.
In April this year, LVMH Group appointed Stephane Rinderknech, former CEO of L’Oréal Group China, as CEO of its perfume and cosmetics department and announced Veronique Courtois as Dior perfume’s CEO, and the former head of Make Up For Ever, Gabrielle Saint-Genis Rodriguez took over the role of CEO at Guerlain.
Following the reshuffle, LVMH Group perfume and cosmetics department sales reached an outstanding $4.3 billion (31.4 billion RMB) in the first half of this year, a 13 percent year-on-year increase. The revenue contribution of Asia (excluding Japan) reached 34 percent, significantly exceeding that of Europe and North America.
In June this year, Kering Group announced that Kering Beauté had signed an agreement to acquire high-end niche perfume Creed. According to Reuters, the all-cash transaction could be worth as much as $2.1 billion (15.7 billion RMB).
The French and Swiss behemoths are set on taking a bigger bite of the luxury beauty market. According to Euromonitor International, the global beauty and personal care market will grow to $547 billion (4 trillion RMB) in 2027, with the Asia-Pacific region, where China is the main market, accounting for 67 percent of total growth.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.
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