Puig Is Getting Serious About Fashion… to Sell More Fragrance

BARCELONA — For years, designer Dries Van Noten insisted that he was glad operating an impartial style enterprise. Then, in 2018, he up and bought a majority stake to Puig, the Spanish group finest recognized for its designer perfume enterprise. The specifics of the deal weren’t disclosed, however Van Noten, who leads each the inventive and enterprise sides of his namesake model, might have chosen to associate with Puig not solely due to what it was, but additionally due to what it wasn’t.

With estimated annual gross sales at round $100 million on the time of the acquisition, most of which got here from attire, the Dries Van Noten model may stand to develop in a variety of classes: purses and sneakers, for positive, but additionally perfume. Nonetheless, if Van Noten had chosen a personal fairness associate, they’d doubtless have pushed the model to scale unnaturally quick, rising distribution and ramping up its equipment enterprise at a tempo that may have been unhealthy. Then, if and when gross sales crept nearer to $500 million, the agency would most likely have been wanting to promote to a bunch like LVMH or Kering, which may, in idea, use its actual property portfolio to open extra shops and drive gross sales into the billions of {dollars} a yr.

Tellingly, that’s not what Van Noten determined to do. As a substitute, he picked Puig, which might kind of enable him to maintain operating his style enterprise as he was, whereas creating a Dries Van Noten perfume that might relieve a few of the strain to develop leather-based items gross sales at a fast charge. For an avid gardener whose collections virtually all the time embody unique floral prints, a Dries Van Noten empire constructed on gross sales of scent appears extra achievable. Plus, a profitable perfume may additionally assist to spice up model consciousness and assist develop the core enterprise, too.

“A perfume and wonder enterprise can have a big effect on the general model picture,” stated luxurious advisor Mario Ortelli. “It could possibly assist construct up an fairness that can be utilized [to sell] ready-to-wear.”

On this approach, it appears Puig is attempting to place itself as an interesting associate for impartial designers, providing them a possibility to earn money with out reengineering their companies. It’s actually a notion that the household owned-and-operated Puig is leaning into because it indicators its ambitions within the style house.

Puig has been within the style enterprise since 1987, when it acquired Paco Rabanne‘s label — 19 years after it launched the Spanish designer’s first perfume. In 1995, it snapped up Carolina Herrera, too, greater than a decade after signing a deal to make and market the designer’s perfumes. However in contrast to LVMH or Kering, promoting garments and purses shouldn’t be Puig’s most important enterprise. In its 2018 fiscal yr — which didn’t account for the Dries Van Noten acquisition — style (outlined as attire, sneakers and equipment) was estimated to account for under 10 % of general gross sales.

Puig is on no account backing away from the sweetness enterprise that makes up the core of the group’s operations. Fairly the alternative. Together with Dries Van Noten, it additionally took a majority stake in Los Angeles perfume line EB Florals (created by movie star florist Eric Buterbaugh) final yr. However it’s diversifying because the perfume class evolves, particularly within the US, the place the patron is more and more turning away from conventional premium fragrances — together with designer scents — and shopping for into area of interest scents as a substitute.

In 2018, “artisanal” fragrances grew quicker than another phase of the $4.3 billion US perfume market, in accordance with NPD. That very same yr, Puig additionally suffered a significant set-back when the Qatari-owned Valentino took its licensing deal to competitor L’Oréal. Much more damaging, if true, is the prospect that Prada, too, has determined to not renew its take care of the Puig, which expires on the finish of 2019, as reported by a number of commerce media retailers, although neither firm has confirmed or denied this. A consultant for Puig stated the corporate doesn’t touch upon rumours.

We thought it was time to carry style to the epicentre of our brand-building course of.

This implies Puig, which generated €1.9 billion ($2.1 billion at present alternate) in 2018, will doubtless need to make some main adjustments to achieve its objective of €3 billion ($3.3 billion) in gross sales by 2025. Proper now, gross sales are kind of flat, however income have grown, which implies that the agency has extra money to put money into its present manufacturers — and purchase new ones. (In 2018, income earlier than tax have been €326 million, or 17 % of general income. A yr earlier, they have been 310, or 16 % of general income.)

Enter José Manuel Albesa, the 20-year Puig veteran who was appointed president of manufacturers, markets and operations in 2018. Albesa’s function is completely different from the submit held by Puig’s former President of Vogue Ralph Toledano, as Albesa oversees each the style and perfume sides of the enterprise. He has been tasked with additional creating Puig’s portfolio of manufacturers by harmonising the best way they’re marketed throughout classes, areas and channels.

“To essentially succeed on this means of brand-building, style needs to be on the centre,” he informed BoF throughout an interview in Paris, the agency’s inventive hub.

It is a problem that even probably the most profitable luxurious manufacturers face: making a constant advertising and marketing and inventive message may be robust. Magnificence enterprise at most style manufacturers, together with main gamers like Prada and Saint Laurent, are licensed out to specialist magnificence conglomerates like Puig, L’Oréal, Coty and Interparfums, which develop, market and distribute perfume and cosmetics merchandise for a mass viewers. Because of this, magnificence promoting is often far much less conceptual than style, usually starring big-name celebrities, not cool fashions. It is also often tailor-made to replicate the sweetness beliefs of particular geographic areas. However the rise of digital media and globalisation implies that customers see blended messages extra usually.

At Puig, it is a problem at lots of its high manufacturers, together with Carolina Herrera, the place designer Wes Gordon‘s gentle, ethereal picture of style clashes with the advertising and marketing of its top-selling perfume Good Woman, which carries the tagline “It is So Good to Be Dangerous.” At the least the star of the marketing campaign is Karlie Kloss, whose healthful picture is an efficient match for Gordon.

For its “1 Million” males’s perfume, Paco Rabanne has run promoting that includes mannequin Dree Hemingway sprayed down in gold, her arms wrapped round a person in a tuxedo snapping his fingers. The picture has little to do with inventive director Julien Dossena‘s imaginative and prescient for the model’s style assortment however has made 1 Million a top-selling scent.

Manufacturers are addressing this problem in two methods. One, by creating extra constant — it not fully uniform — advertising and marketing throughout classes, areas and channels. Two, by creating particular upmarket fragrances which can be extra interesting to customers of luxurious style customers. Dior, as an example, launched Maison Christian Dior, a line of artisanal scents, in 2018.

At Puig, Albesa is bullish on model harmonisation. He started working by matching up inventive administrators with the precise managers, together with Carolina Herrera Artistic Director Wes Gordon, who succeeded the just lately retired namesake, and President Emilie Rubinfeld. Nonetheless, the shift in technique is most seen at Paco Rabanne, which has just lately launched its first perfume below the inventive course of Dossena. He and Common Supervisor Bastien Daguzan used the “One Rabanne” mantra — a time period used to underscore the merging of the label’s style and perfume manufacturers — whereas creating the Pacollection scent, which hit cabinets in June 2019.

Beneath the watch of Dossena and Daguzan, the ready-to-wear line tripled its gross sales in 2019 after doubling them in 2018, with 50 % of gross sales generated on-line. (Its elevated retail presence was amplified by essential adulation and the introduction of extra commercial-leaning product.)

At his Spring/Summer season 2020 style present in Paris, Dossena launched menswear for the primary time. He is increasing the sweetness, too: a make-up line ought to launch inside the subsequent two years.

Nonetheless, the “One Rabanne” undertaking stays a significant work in progress as Dossena and Daguzan reckon with 1 Million and different top-selling, if not on-brand males’s fragrances, corresponding to Ultraviolet and Invictus.

At Dries Van Noten — whose collaboration with Christian Lacroix has been a spotlight of the Spring/Summer season 2020 reveals — there’s a nowhere-to-go-but-up feeling.

“What we would like from this model is extra [of] the identical,” Albesa stated. “We don’t need to change issues; we need to speed up.” Which means constructing out extra direct retail — in China, on-line — and creating equipment, however not at a breakneck pace. Perfume is the clear alternative. Whereas Van Noten has performed with scent earlier than — collaborating along with his buddy Frederic Malle — Puig hopes their partnership will redefine the template for a designer perfume.

“We need to launch a perfume enterprise differently — in a extra educated and cultivated approach,” Albesa stated, noting it would doubtless be one other two years earlier than the primary scent is launched. “It’s going to be one thing extra in a distinct segment, with restricted distribution and top quality. Very respectful, as a result of respect is one thing that’s essential for Dries.”

Different manufacturers within the portfolio are re-examining their enterprise fashions. Jean Paul Gaultier has carried out away with ready-to-wear, specializing in couture, collaborations and wonder as a substitute. At Carolina Herrera, there’s a sturdy world perfume enterprise in addition to a ready-to-wear and bridal line, but additionally CH Carolina Herrera, a bridge assortment that’s primarily bought outdoors of the US and generated $359 million in retail gross sales in 2015. (It isn’t made and manufactured by way of Puig, however as a substitute by way of two licensing offers: an eyewear settlement with De Rigo SpA and an attire and equipment settlement with STL (Sociedad Textil Lonia), an organization by which Puig owns a 25 % stake.)

Whereas the New York-based ready-to-wear and bridal collections are performing properly — with gross sales rising for the reason that February 2018 arrival of Gordon — the objective is to create a constant advertising and marketing story throughout a number of completely different value factors, classes and shopper segments.

“The final supervisor of perfume is working with the overall supervisor of style, along with Wes, to make sure every bit of the model sits below the identical umbrella of values and codes,” Albesa stated, mentioning that the Home of Herrera would launch a make-up line reflecting the shift. “It reveals our dedication to the model; that we’re not being opportunistic creating completely different divisions.”

We do not have a style division, we’ve got a model division… I do not need to penalise the creativity of every home.

Within the case of Nina Ricci, which has cycled by way of a protracted listing of interesting-but-ill-fated designers — Olivier Theyskens, Peter Copping, Guillaume Henry — the problem is establishing an id for a ready-to-wear model that wields little that means for the fashionable shopper. Albesa stated he and Common Supervisor Charlotte Tasset are giving inventive administrators Rushemy Botter and Lisi Herrebrugh, who have been appointed in August 2018, time to develop their concepts. (Important suggestions has to this point been tepid.) “It was a daring transfer as a result of they’ve by no means carried out [womenswear] earlier than,” Albesa stated of the appointment. “What they’re bringing is a really poetic and really modern imaginative and prescient of femininity.”

Given that every of his costs is at a really completely different stage of their growth, Albesa would not plan on standardising the best way these manufacturers run their style companies. In recent times, newly shaped teams trying to rival the incumbents — specifically, LVMH, Kering and Richemont — have bought buyers on the thought of shared sources: from materials sourcing to factories. However Albesa would not see it working like that for Puig any time quickly. Whereas issues like authorized, finance and human sources sit below the Puig company umbrella, the various fashions will stay that approach, permitting every enterprise to serve a unique buyer.

“We do not have a style division, we’ve got a model division,” he stated. “Paco’s all metallic, Carolina Herrera is about extra craftsmanship and color, Nina Ricci is extra tailoring. I do not need to penalise the creativity of every home.”

“The precedence now shouldn’t be the margin itself,” he stated. “The precedence now could be the DNA of the home.”

Within the close to time period, this technique is sensible, in accordance with analysts. Puig is far, a lot smaller than the dominant gamers, which implies it must work more durable on honing the imaginative and prescient for every model; a difficult prospect in an period when megabrands rule.

“If you happen to look carefully within the historical past of the teams, the standardisation and shared companies are fairly current,” Ortelli stated. “They developed their companies after they had the essential mass to discover it.”

For Albesa, the plan appears to be to proceed investing within the owned manufacturers, which have every hit “document” gross sales this yr.

And what about buying different labels alongside the best way? Albesa stated he’s extra compelled by new enterprise fashions than outdated manufacturers prepared for a revival.

“That’s the place acquisitions will grow to be extra fascinating,” he stated. “Let’s face it, style has a really conventional approach of doing enterprise. This concept of being various, disruptive, is de facto what’s related right this moment.”

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