Kering has announced its foray into the cosmetics industry. Kering Beauté, a subsidiary of the French luxury conglomerate, was established to aid Bottega Veneta, Balenciaga, Alexander McQueen, Pomellato, and Qeelin in expanding their respective markets. Raffaella Cornaggia, formerly of Estée Lauder Companies, has been named CEO.
In a statement, Kering group managing director Jean-Francois Palus said, “I am delighted to welcome Raffaella Cornaggia, who brings us a lot of experience in a segment that we see as strategically important for our houses.” To make sure that our brands can reach their full potential in this market, we are developing this new area of expertise within our group.
With L’Oréal, Estée Lauder Companies, and Coty as pure players and LVMH, Chanel, and Hermès (launching skincare and cosmetics in 2020) as luxury conglomerates, Kering is entering a market that is already saturated with other brands. Analysts speculated that Kering was in advanced talks to acquire Tom Ford last year; doing so could have given the conglomerate a leg up in launching its own beauty business. However, Estée Lauder Companies ultimately agreed to acquire Tom Ford in a $2.8 billion deal.
The beauty business may not be a sure thing, but analysts are still bullish on Kering. “The beauty industry is fantastic because you can offer low-price points without watering down the overall value of your brand. Additionally, it brings in marketing dollars that help build brand equity, as noted by Mario Ortelli, CEO of the luxury strategy advisory firm Ortelli & Co. I think Kering Beauté will do very well because the company already owns a number of incredibly well-known brands that have strong potential in the beauty industry. Furthermore, Kering has the financial wherewithal to purchase cosmetics companies.
Because Kering Eyewear has been so successful, the company has talked about plans to move into the beauty industry. Its two biggest names in fashion and luxury are already licensed to sell cosmetics: Gucci and Saint Laurent. Boucheron makes perfumes with Inter Parfums, Alexander McQueen makes perfumes with Coty, and Bottega Veneta also makes perfumes for Coty. Since Coty bought P&G Beauty in 2016, it has owned the Gucci license. In 2008, L’Oréal bought YSL Beauté from Kering (then called PPR), which gave it control of the YSL brand.
Francois-Henri Pinault, the chairman, and CEO of Kering, told the press in February that he wasn’t happy with Gucci’s performance in the beauty business. This was after Kering’s 2019 annual earnings presentation. Total sales came in at just under €400 million. When asked about the house’s success in other areas, he said, “We can’t be satisfied with these levels.” In 2021, Gucci brought back its cosmetics line. Since then, Sue Nabi has become CEO of Coty, giving the licensee a new lease on life.
But neither company has said anything about how long the licensee agreement between Coty and Gucci will last. In an interview with Vogue Business in November, Coty CEO Sue Nabi called the agreement “long-term.” I helped open one of the most gorgeous Gucci Beauty stores in the world with Gucci CEO Marco Bizzarri two weeks ago in Singapore. We introduced the world to Gucci Flora, and it has become an instant classic. “We’re working together for the foreseeable future,” she declared. Analysts agree, though, that it would be financially smart for Kering to bring the Gucci beauty business in-house once it has the right skills and knowledge.
Meanwhile, L’Oréal’s YSL Beauté division earns over €1 billion annually, thanks in large part to the popularity of their fragrance Libre and their dependable cosmetics sales. This is intended to be a perpetual license.
Cornaggia is an Italian national who has worked for Estée Lauder Companies since 2008, most recently in the roles of international senior vice president and general manager for Estée Lauder and Aerin. Tom Ford Beauty and Mac Cosmetics are among the companies she has collaborated with. She started her career at L’Oréal and later worked for Chanel Parfums Beauté before joining Estée Lauder Companies. She will be “supported by a team of seasoned professionals” at Kering Beauté, the company said. She will join the group’s executive committee and be based in Paris, reporting to Palus.