By  on July 1, 1994

NEW YORK -- As reports mount that Procter & Gamble is negotiating to buy Giorgio Beverly Hills from Avon Products Inc., everyone involved continues to remain silent.

"Probably at the right price it could be one of the best things to happen to P&G, because it would establish them as a long-term prestige brand," said industry consultant John Horvitz. "It would give them some badly needed critical mass, their own dedicated sales organization and would catapult them into the top 10 of prestige fragrance houses in the world."

P&G, which owns Cover Girl and Max Factor in the U.S. mass market and the broadly distributed Ellen Betrix in Germany, has only one company in the prestige fragrance business -- the German-based Eurocos Cosmetic GmbH. Its American counterpart is Eurocos USA.

Worldwide, Eurocos is projected by industry sources to do $200 million this year with its Laura Biagiotti, Hugo Boss and Otto Kern fragrance brands. But Eurocos did not begin pushing in the U.S. until last year with the launch of Venezia, a women's fragrance from Biagiotti. Industry sources estimate the company's U.S. volume at $25 million for last year.

That figure is expected to exceed $30 million this year with this month's launch of Elements by Hugo Boss in 638 department store doors.

To jump start the U.S. business, P&G contracted a sales force through Khepra Beauty Group Ltd., which remains under contract.

In comparison, Giorgio had global sales of $163.5 million last year, a gain of 9 percent, attributable to the rollout of Wings women's fragrance in the U.S. and U.K., according to Avon's annual report.

Industry executives have been expecting P&G to make an acquisition ever since Edwin L. Artzt, its chairman and chief executive officer, indicated his interest in the prestige market over a year ago.

During a Eurocos party in New York in January 1993 to hype Venezia, Artzt said, "We believe that Procter & Gamble has the capacity, the marketing skill and the experience in the fragrance business to become a leader in the upper end of the market."

Since then, there have been rumors about P&G looking at Giorgio and then EstÄe Lauder -- two reports that were firmly denied.

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