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The Beautiful People

Stirring up the beauty business, Italian-style.

Gucci fashion has long been controversial, and its beauty business no less so.

The brand’s sexy fragrances, cosmetics and advertising have whipped up a lather of excitement in a marketplace where most play it safe. And Gucci’s beauty license itself has been a point of contention, since it isn’t owned by Gucci AG — the fashion arm of parent PPR — and therefore cannot be run by YSL Beauté, PPR’s beauty division. (See related story, opposite page.)

Gucci’s fragrance and cosmetics license has been overseen by Procter & Gamble, based in Cincinnati, since March 2003, when it was purchased through Wella AG alongside myriad other beauty licenses, such as Lacoste, Rochas and Escada, then also owned by the German company. At that time, Gucci was said to be the top beauty brand in Wella’s prestige fragrance arm, Cosmopolitan Cosmetics, where it outpaced Escada and Rochas, which ranked second and third, respectively.

(Prior to that, on April 1, 2002, Wella snapped up the Gucci license through a deal with Escada AG’s beauty division, Escada Beauté Group SA.)

Today, industry sources estimate the Gucci beauty brand at more than $840 million in sales worldwide. In a WWD interview last summer, Hartwig Langer, global president of P&G Prestige Products, said P&G considers Gucci to be among its main growth drivers.

“Without any question, Gucci and Valentino are global brands,” he said.

Yet, what strategy its products and marketing will follow under P&G guidance is still under wraps. The company would not contribute to this story.

But financial analysts say they wonder if Gucci skin care might be on the horizon.

“If it plans to do it, the question is whether the existing number of company-owned doors is enough,” or whether Gucci would have to set up department store counters, said one analyst, who requested anonymity. “And that’s riddled with expansion issues.”

Further, scent — which generates the lion’s share of Gucci’s beauty business — is a risky category.

Like the Gucci fashion image, the brand’s beauty image was shaped by Tom Ford during his tenure as creative director. Ford’s impact went far beyond cosmetics. He did more than help give Gucci a makeover — he made it controversial again.

Gucci beauty really reentered the scene in 1997 with the launch of the women’s scent Envy, produced by Ford and Cosmopolitan Cosmetics. From its suggestive name to its sleek packaging, it was meant to capture the new spirit of the brand.

Another scent to bolster its image was Gucci Rush, launched in 1999. The concept was glossy and provocative, from rapturous advertising showing three models in advanced states of ecstasy to the scarlet box-shape bottle and heady scent. Gucci Rush for Men came out in 2000 and Gucci Rush 2 for women followed in 2001. Two years later, Gucci Pour Homme bowed. Then there were Gucci Envy Me and a Gucci Eau de Parfum fragrance family, with two scents.

Hubbub has always surrounded Gucci. In mid-2004, Gucci Group’s Web site reported that the license with Wella for the production of fragrances and cosmetics lapsed on Nov. 30, 2003, because Wella did not renew the license on or before Nov. 30, 2001. Gucci further stated that Wella had filed legal actions in the U.S., Germany and Italy to have the license declared valid until Nov. 30, 2028.

Soon after, mention of litigation died down, until last Thursday, when a P&G spokeswoman confirmed market reports in Milan that Gucci had signed a long-term license with P&G for the production and worldwide distribution of its fragrances. The deal ends an old and unresolved litigation between Gucci and Wella. An announcement is expected to be made today, in a joint statement by Mark Lee, president and chief executive officer of Gucci, and P&G’s Langer. Terms were not disclosed.

The Gucci beauty agreement goes back to 1978, and was part of the Muelhens portfolio, which was later consolidated under the Cosmopolitan Cosmetics division of Wella.