The same clear-eyed candor and probing, analytical thinking that has helped Marc Puig drive his family-owned company to the verge of crossing the 2 billion euro sales mark has rewarded him with an honored place in the Fragrance Foundation’s Hall of Fame.
“He is a visionary because he was able to establish such a successful company in a challenging time for the industry,” said Nicolas Mirzayantz, group president of fragrances at International Flavors & Fragrances. “He had the courage to make changes.”
Mirzayantz ticked off Puig’s many strengths: “Strategic, analytical, a deep understanding for the creative process and of the luxury codes for prestige fragrances, also an avid learner — a deep appreciation for talent. It’s about speed and agility and creativity.”
Mirzayantz added, “Humility.”
Patrick Firmenich, chairman and chief executive officer of Firmenich, who got to know Puig when both were working in New York in the Nineties, elaborated even further. “Marc is somebody who will always qualify as a great leader. He has a very clear vision of where he needs to go, with his brands and his company. He has given his company clear priority on what to do and what not to do, what to be and what not to be.”
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During a wide-ranging interview, Puig, chief executive officer and chairman of Puig, discussed a range of topics, from how he sees the fragrance industry maneuvering through the “tectonic shifts” of a social revolution to how Puig’s unusual business model achieves growth to the future of the industry itself. His approach during the interview was clear-eyed and straight forward, which are traits 55-year-old Puig is known for.
The Fragrance Foundation honor is a well-deserved one. Early in his 13-year tenure at the helm of Puig, the company drifted into financial difficulty during 2004 (“We had operating losses…we didn’t meet the governance of our debt,” he said during a speech at the 2012 WWD Beauty CEO Summit).
From this crisis, the ceo learned some crucial lessons, including the importance of “passion and storytelling” in making fragrances, as well as paring down a broad product portfolio that included toiletries. The company at that time was “trying to do so many things and to be good at so many things. Let’s choose one, the thing that for whatever reason we have chances to be good at,” he recalled during the interview. “Let’s take risks.”
That translated into a focus on prestige fragrance, an approach that worked. Over the next eight years, Puig approximately doubled sales. The company finished 2011 with revenues up 12 percent, a pace that has since continued: For the first quarter of this year, sales were up 13 percent, to $2.2 billion at current exchange rates.
So where did Puig get the resolve to make dramatic changes? “It was a question of survival,” he said, with his trademark candor.
During the process, he learned to appreciate the talents of others. “I worked like hell for two years and nothing happened, nothing improved, until I decided that I had to surround myself with people who were better than me. And that’s when things started to work.”
Talking about high points in his career, Puig described the satisfaction of giving people responsibility, showing faith in them and watching them succeed. Combined with the rich storytelling heritage of Puig, the company has launched blockbuster after blockbuster, including Good Girl by Carolina Herrera, the 1 Million and Invictus franchises from Paco Rabanne and, more recently, Portraits from Penhaligon’s. Next up: a Gaultier women’s fragrance.
“It is a combination of having a very clear vision of what to do, hiring absolutely great people and giving them the freedom to do what they feel is right for the market,” said Firmenich. “It is extraordinarily difficult to have a success. It is even more difficult to have one success after the other. They have been able to bring to the market a series of ground-breaking concepts with fragrances that were right for the consumers. Today they have become a reference in the industry.”
“Puig has been by far one the few companies as leading the growth in fine fragrance prestige in the last five or 10 years,” Mirzayantz added.
This intensity of purpose has fertilized the creation of an unusual hybrid business model that features owned fashion and fragrance brands, such as Carolina Herrera, Nina Ricci, Paco Rabanne and Jean Paul Gaultier, and licensed fragrance brands, including Prada, Valentino and Comme des Garçons. Recently Puig acquired two non-fashion fragrance brands, Penhaligon’s and L’Artisan Parfumeur, and acquired minority stakes in EB Florals and the Brazil-based Granado.
The fashion-fragrance duality provides a unique perspective, although only 9 percent of the turnover comes from the fashion side, according to industry estimates. “It is a very holistic approach,” Mirzayantz said. “You really see the key signature fingerprints of his family’s deep respect for creativity, design and fashion and a big respect for the perfume creation process.”
Firmenich sees a strategic advantage. “The fact that they control fashion is something that allows them to have better control of the brand,” he said. “A very smart move was when they bought the Jean-Paul Gaultier fashion house, which allowed them to recapture the fragrance license a few years later.”
Puig said the dynamic of being a family-owned firm allows him to think about long-term goals rather than shorter-term returns. “We take very good care of the brands,” he said, pointing out that the experience can be a selling tool in winning licensing deals. “We can understand better the concerns and worries that brand owners may have with licensees. That’s an advantage.”
When the conversation turned to the company’s storytelling abilities, Puig pointed to the recent launch of Penhaligon’s Portrait line, which he calls “total storytelling.” The line has a Downton Abbey theme starring a Victorian English family, with a number of different scents, each featuring a stopper shaped like the head of a different animal that gives a hint of their human personality.
That unusual approach is the antithesis of the “me-too” approach that Puig believes permeates many fragrance launches today. “Fragrance at the end of the day is about emotions,” he said. “When you ask people to describe a fragrance, they say, ‘Oh, it’s fresh.’ Maybe they can identify a vanilla or some kind of fruit or flower, but that’s it.”
He believes that storytelling will become an even more important driver, noting, “There will be a revolution in the way fragrance is presented and sold — the same way that many other categories have gone through it.”
The market has begun to prove him right. Over the last few years, the fragrance category has undergone a gradual revival, with the advent of artisanal brands and collections bearing the names of perfumers, not fashion designers. Still, he doesn’t believe the category’s recent expansion will go unchecked, predicting a “Darwinian cleaning” will soon take place for brands that are mere marketing propositions. “If you don’t have a true story,” Puig said, “[Millennials] will find out very soon and you are dead.”
This dovetails with Puig’s theory of tectonic shifts. “The digital revolution combined with the Millennial generation, which is digitally native, has tremendous consequences,” he said. “A few we’ve seen already but most of them we still have to see. The channel of distribution is facing tremendous challenges because of the consideration but also because of the digital effect on their reality and even existence.”
Geographically, Puig has been a pioneer in emerging markets, where it gained 44 percent of its revenue last year. The ceo sees even greater opportunity in Asia (“we are underpenetrated in that world”), plus Latin America and the Middle East, while the U.S., at least in terms of distribution, presents challenges.
With all the fast-footed moves by private equity players and quick-stepping consumer goods companies, Puig says he wonders what will be the answer for the future. “Is shaving costs the key answer — or driving dreams?” Then, without missing a beat, he declared: “I bet on dreams.”
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