PARIS — The waiting game is over: After months of speculation, it was revealed on Thursday that Prada and L’Oréal had inked a long-term beauty license.
The agreement, specific terms of which were not disclosed, will come into effect on Jan. 1, 2021. The news confirms speculation about the tie-in reported by WWD in the summer of 2018.
Puig has held Prada’s fragrance and beauty license since 2003.
“L’Oréal is the leading global beauty company. Its position and experience makes it the idea partner for Prada to develop its full potential across a variety of new projects, leverage Prada’s well-established fragrance identity and reach even more audiences around the world,” Patrizio Bertelli, chief executive officer of Prada, said in a statement.
“A symbol of excellence and avant-garde, the Prada brand’s unique and unconventional philosophy appeals to consumers around the world,” said Cyril Chapuy, president of L’Oréal Luxe. “This license will give L’Oréal Luxe the ideal complement to its portfolio of iconic brands.”
L’Oréal keeps delving deeper into the designer fragrance category, where it vies with Coty Inc. to be first. Most recently the French beauty giant signed an agreement to acquire the Mugler brands and Azzaro fragrances from Groupe Clarins. That deal should go through in the first quarter of 2020.
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Another Italian fragrance brand to enter L’Oréal’s portfolio recently, which also formerly had been at Puig, was Valentino, effective Jan. 1, 2019. And L’Oréal in spring 2018 renewed its Giorgio Armani fragrance and beauty license until 2025.
The L’Oréal Luxe division, which includes fragrance licenses for Yves Saint Laurent and Maison Margiela, among others, has been a longstanding engine of the group’s strong sales growth, which reached 7.18 billion euros in the third quarter, up 11 percent versus the same prior-year period. Sales at L’Oréal Luxe, meanwhile, gained 18.4 percent, making it the company’s fastest-growing branch in reported terms.
L’Oréal was overtaken by Coty as the world’s global premium fragrance player in 2016, when it acquired from Procter & Gamble luxury perfume licenses such as Hugo Boss and Gucci.
By summer 2018, rumors were swirling that the Prada fragrance and beauty business would change hands.
In August 2018, during a call with financial analysts, Prada’s chairman Carlo Mazzi fielded a question about Prada possibly parting ways with Puig, saying that the license would expire in 18 months and Prada would hold talks with Puig and potential new partners. Mazzi said Prada was considering the opportunity to increase the business.
According to industry estimates, Prada’s fragrances generate revenues of 100 million euros annually.
Under the Spanish group, perfumes such as Prada L’Homme and La Femme were introduced, as well as the Candy and Luna Rossa franchises. Most recently, a focus has been put on Prada’s in-store strategy for the brand’s fragrances, which are sold in a few thousand sales points.
The Puig-Prada tie-up dates back to May 2003, when Prada Holding NV and Puig inked a 50-50 joint venture for the management of the Italian fashion company’s fragrance and skin-care business globally.
At the time, a priority was to organize Prada’s existing beauty and product makeup lines into three main divisions: “multidose” products, for specific treatments, and “monodose” units for color.
Other plans included a first fragrance for Prada, slated for a 2004 launch, and to increase the brand’s product distribution substantially, from its count of some 100 doors to 1,500 ultimately.
Then it was estimated the Prada beauty brand generated $10 million in wholesale revenues.
Prada first entered the beauty business in September 2000, with the launch of Prada skin care. Its strategy broke all codes of traditional beauty brands, which typically hit the market with a fragrance. Instead, Prada dove straight in with treatment — and treatment not in jars or tubes, but in tiny unidose containers. Next up was color in the form of lip balms, rather than lipsticks.
But that strategy proved to be complicated for consumers, and the line was discontinued less than a decade after its distribution.