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LVMH Scent Unit Sees Growth

LVMH Fragrance Brands, the structure merging the sales forces of Givenchy, Kenzo, Fendi and Pucci, has been in place since January.

PARIS — LVMH Fragrance Brands, the structure merging the sales forces of Givenchy, Kenzo, Fendi and Pucci, has been in place since January.

“The organization is doing very well,” said Alain Lorenzo, its president and chief executive officer, adding there is just some fine-tuning left to do on it.

“I would say 95 percent of the work is done now,” continued Lorenzo.

The new structure virtually doubled to 150 people, the size of the international export and travel-retail sales force of those four LVMH Moët Hennessy Louis Vuitton-owned brands. Meanwhile, each one’s creative, marketing and communications activities remain separate.

Global brand presidents were named for Givenchy, Kenzo plus Fendi and Pucci. The new structure did not affect LVMH’s Christian Dior and Guerlain brands, which maintain their own sales teams.

Lorenzo explained the number-one short-term ambition for the new setup — which hasn’t been initiated in every single market — was to ensure a sales structure was in place to launch the new Fendi women’s scent, Fan di Fendi. Its debut in September 2010 brought the brand back into the fragrance market.

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Fendi Palazzo women’s fragrance was discontinued by LVMH in 2009, just 18 months after Fendi relaunched its activities in the segment in 2007. At the start of the first part of its two-phased launch, sources estimated Fan di Fendi would generate $50 million in first-year wholesale revenues worldwide.

“The number-one ambition is to make a big comeback in the Fendi brand with a product that we think has a lot of potential,” said Lorenzo, adding that during the first phase of its launch, the scent has done very well in Russia and Brazil. For phase two, starting this summer, the company has “extremely high expectations,” particularly in the U.S. and Italy, he continued.

The second objective of LVMH Fragrance Brands was to be certain Givenchy and Kenzo would also benefit from the new structure.

“What we could not afford to do before when we had only smaller sales forces is to dedicate specific sales people to travel retail and other sales people to the export market,” said Lorenzo. “[They’re] completely different jobs.

“We’ve also been able, in the process, to beef up our sales structure for subsidiaries because now we have regional directors supervising our different affiliates in the world, which we didn’t have before,” added Lorenzo. “So that also should allow us to spread the best practices between countries with affiliates much better than in the past, when we had no such structures.”

For Pucci, the first order of the day was the introduction of Miss Pucci, in late August 2010.

LVMH Fragrance Brands has been tweaking some processes, such as logistics, to make them operationally smoother for the sales team and also result in cost-savings. The process should be completed by yearend.

Lorenzo didn’t deny that down the road it might be possible that LVMH Fragrance Brands could grow its portfolio.

“Probably at some point, but there’s no rush,” said Lorenzo. “I think the big mistake would be to try and do too much, too quickly.”

Last year, sales at LVMH’s perfumes and cosmetics division — which includes LVMH Fragrance Brands — gained 12 percent to 3.08 billion euros, or $4.08 billion at average exchange for the period. Organic growth was 9 percent.