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How business-hungry Puig became the beauty industry’s ‘flexible’ conglomerate

Written by The Anand Market

Updated on:

Beauty groups L’Oréal and Shiseido have long made waves with their spectacular acquisitions, but their little-known Spanish counterpart, Puig, has also gotten in on the action, presenting itself to brand founders as a “flexible” acquirer. “.

The beauty and fashion group, which bankers value at between 8 and 10 billion euros, this month unveiled its 11th acquisition in 12 years as it considers an IPO. Puig acquires a majority stake in a high-end German “molecular cosmetics” brand, Dr Barbara Sturm, extending a series of deals including a majority stake in Charlotte Tilbury, which valued the British cosmetics maker at 1.3 billion pound sterling.

Puig is still a minnow compared to companies like L’Oréal and Estée Lauder, which boast market capitalizations of €236 billion and $49 billion respectively, but its transformation in recent years has been drastic.

Before the spending spree began in 2011, the family-owned group, which sells everything from perfume to high heels, focused on a few key brands, including Carolina Herrera and Nina Ricci, achieving annual sales of $1. 2 billion euros.

The acquisition of Dr Sturm now allows it to hold majority stakes in a total of 14 brands. The Barcelona conglomerate announced that its turnover for 2023 would exceed 4 billion euros.

As the luxury sector grapples with the end of the post-coronavirus boom, Marc Puig, the founder’s grandson who serves as both chairman and chief executive, said the company was “seeing some slowdown in growth » but remained in good shape.

Part of the reason is that Puig doesn’t see itself as a luxury player but rather in the high-end beauty sector. Puig said this segment “has traditionally been more immunized because the unit price of products is lower, which gives it a different market dynamic than the luxury market. This resilience has been proven over time and is expected to continue.

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As the biggest cosmetics and fashion groups compete to meet growing demand for beauty products, they have been quick to snap up or invest in smaller brands.

In 2021, LVMH, for example, acquired Officine Universelle Buly 1803, a historic French perfume and cosmetics brand. L’Oréal bought Australian high-end cosmetics group Aesop from its Brazilian owner last year in a deal with an enterprise value of $2.5 billion.

charlotte tilbury poses in a dress against a golden wall
Charlotte Tilbury sits on Puig’s nine-person executive committee © Cindy Ord/Getty Images

Consumer goods group Unilever and private equity firms had considered buying Charlotte Tilbury, a brand associated with its eponymous founder and her YouTube makeup tutorials, before Puig got it in 2020.

The Spanish company also scored a big victory in 2022 by fending off L’Oréal by acquiring Byredo, a cult Swedish brand founded by Ben Gorham, a former basketball player.

When asked why a founder would choose Puig, Marc Puig told the Financial Times: “We have to be aware that every founder and every individual is different. . . we were able to find formulas adapted to each case. We try to be more flexible than other big houses – I think that’s what sets us apart.

Charlotte Tilbury herself remains president and creative director of her brand and sits on Puig’s nine-person executive committee. Jean Paul Gaultier, sold to Puig in 2011, is still involved in his brand even though he has retired.

Dries Van Noten, the Belgian founder of the high-end fashion house that bears his name, said his team approached Puig with a view to acquiring it in a deal that ultimately closed in 2018. The group Spanish has given his company the “strong shoulders” it needs. was expected to expand, including supporting e-commerce and opening stores in China, he told Women’s Wear Daily.

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“Like in any good marriage, I think there are good days, and sometimes not so good days, but I think they really respected us, so they didn’t want to put the Puig stamp on our business,” he said. said Van Noten, who continued as creative director.

one model looks straight ahead while the others turn their backs to the camera on the runway.
Dries Van Noten models at Paris Fashion Week last September © Kristy Sparow/Getty Images

Not all deals in the industry end well. Bobbi Brown sold her eponymous cosmetics brand to Estée Lauder in 1995, but left it in 2016 after a rough few years, later saying “fun things disappear” when you’re part of a billion-dollar brand .

Puig was founded as a perfume company in 1914 by Antonio Puig, who reinvented himself after a ship carrying goods from his previous import business was sunk by a German submarine. The two drivers of its growth in the 20th century were the distribution of foreign-made products in Spain and the production of perfumes under license for other brands. A deal in 1968 to make perfumes for Paco Rabanne marked a turning point. Puig still holds the beauty licenses for Comme des Garçons Parfums and Christian Louboutin.

Marc Puig has run the company since 2004 but said he will be the last generation of the family to run the business, although he has no plans to step down.

A major goal of the chair has been to reduce the group’s reliance on licensing, which is less profitable than outright ownership. The company’s own products now account for more than 90 percent of all sales. This also gives it end-to-end control over products and distribution.

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Other groups wish to establish themselves more in high-end beauty, including the fashion house Kering and the watch and jewelry specialist Richemont. They began to build their capabilities in-house, but also hired third parties to produce products bearing their brands.

marc puig looks at the camera, dressed in a dark gray suit and black tie
Marc Puig said the company was “seeing some slowdown in growth” but remained in good shape

Puig’s president suggested that in the long run his rivals would realize it was safer to do it themselves. “They will have to get back some of the brands that have licenses today,” he said.

Despite diversification into fashion and skincare, fragrances remain at the heart of Puig’s business. Fragrance hasn’t been too affected by the downturn in the luxury sector and Puig continues to strive to sell more expensive products.

In a high-end category it calls “niche perfumes,” which includes its 2015 acquisitions of L’Artisan Partemporel and Penhaligon’s, Puig says it has grown faster over the past decade than any other company.

What sets it apart from other luxury products and what can protect it if spending falls is the price. Haute couture or high-end watches can cost several thousand euros, putting them out of reach for many consumers, but high-end perfumes remain more affordable.

In the past, it was rare to find a 100 ml bottle of perfume for more than €100. Today, Puig has expanded its price range, but has not exceeded €200, a level that allows you to purchase more natural ingredients and unusual fragrance blends.

“There are people who say, ‘I don’t want to smell like everyone else,’” Puig said. “People are responding to this need to express themselves to the rest of the world. »