L’Oréal Acquires Kering’s Fragrance License as Beauty Market Recalibrates
- CBO Editorial
- Oct 20
- 4 min read
C-Suite Notes: L’Oréal’s acquisition of Kering’s fragrance license sharpens strategic focus for both groups—L’Oréal strengthens designer beauty while Kering concentrates on building its in-house beauty engine in a reshaping market.
L’Oréal Takes Over Kering’s Fragrance License Amid Beauty Market Recalibration
L’Oréal has reached an agreement to acquire the global fragrance and cosmetics license from Kering—a move that reshapes competitive dynamics at a time when the luxury beauty market is undergoing a broad recalibration.
Announced in October 19, 2025, the $4.66B deal, L’Oréal largest acquisition Yet, transfers full creative and commercial rights for fragrance and cosmetics to L’Oréal Luxe, the world’s largest prestige beauty division. Under the deal, French beauty giant L’Oreal will acquire Kering’s fragrance line Creed, which former CEO Francois-Henri Pinault acquired in 2023 for 3.5 billion euros, as well as exclusive rights to develop fragrance and beauty products for 50 years under Kering’s fashion labels including Bottega Veneta and Balenciaga. In its statement, the company said the acquisition “strengthens our couture fragrance portfolio,” positioning Balenciaga and Rochas alongside established houses such as YSL Beauté, Armani Beauty, Prada Beauty, and Valentino Beauty. €4 billion is payable in cash at closing, expected in the first half of 2026. L’Oréal will also pay royalties to Kering for the use of its licensed brands.
For Kering, the decision marks a strategic narrowing. Since launching Kering Beauté in 2023—with former Estée Lauder executive Raffaella Cornaggia as CEO—the luxury group has been consolidating beauty capabilities across its maisons. Selling the Balenciaga and Rochas licenses removes inherited fragmentation, enabling Kering to focus on brands where beauty most directly reinforces house identity: Gucci, Bottega Veneta, Alexander McQueen, Pomellato, and Qeelin. Rather than signaling retreat, the move gives Kering Beauté a cleaner starting field as it aims to build a multibillion-euro beauty business over the next decade.
Beauty Market Recalibration: Global Demand Resilient, Channels Rebalancing
Despite uneven luxury spending overall, premium beauty remains one of the sector’s most durable categories. According to Bain & Company, luxury beauty grew high single digits in 2024, driven by prestige fragrance, premium skincare, and digital-led beauty consumption. The global premium beauty market is valued at €76–78 billion, with L’Oréal Luxe holding the largest share.
L’Oréal Luxe Market Share (2024):
Kering Beauté is starting from a smaller base, but analysts at Jefferies estimate its portfolio could reach €2–3 billion in revenue by 2030 if it scales beauty with the same discipline seen in its leather-goods strategy.
The acquisition clarifies competitive boundaries: L’Oréal continues to dominate designer-led beauty, while Kering builds its own beauty architecture around fully controlled maisons—a strategic divergence that mirrors broader restructuring across luxury conglomerates.
Channel Shifts Across the U.S., Europe, and APAC: Prestige Beauty Finds New Ground
Prestige beauty continues to perform well in department stores, but it no longer defines the category’s momentum. The geography of demand and retail discovery has shifted meaningfully.
U.S. & Europe (Circana):
Department-store prestige beauty: +5% YoY
Specialty beauty retailers (Sephora, Ulta Prestige): +14% YoY
Department stores’ share of U.S. prestige beauty: down from ~46% (2014) to ~28% (2024)
APAC:
China’s department stores remain pressured, though beauty still outperforms apparel and accessories.
Over 70% of prestige beauty in China now transacts via digital channels, including Tmall Luxury Pavilion, Douyin, RED, and brand-owned e-commerce.
Travel retail is accelerating again across Korea, Singapore, and Hainan, with beauty as the leading category.
The implication is clear:Luxury beauty is healthy, but its growth engines have migrated to specialty retail, travel retail, and online ecosystems.
L’Oréal’s scale gives it the advantage in omnichannel distribution, while Kering can architect a modern beauty business without inheriting legacy retail dependencies.
Consumer Behavior: Beauty as the Global Gateway to Luxury
Across the U.S., Europe, China, and Korea, consumers increasingly treat beauty as an entry point into luxury, driven by emotional value, affordability relative to fashion, and the cultural momentum of fragrance.
Key behavioral shifts shaping the prestige beauty market:
Fragrance is the standout category. Prestige fragrance grew 13% in the U.S. (Circana), outpacing makeup and skincare for the third consecutive year.
Gen Z leans into small indulgences. Younger consumers continue to invest in premium beauty even as they scale back aspirational fashion.
Travel retail rebounds. Beauty travel retail rose +18% YoY, with fragrance and cosmetics leading airport retail baskets.
Beauty discovery is digital-first. TikTok Shop, Douyin Beauty, RED, and Sephora’s digital ecosystem increasingly shape awareness, trial, and conversion.
Beauty is no longer the auxiliary category—it is the brand-building engine for luxury houses globally.
Strategic Implications for Luxury Beauty Brands
The acquisition is more than a licensing transfer; it reflects a broader restructuring of how luxury groups approach category architecture:
L’Oréal deepen its leadership in designer and couture-led beauty, expanding its reach across omnichannel retail.
Kering gains strategic focus, concentrating its investment on maison-controlled beauty where creative identity and long-term brand value align.
The broader industry trend shows conglomerates reassessing licensing models, retail strategies, and beauty’s role within brand ecosystems.
As the beauty market recalibrates, both groups position themselves for a landscape where category growth, consumer expectations, and channel evolution increasingly demand clarity, specialization, and global scale.
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