Puig Seeks to Go Public, with a Valuation Potentially Reaching €8 Billion

According to a report from Reuters, citing unnamed market sources as reported by the Spanish newspaper Expansión on Thursday, Spanish cosmetics group Puig has reportedly hired investment banks Goldman Sachs and JPMorgan as global coordinators for its initial public offering (IPO). It is understood that Puig is planning to go public next year, with an estimated market valuation reaching 8 billion euros.

Puig achieved a net revenue doubling within three years

Puig has been one of the fastest-growing companies among global beauty and cosmetics giants in the past two years.

It is understood that Puig’s business is divided into three segments. The first is Fragrances and Fashion, which encompasses most of Puig’s brands, such as fragrance brands Paco Rabanne, and Carolina Herrera, and the Swedish fragrance brand Byredo, which was reportedly acquired for 1 billion euros. It also includes lifestyle brands Adolfo Dominguez, Shakira, and Benetton. Puig states that this segment has a diverse fragrance portfolio, positioning the company as the fifth-largest player in the fragrance industry, capturing nearly 10% of the market share. Its three brands rank among the top twenty fragrance brands worldwide.

The remaining two segments focus on the beauty sector. One is an independent cosmetics division formed by the acquisition of British beauty brand Charlotte Tilbury in June this year. The beauty brands Uriage, Apivita, and Isdin are consolidated into a new division called Derma, specializing in skincare.

According to Puig’s latest annual report for 2022, its net revenue reached 3.62 billion euros, marking a significant increase of 40% compared to the previous year. The net profit amounted to 400 million euros, showing a remarkable surge of 71% year-on-year. Breaking down the performance by business segments, the Fragrances and Fashion division experienced substantial revenue growth of 40%, reaching 2.665 billion euros, accounting for 73.6% of the group’s total net revenue. This segment can be considered Puig’s most important growth engine.

Looking back to the year 2020, Puig’s growth rate stood out among its peers in the beauty industry. Due to the impact of the pandemic, Puig’s net revenue declined by 24% to 1.537 billion euros, falling below 2 billion euros, and the net profit plummeted by 58.85% to 93 million euros, dropping below 100 million euros. However, in 2021, Puig experienced a remarkable recovery, with net revenue surging by 68% to 2.585 billion euros, surpassing the pre-pandemic level of 2.029 billion euros in 2019. The net profit also doubled, increasing by 152% to 234 million euros, effectively overcoming the downturn caused by the pandemic.

In 2022, Puig continued its strong growth momentum, with net revenue soaring by 40% to 3.62 billion euros, and net profit increasing by 71% to 400 million euros. Although the growth rate was not as eye-catching as in 2021, a 40% increase still outperforms other global beauty giants. In 2022, major players in the beauty industry such as L’Oréal, Unilever, LVMH, and Beiersdorf achieved strong results, but their revenue growth rates remained around 10%, with none exceeding 20%. Puig currently ranks 16th among the top 100 global beauty companies according to WWD.

Major beauty giants experience significant growth in their fragrance business

Puig’s strong performance is closely linked to the booming global fragrance market. According to data from Fortune Business Insights, the global fragrance market is projected to grow from $48.05 billion in 2023 to $69.25 billion in 2030, with a compound annual growth rate of 5.36% during the forecast period.

In fact, besides Puig, several other fragrance giants have also demonstrated impressive financial results in recent years.

Coty, a major fragrance player based in the United States, experienced four consecutive years of declining performance due to debt issues resulting from its acquisition of Procter & Gamble’s fragrance, hair care, and cosmetics divisions for a total of 43 brands for $12.5 billion. However, under the leadership of new CEO Sue Y. Nabi, Coty managed to reverse the trend, achieving revenue growth for the first time in six years in the fiscal year 2022. In FY 2022, Coty’s revenue reached $5.304 billion, representing a 14.57% increase compared to 2021, and the company achieved profitability for the first time in six years, with a net profit of $268 million. In FY 2023, Coty reported a net revenue of $5.554 billion, a 5% increase compared to the previous year, marking two consecutive years of revenue growth. The net profit for FY 2023 reached $523 million, nearly doubling compared to the $268 million in FY 2022. Coty’s improved performance has allowed it to secure the tenth position among the top global beauty conglomerates in the first half of this year.

Another fragrance manufacturer, Inter Parfums, has also outperformed other beauty giants in terms of growth rate in recent years. In 2022, Inter Parfums achieved sales of €707 million, a 25.99% increase compared to 2021. Sales in 2021 amounted to €561 million, representing a substantial surge of 52.66% compared to €367 million in 2020. In the span of three years from 2020 to 2022, Inter Parfums nearly doubled its revenue. The net profit attributable to the parent company also doubled from €30.7 million in 2020 to €99.5 million in 2023.

Apart from these companies, which heavily focus on the fragrance business, other beauty companies have also seen impressive performance in their fragrance divisions.

French luxury conglomerate LVMH reported a 13% year-on-year revenue growth in its Fragrances & Cosmetics business during the first half of 2023, surpassing €4.028 billion for the first time. The operating profit for this segment reached €446 million, a 15% increase compared to the previous year. Looking at the past five years, the Fragrances & Cosmetics division of LVMH surpassed €3 billion and reached €3.236 billion in the first half of 2019. However, due to the global pandemic impact, the division’s revenue dropped by 29% to €2.304 billion in the first half of 2020. As the pandemic impact weakened in the first half of 2021, the Fragrances & Cosmetics division experienced a significant rebound with a 37% organic growth compared to the previous year, reaching €3 billion once again. In the first half of 2022, the revenue further increased to €3.618 billion, surpassing the pre-pandemic level of 2019. By 2023, it exceeded €4 billion, reaching a five-year high.

LVMH highlighted the outstanding performance of Dior fragrances, which strengthened its leadership position in strategic markets. Sauvage confirmed its status as a world-leading fragrance, while iconic women’s fragrances J’adore and Miss Dior continued to grow.

Estée Lauder, which faced some struggles in its overall performance in recent years, also achieved growth in its fragrance division for three consecutive quarters. Sales increased from $1.563 billion in the fiscal year 2020 to $2.512 billion in the fiscal year 2023, representing a growth rate of 60.7% over three years, surpassing the overall growth rate.

Moreover, some luxury giants have identified fragrance as a new growth curve.

At the beginning of this year, French luxury conglomerate Kering established its newly formed beauty division, Kering Beauté, which operates brands such as Bottega Veneta, Balenciaga, Alexander McQueen, Pomellato, and Qeelin. Raffaella Cornaggia was appointed as the CEO of this new division. Raffaella Cornaggia has extensive experience in the beauty industry, having previously worked at L’Oréal, Chanel, and Estée Lauder.

Kering Beauté’s first investment has attracted significant industry attention.

In late June of this year, Kering Beauté announced its acquisition of Creed, an independent fragrance brand from the United Kingdom. Creed, founded in 1760 and rooted in London, boasts a remarkable 263-year history. Initially serving as a supplier of tailored clothing and scented gloves to the British royal court, Creed later expanded its business to the creation of personalized fragrances for high-end clients. The reported acquisition price for Creed reached €3.5 billion, making it the highest-priced acquisition of a single beauty brand and highlighting Kering’s emphasis on the fragrance sector.

Simultaneously, another luxury goods company, Richemont, announced the establishment of its fragrance and beauty division, following in the footsteps of competitors such as Kering and Dolce & Gabbana. Richemont stated that this new division will collaborate with brands while respecting their distinct high-end positioning, aiming to assist them in developing exquisite creativity and promising licensing opportunities. In addition to Montblanc and Van Cleef & Arpels, Richemont’s fragrance portfolio includes brands like Cartier, Van Cleef & Arpels (aside from its jewelry line), Alaïa, and Chloé, all of which have their own fragrance.

Both companies dedicated to fragrances and fragrance divisions within major beauty conglomerates play a crucial role in boosting overall business performance. The successive entry of luxury giants into the fragrance industry also underscores the extensive prospects within the fragrance sector.

The fragrance market in China is flourishing

China, as the world’s second-largest beauty market, has witnessed rapid development in the fragrance market.

According to statistics from Euromonitor International, the sales of the fragrance market in China have shown significant growth over the past three years, surpassing the global trend. In 2020, while the global fragrance market experienced negative growth, the Chinese fragrance market maintained a growth rate of 10.6%. In 2021, the Chinese fragrance market experienced a remarkable boom with a growth rate of 38.7%. In 2022, despite the global fragrance market’s slowdown due to environmental factors, the Chinese fragrance market continued to outpace the global growth rate. Data from iiMedia Research indicates that the market size of the fragrance industry in China has steadily increased in recent years, reaching 16.9 billion RMB in 2022, a year-on-year growth of 24.3%. It is projected to reach 30 billion RMB by 2025.

Karim LISI, Vice President of Business Development for the Fragrance Division in the Asia-Pacific region at Symrise, believes that a significant portion of the future development of the global fragrance market will occur in China, and they anticipate continuous growth in the Chinese market over the next five years.

Due to the relatively short history of fragrance usage in China compared to Europe and the United States, the future direction of the Chinese fragrance market is expected to focus on niche fragrances. There will also be an emphasis on expanding offline channels and placing greater importance on offline experiences. Jerry Vittoria, Global President of Fine Fragrance at Firmenich, stated that international clients have significantly expanded their presence in the Chinese market, including brands such as Estée Lauder, L’Oréal, and Jo Malone. He believes that the fragrance market in China has tremendous development potential. According to forecasts, the size of the fragrance market in China is expected to exceed 53.9 billion RMB by 2028, with an average annual growth rate of 20% from 2023 to 2028.

In fact, in recent years, major beauty conglomerates have been transforming their fragrance businesses in China to focus on offline experiential stores. For example, L’Oréal invested in Documents, a brand founded in 2021, which features a unique “Zen Cool CHANKU” style and offers high-concentration fragrances containing 15% to 25% fragrance essence, aiming to provide the Gen Z generation with olfactory experiences infused with Eastern philosophical thoughts. Their products use ingredients sourced from or inspired by China.

In terms of distribution, since fragrance is a category that relies heavily on experiential factors, Winky Lux initially skipped online channels and has primarily focused on brick-and-mortar stores for sales. As of September, they have opened three brand stores in Huaihai Road and Jing’an Kerry Center in Shanghai, as well as SKP-S in Beijing.

Le Labo, a brand under Estée Lauder, officially entered the mainland Chinese market on June 1st with the opening of its flagship store, Le Labo Global Brand Home Shanghai Wulixiang, located in Shanghai Xintiandi. Le Labo challenges the traditional fragrance industry by providing the public with an open fragrance laboratory where consumers can experience the behind-the-scenes craftsmanship of handcrafted fragrances, emphasizing on-site consumer experiences.

In addition, in February of this year, Puig collaborated with Chinese e-commerce brand Tmall, launching a “scent visualization” tool to attract Chinese consumers. From 2015 to 2020, the Chinese fragrance market maintained a compound annual growth rate of nearly 15%. Over the next five years, this growth rate is expected to exceed 22%, which is three times the global fragrance market growth rate, according to the Kantar & Eternal Fragrance Report 2021. Puig stated that as China is essentially an untapped region in the fragrance field, it has become one of their main target markets.

It is evident that the potential of the Chinese market is an important target for major beauty conglomerates, and Puig’s pursuit of going public may redirect capital focus onto the promising track of the fragrance market.



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