Will — or won’t — Kering take beauty back in-house during 2023? And in that case, what form might that take?

The excitement around such questions keeps intensifying, with industry experts wondering whether and when the French luxury conglomerate might attempt to take some, or all, of its licensed fashion and jewellery fragrance brands in-house. In addition they ponder if beauty brand acquisitions could be within the offing.

Industry sources have said Kering was all for acquiring Byredo, which was snapped up by Puig in late May 2022, and Tom Ford, which was purchased by the Estée Lauder Cos. in December 2022, as an example.

One thing’s for certain, though: Kering is mulling possibilities.

Jean-Marc Duplaix, chief financial officer of Kering, within the context of the corporate’s third-quarter results released on Oct. 20, 2022, said: “Now regarding beauty, now we have demonstrated that we could create a variety of value for the group and our brands. So currently, we’re constructing a team to evaluate the opportunities and different options.”

An organization spokesperson had no comment on a report that no less than one hire has already been made for that.

“We are going to take a number of months to make your mind up what [are] the most effective solutions,” Duplaix said last October. “We had mentioned that we had some short-term termination as regards certain licenses operated. While for Gucci, it’s a more longer-term expiration time.”

Today, the jewels in Kering’s crown are Gucci with a 50-year beauty license that’s held by Coty Inc. and expected to run out in 2028. There’s also Yves Saint Laurent, with a long-term beauty license sold to L’Oréal in 2008. Industry sources estimate those brands’ beauty activities generate sales of a half-billion euros and 1 billion euros, respectively.

The Balenciaga fragrance license has expired and was not renewed by Kering and Coty’s mutual consent, in keeping with a Coty spokesperson. Coty still runs the Bottega Veneta and Alexander McQueen beauty licenses.

As for Kering, it isn’t any stranger to the category. Until the late Aughts, the group, then called PPR, took a more hands-on approach to fragrance and cosmetics. On the time, PPR’s Gucci Group had a beauty subsidiary named YSL Beauté, which included fragrance and sweetness brands and licenses, equivalent to Yves Saint Laurent, Stella McCartney, Boucheron and Ermenegildo Zegna, before it was sold to L’Oréal in 2008 for 1.15 billion euros.

The YSL Beauté business was never huge. In 2007, the activity generated sales of 649 million euros, placing it twenty ninth globally amongst beauty manufacturers within the WWD Beauty Inc Top 100 rating.

After YSL Beauté’s sale, Kering retained ownership of the Yves Saint Laurent, Boucheron and Stella McCartney fashion brands, and L’Oréal divested a few of its acquired holdings.

Today, amongst Kering’s other owned fashion and jewellery labels, Interparfums runs Boucheron’s business in perfume, while Lalique Group develops Brioni’s fragrance activity.

Neither Pomellato nor Dodo has an energetic perfume business at present, while the producer of Qeelin’s one fragrance couldn’t be learned.

Some experts think it makes good strategic sense for Kering to sharpen its concentrate on beauty, especially because the group now has a stronger balance sheet and net money position with which to perform deals.

Over the past 20 years, luxury goods corporations, equivalent to Puig, have been taking back full control of the brands they own. That may pack a strong punch, giving them more consistency, synergies and power.

LVMH Moët Hennessy Louis Vuitton, which runs its fashion brands’ beauty operations, in addition to other labels, ranked sixth in WWD Beauty Inc’s Top 100 rating reflecting corporations’ 2021 sales. And Puig is available in at nineteenth, as an example.

Kering’s internalizing beauty could echo the success of its taking eyewear in-house six years ago. The group has been encouraged by the accomplishments of that division, which was launched in 2015 and has set a revenue goal of two billion euros within the medium term.

Beauty is a “natural extension” of Kering’s brands’ territory, said Jean-François Palus, group managing director, on July 27, 2022, during a call with financial analysts. He added “all options are open.”

In December 2022, Kering and sweetness concern L’Occitane Group launched Climate Fund for Nature, committing 140 million euros to conservation, biodiversity and regenerative farming projects in countries where they source raw materials.

“The massive prize in fact is Gucci beauty,” wrote HSBC analysts in a note dated Oct. 7, 2022, with reference to beauty brands Kering could take in-house. “We don’t have a powerful view on whether taking back beauty is sweet or bad when it comes to returns as it’ll really rely on execution.

“We note, nevertheless, that it might be positive for the share price because it would cut back the danger of Kering making an unrelated poor acquisition,” they continued, referring to media mentions around that point of Burberry or Tom Ford.