In-House vs. Licensing: Why Luxury Fashion Houses Struggle with Beauty.
Introduction
The world of luxury beauty is far more complex than it appears from the outside. Fashion maisons may enjoy global reverence for their creativity, heritage, and desirability—but translating that into a profitable and coherent beauty business is a different game altogether. Over the decades, luxury brands have experimented with multiple models: full licensing, joint ventures, acquisitions, and lately a return to in-house strategies. Each model offers distinct advantages and pitfalls.
Recent strategic moves by Kering, Richemont, and Dolce & Gabbana prove that beauty is no longer a secondary category, it is a core battleground for profitability, brand equity, and long-term independence. Kering’s creation of Kering Beauté (and subsequent sale), Richemont’s development of Laboratoire de Haute Parfumerie et Beauté, and Dolce & Gabbana’s full transition to in-house operations showcase the spectrum of approaches—and the high stakes involved.
This article traces the evolution of licensing versus in-house models in luxury beauty. It explores why Hermès and Chanel have succeeded with full control, while others like Kering, Richemont, and Dolce & Gabbana have faced challenges. The goal is to extract clear lessons around operational complexity, leadership alignment, capital intensity, and timing; critical insights for any luxury brand seeking to scale in beauty.
Kering
In 2023, under CEO François-Henri Pinault, Kering launched its beauty division, Kering Beauté, marking a strategic move to expand its presence in the beauty and fragrance industry. The division's formation was underscored by the acquisition of the luxury fragrance brand Creed for €3.5 billion, signaling Kering's commitment to developing in-house beauty products for its prestigious fashion labels, including Gucci, Bottega Veneta, and Balenciaga.
Upon establishing Kering Beauté, the company aimed to consolidate its beauty operations and reduce reliance on external licensing agreements. Initially, Gucci's fragrance line remained under its existing licensing agreement with Coty, set to expire in 2028. However, Bottega Veneta and Balenciaga's beauty and fragrance operations were brought in-house, aligning with Kering Beauté's strategy to centralize control over product development and distribution.
In June 2023, Kering announced the acquisition of Creed, a renowned Anglo-French niche perfume house known for its heritage and craftsmanship. The acquisition was completed in October 2023, with Creed becoming part of Kering Beauté's portfolio. This move was intended to bolster Kering's position in the high-end fragrance market and provide a foundation for expanding its beauty offerings.
The primary objective behind the establishment of Kering Beauté and the acquisition of Creed was to develop a cohesive and profitable beauty division that could drive growth across Kering's fashion brands. By bringing fragrance operations in-house, Kering sought to achieve greater control over product development, enhance brand consistency, and capitalize on the growing luxury beauty market.
However, the division faced significant challenges. Despite initial optimism, Kering Beauté reported operating losses, with a €60 million deficit in the first half of 2025. Additionally, Gucci's sales experienced a decline, partly due to reduced demand in key markets such as China. These financial pressures prompted a reevaluation of the strategy.
In October 2025, Kering announced the sale of its beauty division to L'Oréal for €4 billion. The deal included the acquisition of Creed and a 50-year licensing agreement granting L'Oréal the rights to develop beauty and fragrance products for Gucci, Bottega Veneta, and Balenciaga, starting in 2028 after Gucci's current deal with Coty expires. This move was part of a broader effort by new CEO Luca de Meo to reduce Kering's €9.5 billion debt and refocus on core fashion operations. The transaction is expected to close in the first half of 2026.
The sale to L'Oréal marks a strategic shift for Kering, returning to a licensing model for its beauty and fragrance operations. While the in-house strategy initially aimed to enhance control and profitability, the challenges faced led to the decision to partner with L'Oréal, leveraging its expertise and global reach to drive growth in the beauty sector.
Richemont
In September 2023, Richemont established a new beauty division named Laboratoire de Haute Parfumerie et Beauté to scale up its fragrance business. The company appointed Boet Brinkgreve as CEO to lead this initiative. This move aimed to centralize and enhance the fragrance operations across Richemont's maisons, including Cartier, Van Cleef & Arpels, Chloé, Dunhill, Alaïa, and Montblanc, to achieve greater scale and competitiveness in the luxury fragrance market.
In February 2025, Richemont announced changes to its senior executive committee, including the departure of Boet Brinkgreve, head of the beauty division, effective at the end of April. This shift indicated a reevaluation of the company's strategy in the beauty sector. Subsequently, Catherine Rénier, CEO of Van Cleef & Arpels, and Louis Ferla, CEO of Cartier, were appointed to Richemont's senior executive committee, signaling a potential strategic pivot.
Current Status of Richemont's Fragrance Operations:
Cartier: Continues to maintain an in-house fragrance operation, developing and producing perfumes internally, with Mathilde Laurent serving as the in-house perfumer.
Van Cleef & Arpels, Chloé, Dunhill, Alaïa, Montblanc: These brands have traditionally operated under licensing agreements for their fragrance lines and continue to do so as of 2025 (Van Cleef & Arpels licensed to Interparfums, Chloé to Coty, Dunhill license not renewed, Alaïa not renewed, Montblanc to Interparfums).
As of October 2025, there have been no public announcements indicating a shift to in-house fragrance management for these brands.
Richemont's initial strategy to centralize fragrance operations through Laboratoire de Haute Parfumerie et Beauté was aimed at achieving greater scale and competitiveness in the luxury fragrance market. However, the departure of Boet Brinkgreve and the subsequent appointments of Cartier and Van Cleef & Arpels executives to the senior executive committee suggest a reevaluation of this approach. As of now, Cartier remains the only Richemont brand with an in-house fragrance operation, while the others continue to operate under their existing licensing agreements.
Dolce & Gabbana
In 2023, Dolce & Gabbana made a significant strategic shift by transitioning its beauty operations from a licensing model to full in-house management. This move marked a pivotal moment in the brand's history, as it became the first major Italian luxury fashion house to fully internalize its beauty division. The decision was driven by a desire to have greater control over product development, enhance brand identity, and capitalize on the growing global demand for luxury beauty products.
Prior to its transition to in-house operations in 2023, Dolce & Gabbana's beauty and fragrance lines were managed through various licensing agreements with several partners over the years:
Euroitalia: Held the fragrance license from 1992 until 2006.
Procter & Gamble (P&G): Managed the global fragrance business from July 1, 2006, following the expiration of Euroitalia's license. P&G's Prestige division handled the development, manufacturing, and distribution of Dolce & Gabbana's perfumes.
Coty: Acquired P&G's Prestige division in 2016, including the Dolce & Gabbana fragrance license. However, Coty did not renew the Dolce & Gabbana fragrance license, and it expired in 2016.
Shiseido: Through its subsidiary Beauté Prestige International (BPI), Shiseido assumed responsibility for the fragrance, makeup, and skincare lines under a new licensing agreement effective October 1, 2016. This partnership continued until December 31, 2021, when a partial termination of the license agreement was agreed upon, effective from January 1, 2022, for all markets except France.
These partnerships allowed Dolce & Gabbana to expand its beauty offerings but also meant that the brand had limited control over product innovation, marketing strategies, and distribution channels.
In early 2022, Dolce & Gabbana initiated the process of bringing its beauty operations in-house. By January 2023, the company had fully assumed control over the development, production, and sale of its perfumes and cosmetics through a newly established entity, Dolce & Gabbana Beauty. This move was part of a broader strategy to strengthen the brand's presence in the beauty market and to ensure that its beauty products aligned more closely with its fashion identity.
Under the leadership of CEO Gianluca Toniolo, Dolce & Gabbana Beauty has expanded its product portfolio to include a comprehensive range of makeup and skincare items. The brand's beauty division is now valued at approximately €1.5 billion, with ambitions to triple this figure by 2027.
However, the transition was not without challenges. In the fiscal year through March 2024, Dolce & Gabbana reported an operating loss of €13 million, attributed to increased investments in its beauty division and retail network.
In 2025, Dolce & Gabbana continued to focus on expanding its beauty division. The company launched the Devotion makeup collection, which includes products like illuminating face powder and lipsticks, aiming to strengthen its presence in the luxury beauty market.
Looking ahead, Dolce & Gabbana plans to further develop its beauty division, with a particular emphasis on skincare products. The company aims to increase the retail value of its beauty division to €3 billion by 2027, signaling its commitment to becoming a significant player in the global luxury beauty industry.
This strategic shift underscores Dolce & Gabbana's dedication to integrating its beauty offerings more closely with its fashion identity, ensuring that its products resonate with consumers who value both luxury and authenticity.
Burberry
Burberry's fragrance line commenced in 1981 with the launch of "Burberry for Men" through in house development. In 1993, the brand entered into a licensing agreement with InterParfums, entrusting the company with the development, manufacturing, and distribution of Burberry-branded fragrances and cosmetics. This partnership expanded Burberry's presence in the beauty market, leading to the introduction of notable fragrances such as "Burberry Brit" in 2003. However, by 2012, Burberry opted to exercise its option to terminate the licensing agreement, citing a desire for greater control over its fragrance business. The termination was finalized at the end of 2012, with Burberry paying approximately €181 million to buy back the license rights
Following the termination of its agreement with InterParfums, Burberry took its fragrance operations in-house on April 1, 2013. This strategic move aimed to provide Burberry with more direct control over product development, marketing, and distribution, aligning its fragrance offerings more closely with its brand identity. Under this new structure, Burberry launched several new fragrances and expanded its beauty product lines, including cosmetics and skincare, with celebrity makeup artist Wendy Rowe leading the creative direction
In April 2017, Burberry entered into a strategic partnership with Coty, granting the company exclusive long-term global license rights for Burberry Beauty products, encompassing luxury fragrances, cosmetics, and skincare. Coty assumed responsibility for the development, manufacturing, and distribution of these products, while Burberry retained control over aspects such as packaging, marketing, and creative direction. This partnership aimed to leverage Coty's expertise in luxury beauty to accelerate the growth and development of Burberry's beauty business.
Burberry's transitions between in-house operations and licensing agreements reflect its strategic objectives to enhance brand control, expand market presence, and adapt to industry dynamics. The move to in-house operations in 2013 was driven by the desire for greater control and alignment with brand identity. However, the decision to license its beauty business to Coty in 2017 was influenced by the need to leverage external expertise and resources to accelerate growth in the competitive beauty market.
As of 2025, Burberry continues its partnership with Coty, focusing on expanding its beauty product offerings and enhancing its presence in the global beauty market. The collaboration aims to strengthen Burberry's position in the luxury beauty sector, combining the brand's heritage with Coty's industry expertise.
Salvatore Ferragamo
Ferragamo established its fragrance division, Ferragamo Parfums, in the late 1990s. The first fragrance, Ferragamo Pour Femme, was launched in 1998, followed by Incanto in 2003 and F by Ferragamo in 2006. These fragrances were developed, produced, and distributed internally, aligning with Ferragamo's strategy to maintain control over its brand identity and product offerings. The division also produced fragrances for the Ungaro label.
In July 2021, Ferragamo entered into an exclusive worldwide licensing agreement with InterParfums Inc. The agreement, effective from October 2021, granted InterParfums the rights to produce and distribute Ferragamo-branded perfumes. The deal was set for an initial term of 10 years, with a 5-year optional extension.
To ensure alignment with Ferragamo's brand values and heritage, InterParfums operates through a wholly-owned Italian company based in Florence, guaranteeing that all fragrance production remains in Italy.
However, the shift also posed challenges, including the need to maintain brand consistency and quality control across different markets and distribution channels.
As of 2025, Ferragamo continues its partnership with Inter Parfums, focusing on expanding its fragrance offerings and enhancing its presence in the global luxury market. The collaboration aims to strengthen Ferragamo's position in the fragrance industry while maintaining the brand's commitment to quality and Italian craftsmanship.
Prada
Prada's foray into the fragrance world began in 1990 with the launch of its first perfume, simply named Prada. This exclusive scent was available only in Prada boutiques and select department stores, marking the brand's initial foray into the fragrance market. The fragrance was developed internally, aligning with Prada's strategy to maintain control over its product offerings. This move set the foundation for Prada's future ventures in the beauty industry.
In 2003, Prada entered into a licensing agreement with the Spanish fragrance company Puig. This partnership led to the creation of the Les Infusions de Prada collection, a series of fragrances focusing on single notes such as Iris, Tuberose, and Orange Flower. The collaboration with Puig allowed Prada to leverage the company's expertise in fragrance development and distribution, expanding its presence in the global beauty market. During this period, Prada also introduced other notable fragrances, including Prada Candy in 2011, which became a significant success.
In December 2019, Prada signed a long-term licensing agreement with L'Oréal for the creation, development, and distribution of luxury beauty products under the Prada brand. This agreement, effective from January 1, 2021, marked a significant shift in Prada's fragrance strategy. Under L'Oréal's stewardship, Prada launched Paradoxe in 2022, a fragrance that reinterprets the brand's heritage. Subsequently, in August 2023, Prada expanded its beauty offerings to include makeup and skincare products. The new beauty range, developed by L'Oréal, includes two collections: Prada Skin and Prada Color, offering a wide range of premium products.
Prada's transitions between in-house operations and licensing agreements reflect its strategic objectives to enhance brand control, expand market presence, and adapt to industry dynamics. The move to in-house operations in 1990 was driven by the desire for greater control and alignment with brand identity. The subsequent licensing agreement with Puig in 2003 allowed Prada to leverage external expertise to expand its fragrance offerings. The decision to partner with L'Oréal in 2019 aimed to further enhance Prada's presence in the luxury beauty market, combining the brand's heritage with L'Oréal's industry expertise.
As of 2025, Prada continues its partnership with L'Oréal, focusing on expanding its fragrance and beauty product offerings. The collaboration aims to strengthen Prada's position in the luxury beauty sector, combining the brand's heritage with L'Oréal's industry expertise. The launch of Paradoxe and the expansion into makeup and skincare products signify Prada's commitment to broadening its beauty portfolio and reaching a wider audience.
Hermès
Hermès has opted to maintain control over its beauty products, including makeup, through an in-house model. This approach aligns with the brand's strategy of preserving its artisanal heritage and ensuring quality control across all product categories.
Fragrance Division: A Legacy of In-House Excellence
1951: Hermès introduced its first fragrance, Eau d’Hermès, created by renowned perfumer Edmond Roudnitska. This marked the beginning of Hermès' journey into the world of perfumery.
1961: The launch of Calèche, a women's fragrance, led Hermès to establish a dedicated perfume subsidiary, solidifying its commitment to in-house fragrance development.
2004–2016: Jean-Claude Ellena served as Hermès' exclusive in-house perfumer, crafting iconic scents such as Un Jardin en Méditerranée, Terre d’Hermès, and the Hermessence collection.
2014–Present: Christine Nagel succeeded Ellena, continuing the tradition of in-house perfumery. Under her guidance, Hermès has introduced fragrances like Un Jardin sur le Nil and Twilly d’Hermès.
Production Facilities: All Hermès fragrances are produced in its own workshops at Le Vaudreuil, Normandy, ensuring meticulous quality control and alignment with the brand's values.
Beauty Division: A Controlled Expansion
2020: Hermès launched its beauty line with Rouge Hermès, a collection of lipsticks presented in refillable lacquer tubes. This move marked Hermès' entry into the beauty industry, emphasizing sustainability and craftsmanship.
2021–2022: The beauty line expanded to include blushes and nail enamels, maintaining the brand's focus on quality and exclusivity.
2022–2023: Hermès introduced complexion products, such as the Plein Air balm, further diversifying its beauty offerings while adhering to its principles of simplicity and elegance.
Distribution Strategy: Hermès beauty products are distributed through its own channels and select high-end retailers like Harrods and Selfridges, ensuring a controlled and exclusive customer experience.
Hermès has consistently maintained control over its beauty and fragrance products through an in-house model. This approach aligns with the brand's strategy of preserving its artisanal heritage and ensuring quality control across all product categories. The integration of fragrance and beauty into Hermès' portfolio reflects a commitment to craftsmanship and a seamless extension of its luxury offerings.
Chanel:
Chanel has opted to maintain control over its beauty products, including makeup, through an in-house model.
Fragrance Division: A Legacy of In-House Excellence
1921 – Introduction of Chanel No. 5: Chanel introduced its first fragrance, Chanel No. 5, created by renowned perfumer Ernest Beaux. This marked the beginning of Chanel's journey into the world of perfumery.
1924 – Establishment of Parfums Chanel: Pierre Wertheimer founded Parfums Chanel to produce and sell perfumes and cosmetics. This move solidified Chanel's commitment to in-house fragrance development.
1958–1978 – Henri Robert: Henri Robert served as Chanel's in-house perfumer, succeeding Ernest Beaux.
1978–2015 – Jacques Polge: Jacques Polge took over as Chanel's in-house perfumer, continuing the tradition of in-house perfumery.
2015–Present – Olivier Polge: Olivier Polge, son of Jacques Polge, became Chanel's in-house perfumer, maintaining the family's legacy in fragrance creation.
Production Facilities: All Chanel fragrances are produced in its own workshops, ensuring meticulous quality control and alignment with the brand's values.
Beauty Division: A Controlled Expansion
1924 – Introduction of Makeup Collections: Chanel expanded its beauty offerings to include makeup products, such as powders and lipsticks, marking the brand's entry into the beauty industry.
Recent Developments: Chanel continues to develop and distribute its beauty products in-house, maintaining a focus on quality and exclusivity.
Recent Leadership Changes
2024 – Appointment of Simona Cattaneo: Chanel appointed Simona Cattaneo as president of its Fragrance and Beauty division, effective January 2025. Cattaneo brings extensive experience from positions at Coty, L'Oréal, Burberry, and Dior Beauty.
Chanel has consistently maintained control over its beauty and fragrance products through an in-house model. This approach aligns with the brand's strategy of preserving its artisanal heritage and ensuring quality control across all product categories. The integration of fragrance and beauty into Chanel's portfolio reflects a commitment to craftsmanship and a seamless extension of its luxury offerings.
Licensing vs In-House Development in Luxury Beauty and Fragrance: Lessons from Leading Fashion Houses
The evolution of luxury beauty and fragrance strategies among top-tier fashion houses over the past decades illustrates the complex trade-offs between licensing agreements and in-house development. Each approach carries strategic advantages and potential drawbacks, and the choices made by brands often reflect broader corporate priorities, financial considerations, and the evolving dynamics of the luxury beauty market.
1. Licensing: Access to Expertise, Scale, and Market Reach
Licensing involves entrusting external partners, typically specialized fragrance and cosmetics companies, with the development, production, distribution, and often marketing of a brand’s beauty products. Historically, this approach has allowed luxury fashion houses to leverage the technical know-how and global networks of established beauty players.
Examples and Strategic Rationale:
Burberry initially relied on InterParfums from 1993 to 2012. The partnership allowed the brand to scale its fragrance portfolio quickly, introducing internationally recognized lines such as Burberry Brit. By outsourcing expertise, Burberry could focus on fashion while benefiting from InterParfums’ global distribution channels and operational know-how.
Dolce & Gabbana navigated a sequence of licensees over decades: Euroitalia (1992–2006) for Italian heritage, P&G (2006–2016) for global markets, Coty (briefly in 2016), and finally Shiseido (2016–2021) for their luxury expertise. Each partner brought regional expertise, market penetration, and operational capacity that would have been challenging to replicate internally, especially given the fragmented nature of global fragrance markets.
Prada partnered with Puig (2003–2018) and subsequently with L’Oréal (from 2021) to expand its fragrance and overall beauty presence worldwide, benefiting from the partners’ product development capabilities and marketing infrastructure.
Pros of Licensing:
Immediate access to industry expertise, R&D capabilities, and perfumery knowledge. This is particularly valuable because fragrances, while complex, are generally easier to manage than skincare or makeup, which involve higher regulatory hurdles, more intensive clinical testing, and more complex formulations.
Ability to scale rapidly across international markets without investing heavily in manufacturing, logistics, or talent.
Lower capital expenditure and reduced operational complexity (e.g. inventory in the hands of licensee).
Risk mitigation in a highly competitive and volatile sector, financial losses are shared or absorbed by the licensee.
Cons of Licensing:
Limited brand control over product innovation, marketing, packaging, and consumer experience, potentially leading to misalignment with the fashion brand’s identity. Additionally, licensing agreements often limit a brand’s ability to explore more technically complex categories, such as skincare or makeup, which require greater investment and expertise. This can constrain product innovation beyond fragrances, where licensees may be unwilling to assume higher risks.
Licensing agreements are time-bound and may create strategic inflexibility, especially when a brand wishes to pivot or consolidate its beauty operations.
Royalty structures often limit the financial upside for the fashion house (they cannot benefit from beauty revenues).
Over-reliance on external partners exposes brands to execution risks, such as underperformance in key markets or suboptimal marketing.
2. In-House Development: Control, Brand Integrity, and Strategic Alignment
In-house development entails the brand assuming direct responsibility for fragrance and beauty operations, from product conception to distribution. This model is often chosen by brands seeking maximum control over the creative process, product quality, and alignment with brand heritage.
Examples and Strategic Rationale:
Hermès has historically maintained full in-house control, from the launch of Eau d’Hermès in 1951 to the development of its Rouge Hermès beauty line in 2020. By producing fragrances and cosmetics internally, Hermès ensures meticulous quality control, preserves artisanal standards, and aligns beauty products seamlessly with the brand’s luxury positioning.
Chanel has followed a similar philosophy since its inception, controlling fragrance development in-house via Parfums Chanel, and maintaining an unbroken lineage of in-house perfumers from Ernest Beaux to Olivier Polge. The result is consistent quality, iconic fragrances like Chanel No. 5, and a closely integrated brand identity across fashion and beauty.
Dolce & Gabbana’s 2023 transition to in-house operations exemplifies a modern attempt to internalize beauty and fragrance development to strengthen brand alignment, drive innovation, and capture higher margins.
Pros of In-House Development:
Full creative control, enabling alignment of products with brand identity, fashion collections, and marketing strategies.
Long-term financial upside, as the brand retains all revenues from product sales rather than sharing with licensees.
Ability to implement innovative strategies in product development, sustainability, and exclusive distribution.
Direct ownership of consumer experience and quality assurance, which is critical in the luxury segment.
Cons of In-House Development:
Requires substantial upfront investment in manufacturing, distribution infrastructure, R&D, and talent.
Operationally complex and resource-intensive, requiring expertise that may not exist within a fashion house.
Increased exposure to financial risk, especially if sales underperform or market dynamics shift unexpectedly, as Kering Beauté experienced between 2023 and 2025.
Scaling globally is more challenging without the networks and operational support of established beauty partners.
3. Hybrid Approaches and Strategic Flexibility
The case studies illustrate that many brands oscillate between licensing and in-house development depending on their strategic priorities, market conditions, and leadership vision:
Burberry shifted from in-house (1981–1992) to licensing with InterParfums (1993–2012), returned to in-house (2013–2017), and then entered a long-term licensing agreement with Coty in 2017. This reflects a dynamic balancing act between control, expertise, and scale.
Kering attempted to consolidate in-house operations via Kering Beauté (2023–2025), acquiring Creed to anchor its strategy, but ultimately reversed course by selling to L’Oréal to reduce debt and leverage a partner’s global reach.
Ferragamo operated in-house from the late 1990s until 2021, before transitioning to a licensing model with InterParfums, demonstrating that smaller houses may initially invest internally to develop heritage products before outsourcing to expand distribution efficiently.
4. Strategic Insights
From these cases, several insights emerge:
Licensing suits brands prioritizing speed, scale, and risk management, particularly when entering complex global markets or when internal resources are insufficient.
In-house development is optimal for brands emphasizing brand integrity, long-term control, and differentiation, but it demands significant operational capabilities and carries higher financial risk.
Hybrid models, where some brands or product categories are in-house while others are licensed, offer strategic flexibility but require careful governance to ensure brand coherence.
Ultimately, the choice between licensing and in-house operations reflects a trade-off between control versus reach, revenues and margin versus risk, and brand heritage versus operational efficiency.
Conclusion
Luxury fashion houses continue to navigate the delicate balance between licensing and in-house beauty operations. While iconic brands like Hermès and Chanel demonstrate the enduring value of in-house craftsmanship, others like Kering, Burberry, and Prada illustrate that partnerships with global beauty players can accelerate growth, reduce risk, and expand market reach. The evolution of these strategies underscores that there is no one-size-fits-all approach: success depends on a brand’s financial capacity, leadership vision, operational expertise, and long-term strategic priorities in the highly competitive luxury beauty sector.
Reasons for Failure in In-House Beauty Operations
While internalizing beauty operations offers luxury brands greater control over product development, creative alignment, and brand identity, history shows that the path is complex and fraught with challenges. The experiences of Kering, Richemont, and Dolce & Gabbana illustrate both the opportunities and pitfalls of this approach.
1. Scale and Cost Challenges
A common reason cited for failed in-house beauty ventures is insufficient scale. Establishing production, distribution, and marketing infrastructure for fragrances, skincare, and cosmetics is capital-intensive. Without adequate volume, profitability becomes difficult. For Kering, despite acquiring Creed for €3.5 billion and bringing Bottega Veneta and Balenciaga in-house, Kering Beauté reported operating losses of €60 million in the first half of 2025. Similarly, Richemont’s Laboratoire de Haute Parfumerie et Beauté struggled to achieve scale benefits across its maisons, with only Cartier retaining fully in-house operations. Even well-resourced luxury groups can find the economics challenging without an integrated, profitable model.
However, while it is often argued that Kering Beauté failed because the division lacked sufficient scale, the counterpoint is that Hermès and Chanel have built highly profitable beauty businesses without being massive in scale relative to conglomerates (especially at the beginning of their journey). Similarly the usual narrative for Richemont or Kering that beauty is peripheral to the fashion business, while it is true many brands have successfully treated beauty as a complementary and successful luxury experience.
Success in in-house beauty is less about scale or core vs non-core status and more about expertise, patient investment, strong leadership, alignment with brand identity, and realistic execution timelines. Kering and Richemont stumbled not because beauty isn’t profitable or strategic, but because their in-house experiments lacked these critical foundations. Hermès and Chanel prove that a well-managed, brand-aligned, and expertise-driven approach can succeed even without being “core” or globally scaled initially.
To get into more details about these two cases, the strategic missteps in Kering and Richemont have been:
Kering (2023–2025, Kering Beauté & Creed acquisition)
Integration challenges: Kering tried to centralize beauty quickly across multiple brands (Bottega Veneta, Balenciaga) while Gucci remained under license. This created operational complexity, brand misalignment, and internal friction.
Overpaying for Creed (€3.5B): Creed is a niche brand with limited scalability. Integrating it as the cornerstone of Kering Beauté was risky, as it did not provide immediate revenue sufficient to cover heavy investment.
Leadership & expertise gaps: Kering did not have a deeply experienced beauty leadership team in place. Unlike Chanel or Hermès, which have decades of in-house expertise, Kering had to build capabilities from scratch.
Richemont (2023–2025, Laboratoire de Haute Parfumerie et Beauté)
Fragmented brands: Cartier, Van Cleef & Arpels, Chloé, and Montblanc each have distinct heritage, customer bases, and market expectations. Attempting to centralize beauty operations under one division can dilute brand identity and slow decision-making.
Execution risk: Richemont’s approach relied heavily on creating a new internal division without fully leveraging existing partnerships or operational knowledge. Boet Brinkgreve’s departure in early 2025 illustrates the instability in leadership needed for in-house success.
Short timeline & high expectations: Two years is very short for establishing a luxury beauty division capable of delivering profits. Initial losses were predictable, but the parent companies lacked the patience and long-term plan that a brand like Hermès has implemented over decades.
Based on these case studies, the main drivers seem to be:
Lack of deep in-house expertise and leadership – Hermès and Chanel succeeded because they had perfumers, product development teams, and corporate structures built over decades. Kering and Richemont were building from zero.
Misaligned strategic vision across brands – Centralizing beauty under one division is operationally efficient but risky if brand identities differ widely. Hermès or Chanel focus on one brand, allowing cohesion and control.
Short-term financial pressures – Kering’s €9.5B debt and Richemont’s shareholder expectations forced premature reevaluation, preventing the divisions from reaching maturity.
Integration and complexity underestimation – Running in-house beauty is not only about creating fragrances; makeup, skincare, distribution, retail, and regulatory compliance are highly complex. Many licensing failures reflect underestimating operational challenges.
Overreliance on a single acquisition or flagship brand – Kering over-invested in Creed as the centerpiece, while Richemont attempted a top-down model without proven internal success.
2. Complexity Beyond Fragrances
Fragrances are comparatively easier to manage than other beauty categories. Skincare and makeup involve complex formulations, stringent regulatory compliance, multi-geography testing, ongoing R&D, and specialized supply chains. Some licensing partners deliberately avoid these higher-risk categories, focusing solely on fragrances where the operational and market risks are lower. Internalizing these more complex categories without deep expertise is a major challenge, and misjudging this complexity can contribute to struggles.
3. Leadership and Strategic Alignment
The execution of in-house beauty operations requires sustained leadership focus and alignment with the company’s core strategy. Leadership changes or shifting priorities can undermine initiatives. Richemont’s departure of Boet Brinkgreve in early 2025, just 18 months after establishing Laboratoire de Haute Parfumerie et Beauté, and Kering’s sale of its beauty division under CEO Luca de Meo illustrate how leadership transitions can destabilize newly formed in-house operations. Without clear ownership and long-term commitment at the top, in-house beauty divisions struggle to meet their objectives.
4. Overestimation of Brand Synergy
Luxury fashion houses often assume that brand prestige alone will drive success in beauty. Kering initially expected its strong fashion brands (Bottega Veneta, Balenciaga) to translate automatically into high-margin beauty sales. Richemont similarly aimed to leverage Cartier and Van Cleef & Arpels heritage to dominate luxury fragrance. However, the reality is that beauty requires specialized operational excellence and continuous consumer engagement, and brand equity is not sufficient by itself to guarantee success.
5. Strategic Use of Hybrid Models
Even brands committed to in-house operations often rely on selective external expertise for non-core activities. Dolce & Gabbana, for example, after fully internalizing its beauty operations in 2023, continues to leverage Give Back Beauty for go-to-market execution in certain geographies and/or channels. This hybrid approach allows the brand to maintain creative and operational control over key areas while outsourcing specialized tasks, demonstrating that failure often comes from attempting to internalize too many functions at once without leveraging external expertise efficiently.
6. Market Timing and External Factors
External market conditions can amplify operational challenges for in-house beauty divisions. Kering’s beauty operations faced declining sales in key markets such as China, which increased financial pressure despite significant investments in the division. Additionally, the group’s broader financial situation played a role: Kering was carrying substantial debt (€9.5 billion in 2025) and reportedly considered selling PUMA as part of a deleveraging strategy. In this context, the beauty division became the first non-core unit to be divested, either as a priority exit to reduce debt or to replace the expected contribution from a PUMA sale. This illustrates how in-house beauty initiatives, even when strategically sound, can be vulnerable to macroeconomic pressures, corporate debt management, and shifting strategic priorities.
Conclusion
The history of fashion and luxury groups entering, exiting, or restructuring their beauty operations shows one truth clearly: owning beauty in-house is not just a creative or financial decision; it is an organizational, cultural, and executional challenge. Success depends less on size or whether beauty is considered “core,” and more on strategic clarity, operational discipline, cultural fit, long-term capital commitment, and the ability to build or partner for missing capabilities.
Hermès, Chanel and even Dolce & Gabbana prove that it is possible, even without massive industrial scale or external backing, to build a thriving in-house beauty business when craftsmanship, brand integrity, financial patience, and operational control are aligned. Conversely, groups like Kering and Richemont demonstrate that even global leaders can stumble when timing, internal alignment, or execution fall short, despite strong brands and financial resources.
From Analysis to Action
If this topic resonates, whether you're a fashion house considering entering beauty, a licensing partner evaluating vertical integration, or an investor assessing feasibility, the next logical step is to move from historical observation to company-specific strategy.
We would be happy to support on:
Assessing whether in-house, licensing, JV, or hybrid models make sense for a specific brand.
Mapping internal capabilities vs. required capabilities (R&D, manufacturing, regulatory, go-to-market, retail, CRM, influencer ecosystems).
Designing an execution roadmap, not just a strategy; including partners, timelines, and budgets.
Identifying risks and success factors unique to your company’s culture, scale, geography, and category.
Every brand’s decision is different, but success is never accidental. It is the result of clear positioning, realistic capability-building, and uncompromising execution.
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