Burberry Overhauls its Beauty Strategy, Signing a Deal With Coty

The brand had brought its beauty business in-house four years ago.
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Burberry's spring The Essentials collection. Photo: Courtesy of Burberry

Burberry's spring The Essentials collection. Photo: Courtesy of Burberry

In a statement released on Monday morning, Coty announced that it would enter a "strategic partnership with Burberry, acquiring exclusive long-term license rights for Burberry Beauty luxury fragrances and cosmetics." This will also extend to the brand's skin-care line. The deal is expected to close in the fourth quarter of 2017.

This is a major overhaul of the company's beauty strategy, being that Burberry ended its partnership with Interparfums just four years ago in 2013 in order to bring the business in-house. The shift speaks to how beauty — and more specifically, the fragrance industry — is a notoriously competitive market. 

That's reflected by the fact that very few designer labels manage their own beauty businesses in-house. Burberry Beauty will now be managed by Coty's Luxury division, which also manages fragrances by Gucci, Marc Jacobs, Hugo Boss, Calvin Klein, Alexander McQueen, Bottega Veneta and Balenciaga, as well as cosmetics and skin-care lines from Philosophy and Gucci. (Marc Jacobs's makeup line is separately managed by San Francisco-based Kendo Brands.) 

The other major player in designer beauty businesses is Burberry's former partner Interparfums, which continues to manage fragrances for designer labels such as Anna Sui, Coach, Lanvin, Jimmy Choo, Oscar de la Renta and Rochas. Losing Burberry's fragrance license proved to be detrimental to the company's earnings in the immediate aftermath, and with Burberry's impressive portfolio of fragrances, it's a big get for Coty.

"Burberry is an iconic luxury brand. It fits perfectly with Coty Luxury's portfolio, which includes contemporary and globally relevant prestige beauty brands. We are uniquely positioned to develop Burberry Beauty to the next level. This is another significant step in building Coty's Luxury division," said Edgar Huber, president of Coty Luxury, in a statement.

Burberry's Chief Creative and Chief Executive Officer, Christopher Bailey, also issued a statement on the news: "We are delighted to partner with Coty, a world leader in luxury fragrance and makeup. Working with  global partner of Coty's scale and expertise will help drive the next phase of Burberry Beauty's development and position this business for growth."

Burberry announced that Coty will pay about $225 million for the deal ($163 million for long-term exclusive licensing deal, and roughly $62.5 million for assets).

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