Disinvesting in beauty was one of the first strategic decisions made by Luca de Meo when he officially took up his role as CEO of Kering. Whether it is a strategic move to optimize resources and provide security for investors or a response to a market trend, the withdrawal of the French conglomerate controlled by the Pinault family comes at a key moment. After years of vertiginous expansion, the sector has entered a new phase marked by consolidation, divestments and polarization between large groups and virally successful brands, driven by the online channel and alliances with giants such as Sephora. Now that Kering is leaving the game, LVMH is rethinking its position in Fenty Beauty and private equity is accelerating asset rotation in niche perfumery. The immediate result? Power, once fragmented, is progressively concentrated in the hands of a few global players.
The deal of the year in the industry came last week. French giant L’Oréal signed a coup that will change the beauty map for decades to come with the acquisition of Kering Beauté, the cosmetics division of the holding company, for €4 billion. The deal, which will close in the first half of 2026, includes the acquisition of Creed, one of the niche perfumery jewels, and exclusive 50-year licenses for the brands Gucci, Balenciaga and Bottega Veneta. The deal, which will close in the first half of 2026, includes the acquisition of Creed, a niche perfumery jewelry brand, and exclusive 50-year licenses for Gucci, Balenciaga and Bottega Veneta, as well as the creation of a 50/50 joint venture between the two groups to explore businesses at the intersection of luxury, wellness and longevity.
Through this alliance, L’Oréal consolidates its global hegemony and defines a new power board in luxury cosmetics. To a large extent, this is because the agreement goes beyond a sale and purchase and involves a redesign of the market architecture. With a long-term vision, the group led by Nicolas Hieronimus will add fragrance and beauty licenses to a portfolio that already includes renowned brands such as Armani, Valentino, Prada and Yves Saint Laurent. This expansion and consolidation of its portfolio strengthens L’Oréal’s strategic position vis-à-vis any competitor, assuming a unique dominance in the sector with assured decades of future revenues.
L’Oréal’s objective is thus to secure its first place on the podium for the coming decades. The license for Gucci, the brand that was the jewel in Kering’s crown during its boom years, is in the hands of Coty until 2028. It is expected, therefore, that before becoming controlled by the French group, investments in the development of Gucci collections and products will take a back seat in Coty’s priorities and L’Oréal will recover a Sleeping Beauty that will have to be relaunched and for which resources will be necessary. However, as Tanguy Pellen of Skarbek Partners explained to Reuters, “the big prize is Gucci” and getting hold of a fifty-year license “is a masterstroke”.
L’Oréal concentrates the board after the deal with Kering Beauté
This is in addition to Creed, one of the world’s most exclusive fragrance brands, which Kering had acquired just two years earlier for €3.5 billion. After a failed investment that, at the time, the industry considered oversized, L’Oréal hopes to reinvigorate the brand. Creed has grown below the market in the last year, but boasts industrial muscle and a global distribution network, especially in the Middle East, a region in strong expansion for luxury perfumery.
In 2024, fragrances accounted for 13.7% of L’Oréal’s sales, representing around €6 billion in turnover, giving it a global market share of 16%. With this move, the company reinforces its dominance in the fastest growing segment of beauty, premium perfumery.
For Kering, this move represents both a financial operation and a strategic shift. The company, which carries a debt of €9.5 billion and is going through a restructuring process, seeks to focus on its core business of fashion and traditional luxury. The departure of François-Henri Pinault from the front line and the arrival of Luca de Meo as CEO has accelerated the withdrawal of non-strategic divisions, starting with beauty and limiting the staff of the British Alexander McQueen, one of the smallest firms of the conglomerate in terms of turnover.
Kering Beauté’s adventure has been as short as it has been intense. Launched in 2023 with the purchase of Creed and the launch of Bottega Veneta and Balenciaga’s own fragrances, the division has managed to achieve only €150 million in sales in the first half of 2025. Developing its own beauty business requires heavy investments and a scale that only a few groups in the world master, so the sale to L’Oréal allows it to free up resources and concentrate on regaining its profitability.
LVMH could divest its stake in the cosmetics brand Fenty Beauty
In any case, Kering is not alone in pulling back. In parallel, LVMH has hired Evercore to study the sale of its 50% stake in Fenty Beauty, the brand founded alongside Rihanna in 2017. The company turned over $450 million in 2024 and could be valued at between $1 billion and $2 billion. The move confirms that even luxury leaders are readjusting positions.
However, just this year, the conglomerate that owns Sephora, has bet on giving the maison Louis Vuitton its own beauty division, led by the successful makeup artist Pat MacGrath. Just as Hermès had done when deciding the positioning of the line, Louis Vuitton has chosen a niche segment of super luxury, with products marketed at several hundred euros, to distinguish itself from the accessible luxury cosmetics, on which firms such as Chanel or Dior are betting.
The investment is also related to the fact that beauty is now one of the most liquid assets in the luxury sector, after years of strong growth of 7% per year from 2022, according to McKinsey & Company. According to Euromonitor International, the global luxury perfume market will grow by 11% in 2024, compared to 4% for cosmetics as a whole. The divestment of large groups and investment funds is largely linked to the global slowdown in the luxury sector and the uncertain macroeconomic context, which is forcing them to restructure portfolios and seek liquidity. In addition, several analyst firms have anticipated a slowdown in the fragrance market, which is affecting the share price of groups such as Puig.
The move is also part of a boom in corporate operations in the niche fragrance segment. Last week, for example, Advent International put up for sale Parfums de Marly, valued at more than $2 billion, just two years after acquiring it for about $700 million. Advent also controls Initio Parfums Privés, another strongly expanding niche brand.
Rhode was acquired for €1 billion by E.l.f Beauty
Thus, this realignment is not only affecting conglomerates, but private equity funds are looking for quick returns on assets, anticipating demand from large groups such as L’Oréal, Puig or Estée Lauder Companies. The result is an increasingly concentrated market, with fewer players and more accumulated power.
But this new era of concentration does not mean uniformity. In contrast to L’Oréal’s model of structural power, based on long-term licenses, industrial muscle and global control of distribution, another competitive model is emerging, that of viral, fast and highly capitalizable brands. Both models coexist, but do not have the same strategic weight. While one consolidates traditional weight, the other pursues speed and media visibility.
Last May, E.l.f. Beauty announced the acquisition of Rhode, Rhodex and Rhodex . Beauty announced the acquisition of Rhode, the brand founded by Hailey Bieber, for $1 billion. The deal, the largest in E.l.f.‘s history, seeks to reinforce its strategy of growing through brands with strong digital traction and loyal communities. Rhode achieved $212 million in sales in just three years, operating with a minimal number of references and a direct-to-consumer approach.
The new balance of power puts the other major players under pressure. Coty will see one of its most powerful assets pass into the hands of L’Oréal in 2028. The company, which also manages Burberry, Jil Sander and Hugo Boss licenses, is exploring sales and adjustments to strengthen its position. For its part, Estée Lauder Companies is accelerating its commitment to perfume with the recent opening of La Maison des Parfums in Paris to drive innovation in this category. Puig, for its part, was one of the contenders in the bidding for Kering Beauté and is strengthening its position following the full acquisitions of Byredo and Charlotte Tilbury.
Perfume is now the crown jewel of the beauty sector. It is the fastest growing category and, for the moment, the one that is best able to withstand the slowdown in luxury. It also offers the highest margins and the best global scalability. Unlike fashion or jewelry, fragrances allow you to multiply distribution without compromising exclusivity. This factor explains why L’Oréal is concentrating its bets on this segment. Creed, Gucci, Balenciaga and Bottega Veneta will have to function as engines of an industry that moves $62 billion worldwide, according to Statista, so that license management is asserting itself as control of economic territory.
The movements of the panorama are not isolated operations, but are part of the same structural transformation. Beauty has become the most coveted battleground of luxury. On the one hand, the major fashion groups are retreating into their most profitable categories (such as leather goods, ready-to-wear and jewelry), while divesting from cosmetics. On the other hand, L’Oréal is concentrating power, funds and investors are energizing the market, and viral brands are capitalizing on attention and speed.
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