In the sophisticated world of luxury fragrances, a significant shakeup has just occured.

Announced on Monday 26 June 2023 in a press release, Kering Beauté, led by François-Henri Pinault, has made a significant acquisition for its newly established division by purchasing Creed.

In an all-cash transaction, Kering Beauté will acquire the entire luxury fragrance house, currently under the control of BlackRock Long Term Private Capital Europe and Chairman Javier Ferrán.

Even if the financial details of the deal were not disclosed, let's dive into why this acquisition is an important step towards Beauty for Kering Group.

Who is Creed?

Creed is a niche fragrance house, not really famous in France or not yet should I say. However, it is one of the most famous fragrance house in the United-States and in the United Kingdom.

Creed was funded in 1760 in London by James Henry Creed, a "tailor artisan". Seven generation later, Creed is still a family owned business.

It's only during the 19th century that Creed come to France and has now 2 shops or "boutiques" in Paris: One Pierre-Ier-de-Serbie and the other rue des Saints-Pères. The brand produce its own smells in its workshop in Fontainebleau near Paris.

Olivier Creed and his son are still involved in the family business.

The brand is particularly known for her fragrance Aventus, created for the 250th anniversary of the Creed house.

Why did Kering acquired Creed?

It is a highly strategic acquisition for Kering, which had announced in January of this year the launch of a Beauty division to enable the Group to support certain brands in their development within this category - a natural extension of their brand universe.

Kering is a French luxury conglomerate and home to illustrious brands such as Gucci, Brioni and Saint Laurent.

The acquisition of the distinguished fragrance brand Creed, immediately allows Kering Beauty to achieve significant scale and provides it with a platform to support the future development of other fragrances within Kering, notably leveraging Creed's global distribution network.

The objective of this acquisition is to enhance Kering's authority and expertise in the high-end fragrance market, as stated by Jean-François Palus, Group Managing Director of Kering.

In addition to growing the feminine fragrance, body and home categories, Creed is a really good investment for Kering. The fragrance house generated €250 million (or about $272.7 million) in revenue between 2022 and 2023. This represents 1.23% of Kering's total revenue, which amounted to 20.35 billion euros in 2022.

In the business world at the Paris Stock Exchange, Kering is up by 1.4% after gaining over 2.5% in early trading on Tuesday.

The acquisition of Creed represents Kering Beauté’s first strategic initiative, and demonstrates our commitment to developing a strong position in the luxury beauty segment. I am thrilled that today our stories and values come together around this spirit of family entrepreneurship and excellence to accelerate our journey in beauty, and I am delighted that the brand is joining Kering’s collection of luxury Houses.”

François-Henri Pinault, Chairman and Chief Executive Officer of Kering.

Is it the end for family owned house?

While some may applaud this acquisition, others, on the contrary, condemn it for symbolizing the dominance of large corporations over long-standing family-owned businesses like Creed, which have proudly remained within the same family for over seven generations.

Private equity firms are shifting their focus from buying, merging, or acquiring companies, which was common in previous years.

The changing interest rates and the increasing importance of cash have prompted this change in strategy.

While it's not a one-size-fits-all approach, we can expect more private equity firms to pursue selling opportunities in the broader market.

This trend will be particularly noticeable as multi-generational family businesses realize they would rather sell their companies to pursue other endeavors with the cash, rather than returning to traditional office-based work.

In conclusion, this acquisition hints at a fresh chapter of luxury scents. Let us eagerly anticipate what lies ahead.