The October 19th announcement sent ripples through the beauty industry. These two French powerhouses have formed what industry insiders are calling a transformative partnership in luxury beauty and wellness. Kering and L’Oréal revealed a binding agreement worth 4 billion euros that will change how some of the most recognizable fashion brands approach fragrance and cosmetics.
The deal positions L’Oréal at the forefront of the niche fragrance market and gives Kering much-needed capital to reinvest in its struggling fashion houses. Most notably, L’Oréal will acquire Creed, the renowned fragrance house founded in 1760, which has built its reputation on artisanal methods and rare natural ingredients. The transaction also grants L’Oréal exclusive 50-year licenses for fragrance and beauty products from Gucci, Bottega Veneta, and Balenciaga.
Beyond the immediate business of fragrances and cosmetics, the partnership ventures into territory that beauty executives have been eyeing with increasing interest. Kering and L’Oréal plan to establish a 50-50 joint venture to explore opportunities at the intersection of luxury, wellness, and longevity. This move aligns with broader industry trends toward science-driven approaches to healthy aging and holistic skin health.
What does this mean for fragrance?
The acquisition of Creed represents a strategic bet on niche perfumery, a segment that has shown remarkable growth even when other beauty categories have faced headwinds. Creed uses methods that most modern fragrance houses abandoned decades ago because they are too expensive. The company uses the millésime process, which was originally developed for winemaking. They weigh and mix ingredients by hand according to traditional family recipes.
Before Kering acquired the brand in June 2023, Creed generated approximately 250 million euros in revenue, boasting notably high profit margins. Its strength in men’s fragrances provided a solid foundation, and its women’s scents showed significant potential for growth. Another opportunity lies in geography, as the brand has a minimal presence in Asia-Pacific markets and travel retail.
L’Oréal CEO Nicolas Hieronimus addressed the acquisition directly, stating: “Through Creed, we will establish ourselves as one of the leading players in the fast-growing niche market.” According to Statista, the worldwide fragrance market is expected to generate $62.11 billion in sales this year. Niche fragrances represent the strongest segment within that category, driven by consumers seeking distinctive scents made with premium ingredients.
Licensing agreements bring additional heavyweight brands into L’Oréal’s expanding fragrance portfolio. Gucci fragrances currently generate an estimated $1.1 billion in net sales annually under Coty’s management. The license expires in 2028, at which point it will transition to L’Oréal, along with the newly acquired rights to Bottega Veneta and Balenciaga fragrances.
The wellness and longevity angle
This joint venture reveals where both companies see future growth potential. It’s not just speculation about an emerging category. Longevity has firmly entered the mainstream beauty conversation in 2025.
Earlier this year, L’Oréal’s Hieronimus proclaimed, “We are entering a new era of science where beauty and longevity will be intertwined for the well-being of the population.” The company has backed up these words with product launches, including the Lancôme Absolue Longevity Soft Cream and the Vichy Laboratoires Neovadiol Longevity Cream. These products address cellular-level aging processes, including collagen synthesis, DNA repair, and cell senescence.
Longevity beauty represents a tonal shift in how the industry approaches skin and hair health. Rather than targeting only visible signs of aging, this category emphasizes proactive care that supports skin regeneration, boosts mitochondrial function, and maintains youthful skin over time. This approach draws from systems biology and functional medicine, treating aging as a systemic, multi-pathway process.
According to Launch Metrics data, wellness conversations in beauty grew 16 percent in 2024 compared to the previous year. Meanwhile, PDRN, an ingredient in longevity beauty products that promotes skin regeneration and elasticity, was mentioned online nearly five times more in August 2025 than in all of 2024. The planned Kering-L’Oréal joint venture positions both companies to capitalize on this momentum by combining L’Oréal’s innovation capabilities with Kering’s deep understanding of luxury consumers.
Strategic rationale
The partnership makes sense for both parties, though their motivations differ significantly. For L’Oréal, the deal is a rare opportunity to acquire an assembled portfolio of luxury beauty brands instead of pursuing them individually. The company has been methodically building its prestige fragrance business through selective acquisitions and licenses. This agreement dramatically accelerates that strategy.
Kering’s CEO, Luca de Meo, who took on the role in September, has swiftly restructured the luxury conglomerate. The company has faced steep declines at Gucci, once its star performer, and has a debt load that reached 9.5 billion euros at the end of June. De Meo stated: “This strategic alliance marks a decisive step for Kering. By joining forces with the global leader in beauty, we will accelerate the development of fragrances and cosmetics for our major brands, enabling them to achieve scale in this category and unlock their immense long-term potential.“
The €4 billion cash infusion from L’Oréal will help Kering reduce its debt ratio and refocus on its core strengths, according to de Meo. He explained: “This partnership allows us to concentrate on what defines us best: our creative power and the attractiveness of our brands.” Industry sources indicate that Kering is considering selling its eyewear business. Former CEO François-Henri Pinault had championed both operations as strategic pillars.
Laurent Droin, a partner and investor at Felix Capital, offered insight into why Kering is changing its approach to beauty: “Building a beauty company takes a lot of time, and it’s very different from fashion, even though there are synergies on the brand side. For L’Oréal, however, this acquisition makes a lot of sense because it’s a unique opportunity to expand its luxury beauty portfolio. This makes sense for both parties.”
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Industry implications
The announcement has created uncertainty for other major players in the prestige beauty industry. One industry expert described the development as a “real game-changer” with implications for everyone. The deal puts pressure on companies, including Coty, Estée Lauder Companies, Puig, and Interparfums.
Coty’s situation appears particularly complex. While the company holds lucrative licenses for Gucci fragrances until 2028, industry sources suggest that Coty is exploring the sale of its luxury and consumer divisions. If Coty does pursue that path, competition to acquire those brands could intensify significantly.
Estée Lauder has been leaning more heavily into fragrance lately. Last week, CEO Stéphane de La Faverie said that perfume represents the company’s future. He also inaugurated La Maison des Parfums, a prospective innovation center in central Paris designed to accelerate fragrance development globally.
The timing of this announcement raises questions about other potential acquisitions. L’Oréal is one of three preferred bidders named in Giorgio Armani’s will, which was opened after his death on September 4. Within 18 months of the will’s opening, an initial 15 percent of Giorgio Armani‘s company could be sold to LVMH, EssilorLuxottica, or L’Oréal. L’Oréal has held a long-standing fragrance and beauty license with Giorgio Armani, which was renewed in 2018 and is set to last until 2050.
Private equity firms watching the beauty sector are recalibrating their expectations. One industry expert noted: “L’Oréal made a clear choice between acquiring a PE-backed indie brand and making a big acquisition like this one. They are thriving at a time when everyone else is asking, ‘Should we buy Makeup by Mario or Glow Recipe?‘” This comment references the buzz surrounding independent brands that are reportedly pursuing sales.
Several niche perfume brands owned by private equity have reached or are approaching a scale at which sales would be viable. Industry sources cited Parfums de Marly and Initio Parfums Privés, which are owned by Advent International, as well as Kayali, which was recently acquired by Mona Kattan and General Atlantic.
The road ahead
The transaction is expected to close in the first half of 2026, pending regulatory approvals and compliance with French labor law requirements. A strategic committee will coordinate between Kering’s and L’Oréal’s brands while monitoring the partnership’s progress. L’Oréal will pay royalties to Kering for the use of the licensed brands beyond the initial €4 billion payment.
For beauty and wellness enthusiasts, the partnership signals a shift toward more integrated approaches that connect fragrance, skincare, and holistic health. The planned joint venture exploring luxury wellness and longevity could yield new products and services that transcend traditional category boundaries.
L’Oréal’s success with Yves Saint Laurent Beauté, another Kering brand, provides a template for this collaboration. Both companies referenced this collaboration explicitly when announcing their expanded partnership. Hieronimus emphasized this point when he said: “I am delighted to forge this long-term alliance with one of the world’s most prestigious, creative, and visionary luxury groups. This partnership will further strengthen our position as the world’s number one luxury beauty company and enable us to explore new wellness opportunities together.“
