Why Might L’Oréal Be Acquiring Luxury Perfume Brand Atelier Cologne?

by Trefis Team
+11.88%
Upside
84.70
Market
94.76
Trefis
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L'Oreal
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L’Oreal is adding yet another fragrance brand to its luxury perfume offerings. A few days back, L’Oreal had announced the decision to acquire Atelier Cologne. Established in 2009, Atelier Cologne is found in stores such as Neiman Marcus, Sephora, Fortnum & Mason, and Galeries Lafayette. The brand has a presence in 40 countries with 800 points of sale. It also has its own e-commerce website and 6 standalone stores (3 in France, 2 in the United States, and 1 in Hong Kong). Let us explore the reasons why L’Oreal might be interested in adding Atelier to its portfolio.

Is L’Oreal following The Footsteps Of Its Peers?

Luxury Fragrance seems to be a coveted segment among beauty companies and it is a pretty common sight for the bigger players to acquire the smaller ones. In February of this year, Estee Lauder acquired the Paris-based prestige fragrance brand, By Kilian. Towards the end of 2014, Estee Lauder acquired Le Labo, the high end fragrance and sensory lifestyle brand, and it also announced the acquisition of Editions de Parfums Frédéric Malle, the storied fragrance brand established by the iconic perfumer Frédéric Malle. In 2015, Revlon acquired U.K. based fragrance company CBBeauty and its U.K. distributor, SAS & Company. A month ago Revlon announced the decision to acquire Elizabeth Arden. Along with premium makeup and skincare, Arden sells a range of licensed prestige fragrances under names such as Elizabeth Taylor, Britney Spears, and Taylor Swift.

Why Is Fragrance So Much In Demand?

Revlon’s management had implied in its  Q2 2015 earnings call, that the fragrance industry is largely fragmented and hence lacks fierce competition. The global fragrance market size is currently estimated to be around $40 billion, out of which the two largest beauty players, L’Oreal and Estee Lauder, enjoy around 16% and 7% market share, respectively. Hence, it seems that a major chunk of the fragrance market is waiting to be captured. The global beauty leaders seem to be taking advantage of this untapped potential and extending their portfolios in the fragrance segment.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for L’Oreal
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