Dolce & Gabbana, a name synonymous with Italian luxury and elegance, is poised to revolutionize the beauty industry with the launch of Dolce & Gabbana Beauty. This bold move marks a significant shift as the iconic fashion house takes complete control of its €1 billion fragrance and makeup business, setting the stage for unprecedented growth and innovation in the world of beauty.
Taking Control of Beauty
As reported by Financial Times, Vogue Business, and Reuters, Dolce & Gabbana’s decision to bring their beauty division in-house came after Shiseido, the previous licensee, announced plans to terminate their agreement. This strategic shift, effective by January 2023, will see Dolce & Gabbana Beauty oversee all aspects of manufacturing, sales, and distribution. The impetus behind this move stems from Shiseido’s medium- to long-term strategy, “WIN 2023 and Beyond,” which focuses on their prestige skincare business and will result in an estimated $323 million loss for Shiseido due to the termination.
The luxury brand’s move to internalize their beauty operations aligns with a broader trend seen among high-end fashion houses. While giants like Chanel and LVMH have long managed their beauty lines, Dolce & Gabbana’s venture marks a significant diversification of their revenue streams, emphasizing their commitment to maintaining the highest standards of quality and innovation.
Strategic Timing and Market Potential
The timing of this transition could not be more opportune. According to the Bain Altagamma 2021 luxury study, the global luxury beauty market is experiencing robust growth, projected to be worth $69 billion by 2025. The NPD Group also highlighted the US prestige beauty industry’s impressive performance in 2021, generating $22 billion in sales—a 30% increase from the previous year—with the fragrance category alone witnessing a 49% surge.
Dolce & Gabbana’s strategic move to control their beauty business comes as part of a broader plan to leverage these market trends and diversify their offerings beyond fashion. By doing so, they aim to capture a larger share of the lucrative beauty market and ensure that their products reflect the same meticulous craftsmanship and luxury that define their fashion lines.
Leadership and Vision
Under the leadership of Alfonso Dolce, President and CEO of Dolce & Gabbana, and Gianluca Toniolo, the newly appointed operating CEO of Dolce & Gabbana Beauty from LVMH, the brand is set to embark on this new journey with vigor and vision. The company plans to invest $500 million through self-financing and banking support, assembling a robust team of 130-150 people in Italy by March 2023, with an additional 100-120 positions internationally.
This investment and strategic leadership aim to propel the brand’s annual beauty retail sales from €1 billion to €2.5 billion within seven years, generating approximately €1.25 billion in annual wholesale revenue. This ambitious growth trajectory underscores Dolce & Gabbana’s commitment to establishing a formidable presence in the global beauty market.
Expanding Product Lines
Dolce & Gabbana first ventured into the fragrance market in 1992, and since then, this category has accounted for 95% of their beauty revenue. However, with the establishment of Dolce & Gabbana Beauty, the brand is set to expand its offerings significantly. Plans are underway to introduce a wider range of color cosmetics and venture into the skincare sector, promising a holistic and luxurious beauty experience for their clientele.
A New Era
The launch of Dolce & Gabbana Beauty marks a new era for the esteemed fashion house. By bringing their beauty operations in-house, Dolce & Gabbana is not only ensuring greater control over their products but also positioning themselves for significant growth in a booming market. As they expand their product lines and enhance their brand’s presence, Dolce & Gabbana Beauty is set to redefine luxury in the world of cosmetics.
