Perfume and France from 80’s to 90’s Competition Internationalization
Definition of a competitive market:
A competitive market is one where no one firm has a dominant position and where the consumer has plenty of choice when buying goods or services. Firms in a competitive market each have a small market share. There are few barriers to the entry of new firms which allows new businesses to enter the market if they believe they can make sufficient profits. -www.tutor2u.net
Benefits of a competitive market:
Lower prices for consumers
Driver for productivity growth
Competition in France
Variability in perfume market shares over years
Transfer of fragrance house names in second half of 1980s
Changes of fashion
Launch of new brands
Lauder’s market share fell 40%
LVMH’s market share has held strong in USA, Asia, and Europe, despite economic climate
Competition in France
Competition In France
French cosmetic industry is world’s fourth largest exporter. 53% of 2003 production exported. Sold in 202 Countries. Represents $8.57 billion in sales
The 80s Market in France !!
Marked decline in national saving fund (SICAV)-
1993- it accounted for 3000 billion Francs of total GNP (7000 billion Francs)
Sustained economic growth-
Retained good standard of living for French
also state protection
High levels of exports- 6.1% of world exports behind Japan and Germany [1 st ] France [2 nd ]
More features of the 80s market……!!
France had some biggest countries e.g. Danome, Elf, Sodexho, Michelin.
Shift from national systems to privatisation-
1982- major banks nationalised and state took over control therefore control over money!
Problematic; people made redundant
Employment figures in 1983 as % of working population;
Britain ~ 10%
France ~ 8.3%
Germany ~ 7.7%
HOWEVER advantage; promotion of enterprises
The 90s market in France
Shift from state ownership to private business
The French economy opened up to world markets making France the world’s fourth largest exporter of goods and third largest exporter of services
But opening up markets always gives rise to fears of competition for French businesses and constraints placed on economic policy
The perfume industry and foreign trade
In comparison to other industries, perfumes have remained a niche in the market but they have had to evolve to compete on the world market
French perfumes account for a substantial share of world exports and 4 of the 8 major groups in the sector are French
An industry with an ancient tradition- once family run firms, now major corporations.
The perfume industry and foreign trade
Grasse on the French Riviera has been the capital since the 18 th century and perfumes are luxury goods important to the French reputation. Brands such as Guerlain refuse to hear of anything but highly selective distribution.
However, with stiffer competition from abroad perfume is more widely distributed :
“ Perfume. like Champagne will soon be sold in all supermarkets” – Cartier
Business Description Founder : Gabrielle "Coco" Chanel opened her first boutique in 1913 Company type : Private, independent company, Thus, financial results and strategy are not featured Owners : These have changed over the years. Today the main players are: Chairman: Alain Wertheimer CEO: Francoise Montenay President: Maureen Chiquet (in 2003) Top competitors : Gucci, Prada, LVMH Company audience : shifted to a younger market after Coco Chanel died in 1971 Chanel Owns : 100 boutiques worldwide: more than 35 are in japan. Chanel also owns Eres and Paraffection
Chanel and going International With regard to the international sector, Chanel has been open to international interests, and not let French ideals come in the way: Chanel was interested in getting involved int. Chanel's first post-war collection was presented in 1954. The French were not impressed; the Americans loved it. 1983 : Karl Lagerfeld, who was hired away from Chloe by the House of Chanel in, revitalized the name and make it an international brand. Won 2004 Award: “ is now a global business Chanel” Today Chanel No.5 sells a bottle every 30 seconds
Chanel and Production 1921 Ernest Beaux created Chanel No. 5 for Coco Chanel
At the height of her fame in 1935 Chanel employed 4,000 workers and sold 28,000 models world-wide every year. Chanel and Finance: “ Money for me has only one sound: liberty. “Gabrielle Chanel From the beginning: Gabrielle “coco” was able to finance herself through Arthur 'Boy' Capel. He financed her move from her Balsans studio to her shop in Paris in Rue Carbon. 1935 : At the height of her fame in Chanel employed 4,000 workers (compare to today: Worldwide, Chanel employs approximately 10,000) During the Great depression: 1930’s: As the thirties drew to a close, Chanel became very bitter about her financial situation. The U.S.A were interested in the Workers at Chanel stirked in her office, and got locked in 1939 : All Chanel stored were closed and all workers were laid off In the 20 th century : Perfume started to be mass produced
However, at this time the designer himself was in charge, and the group had its base in France and was present abroad only through its licensees.
Business Description :
Christian Dior’s international fame dates back to 1947.
Since then, an international network of stores has been developed. It has grown from 66 boutiques in 1998 to 184 at the end of 2004. By the end of the current year, it will be close to 200 boutiques.
These can be found in high-potential zones all over the world.
France is home to world-famous brands such as L'Oréal, Chanel, Guerlain, Yves Saint-Laurent, Clarins, Dior, and Givenchy.
They hold 30% of international market shares, ahead of the United States and they have made France the world's number one perfume and cosmetics exporting country.
The business is split into the following segments:
Christian Dior couture
wines and spirits
fragrances and cosmetics
watches and jewellery
fashion and leather goods
and selective retailing
These account for approximately: 4.2%, 16.9%, 33.2% , 17.4%, 4%, and 24.3% of sales respectively.
Christian Dior consists of three subsidiaries: Christian Dior Couture (100% owned), Financiere Jean Coujon (100% owned) and LVMH, which is 42.5% owned by Financiere Jean Coujon.
LVMH accounts for all the company's revenues apart from the Christian Dior Couture segment.
Dior was bought in 1987 and now belongs to the Louis-Vuitton-Moët-Hennessy (LVMH) Group.
Christian Dior has tripled its revenues since 1998.
LVMH is the world's largest luxury goods company, with many well-known brands, including:
wines and spirits (Dom Pérignon, Moët & Chandon, Veuve Clicquot, and Hennessy)
perfumes (Christian Dior, Guerlain, and Givenchy), cosmetics (Bliss, Fresh, and BeneFit)
fashion and leather goods (Christian Lacroix, Donna Karan, Givenchy, Kenzo, and Louis Vuitton)
watches and jewellery (TAG Heuer, Ebel, Chaumet, and Fred).
LVMH also owns the Sephora cosmetics stores, Le Bon Marche Paris department stores and 61% of the DFS Group.
For the fiscal year of 2004 the company generated total revenues of E13,208 million thus representing organic growth of 11% over 2003.
LVMH is a publicly traded company.
The chairman (Bernard Arnault) as well as several directors are members of the board of both companies.
Christian Dior's has control of the group as it owns 42.5% of the shares .
Between 2002 and 2004, its net income grew more than 80%.
Hugo Boss AG
Tommy Hilfiger Corporation
Polo Ralph Lauren Corporation
Puig Beauty & Fashion
Some of the biggest designers have followed one another at the head of the group, beginning with Christian Dior himself, then Yves Saint-Laurent, Marc Bohan, Gianfranco Ferré and John Galliano. Date of first listing: 4/12/1991 Initial listing price: €15.63 58,679 ( 12/31/2004 ) 56,815 ( 12/31/2003 ) Number of employees: Latest price: €66.80
1947-Miss Dior 1949-Diorama 1957-Diorissimo 1963-Diorling 1963-Eau Fraiche (W) 1966-Eau Sauvage 1972-Diorella 1976-Dior Dior 1979-Dioressence 1980-Jules for men 1984-Eau Sauvage Extreme 1985-Poison 1988-Fahrenheit for men 1991-Dune (W) 1994-Dolce Vita 1994-Tendre Poison 1995-Eau Svelte (W) 1997-Dune for Men 1998-Eau de Dolce Vita 1999-Hypnotic Poison (W) 1999-J'Adore (W) 1999-Lily (W) 2000-Eau de Dior Coloressence 2000-Eau de Dior Energizing 2000-Eau de Dior Relaxing
2000-Diorever 2000-Remember Me (W) 2001-Fahrenheit Summer (M)
2001-Higher (M) 2002-Forever and Ever (W) 2002-Addict (W) 2002-Dune Sun (W) 2002-J'Adore Eau d'Ete (W) 2003-ILove Dior (W) 2003-Chris 1947 (W) 2003-L'Or J'Adore (W) 2003-Fahrenheit O Degree (M) 2003-J'Adore New Eau de Toilette (W) 2003-J'Adore So Dior (W) 2003 -Higher Energy (M) 2003 -Addict (W) 2003 -Lily Dior (W) 2004 -Addict Eau Fraiche (W) 2004 -Fahrenheit Fresh (M) 2004 -Eau Noire (M) 2004 -Cologne Blanche(M) 2004 -Boise d'Argent (M) 2004 -Pure Poison (M) 2004 -Dior Me, Dior Me Not (W) 2005 -Miss Dior Cherie(W)
In 1947 Christian Dior perfume company is set up and he christens the first perfume "Miss Dior".
Summary of important events:
1947-Christian Dior perfume company set up
Many well-known designers take over the house over the years (after Dior’s death in 1957).
1985- Bernalt Arnault becomes chairman ( # 40 on World's Richest People 2003)
1987-company is bought and becomes part of LVMH group
1991- Group becomes privatised and enters the stockmarket
Perfumes and cosmetics form the biggest part of sales and increase the group’s revenue
More emphasis placed on perfume industry in last few years