Its portfolio of brands says it all: Carolina Herrera, Paco Rabanne, Charlotte Tilbury, Jean Paul Gaultier, Nina Ricci... Puig has become a giant in the beauty and fashion industry with a global presence that awaits exceed this year the turnover of 4,000 million. The family company based in Barcelona is carefully preparing the next generational transition, a moment that entails risks, as its president, Marc Puig, admits. The IPO, one of the options on the table, is "one of the scenarios, but not the only one", he underlines.
Can it go public?
We haven't made a decision yet. Family businesses, and here in Catalonia we have many examples of them, each generation has to find its own solution for leadership, governing bodies, in order to function. Now more than 20 years ago we chose a way to organize ourselves with the third generation, to which I belong. This has worked all this time and will continue to work for several more years. Now we wonder if this solution will work for the next generation and this has sparked the rumor mill.
Would that be a good solution?
What we can say is that the leading companies in the world of luxury and premium beauty are usually controlled by a family, they have a family at heart. This is the case of the LVMH (Louis Vuitton) group, of Kering, of L'Oréal... And a large majority, but not all, are listed. This system has a number of advantages. Because luxury brands require patience, a long-term view, and this is usually given to you by a family: a family business looks more at the next generation than the quarter. But, on the other hand, family businesses have pitfalls. When there is a generational change there is a risk of leadership fights, losing passion or not finding the right governance solution. And many times we have seen it with close examples, mistakes or family crises, which lead to the deterioration of the business project or even to a slow death. Being subject to market scrutiny shakes up companies. It's not the panacea, it doesn't provide the whole solution, but it's a good balance between the market, which makes you look at the short term, and the family, which helps you look at the long term. It is one of the scenarios we foresee, but it is not the only possible one.
In any case, if it is decided to go public or they opt for another option, would the Puig family keep the majority of the capital?
Of couse.
And when will the decision be made?
It is linked to the generational transition, and this does not happen in a day, it will happen in the next decade, I don't know when.
Last year he already announced that the fourth generation would not continue to run the company. Does this hold?
The next generational successor of the family will in principle not be part of the management team, but they will gradually participate in the governing bodies. In companies, and obviously I am an example, members of the owning family can be part of the management team and so far it has been like this, but when a certain complexity is reached and when the members start multiplying of the family, it is better to professionalize the management.
What they have already done is turn the parent company into a public limited company, Puig Brands SA. Is it a first step to facilitate the possible IPO?
We had an SL, which has a series of limitations, it does not admit more than 12 members to the board of directors. And we wanted to expand the board to 14, so we could go from two family members to five and keep more non-family board members. And a joint stock company gives more flexibility with respect to other future possibilities.
Last year they registered a strong growth of 40%. What are the prospects for this year?
After the covid, the beauty and perfumery sector, and especially the most selective, has had the tail wind. The whole sector has benefited, but we have been growing above the rest for three years. In 2022 turnover increased by 40%, up to 3,620 million euros, and each of the categories in which we are present, fragrances and fashion, make-up and skin care, grew by more than 20%. This allowed us to reach a 10% global market share in the fragrance sector. And this 2023 we will exceed 4,000 million in turnover.
What are the main markets?
The first is the United States, followed by England and Spain, which now represents only 7% of sales.
How is this growth achieved above the rest of the sector?
By the strength of brands. 94% of sales are own brands and only 6% sell licenses. We are where we are because 20 years ago, when half of our business was in Spain and most of our products were widely distributed (gels, soaps, shampoos, deodorants), we decided to bet on fashion and selective perfumery and focus all the efforts in this activity to be able to be a player on a global scale. The second important decision was to bet on the own brand and leave the licenses. In recent times there have been many movements in this sense all over the world, it is a global trend, to minimize risks. We have also opted for niche brands (Penhaligon's, Byredo), entered the skin care and make-up sector and brought all the family brands under the Puig umbrella (Apivita, Uriage) and with the purchase after the makeup company Charlotte Tilbury. And finally, a great acquisition process. In 12 years we have made 10 purchases.
When is the inauguration of the new Puig tower scheduled?
The works are almost finished and we will soon start installing equipment gradually until the end of the year. We are expanding our headquarters in Barcelona with this second Puig tower in Plaça Europa de l'Hospitalet, where we are installing our operations hub, which will include an innovation center, with 485 workers. There are 20 floors and an area of more than 21,000 m2. We are doubling the surface area of the headquarters, which already has 500 workers in the first building. The official opening, in any case, will be in the first quarter of next year. We also have new offices in London, Paris and New York, and we have made a hub in Miami for travel retail.
What are the future prospects? Continue to grow with new purchases?
This is a very dynamic sector. We will continue to grow organically and will be on the lookout for opportunities for further acquisitions.
