From April, British luxury goods house Burberry took full control of its formerly licensed beauty business which it says will boost wholesale revenue by £140m ($215m) in the current financial year.

 

In FY2013 wholesale revenue – which includes duty free and travel retail sales – stood at £473m so beauty, as a fifth product division, will be a major addition. The sales increase, however, will only offset lost royalties of a similar level.

 

Nevertheless, Burberry is banking on growing the beauty business faster than if it was outsourced and has built a 90-strong beauty team within hires from Dior, P&G and Chanel.

 

The British brand believes it can grow share in the premium fragrance business with a focus on British heritage and quirkiness. In premium fragrance, Burberry currently has just 1-2% in top markets such as the US, France and the UK, compared with a share of 11% by the leading scent brand in these countries.

 

GROWING SHARE

Alessandro Fabrini, Senior Vice President Licensing, says: “Our opportunity is to grow share. Beauty is the most widely encountered projection of our brand. It’s our opening price point, sold at thousands of points of sale and represents over a third of our global media spend. Direct ownership will allow greater alignment and synergies.”

 

Burberry has also pointed to duty free and travel retail as a key channel to drive its beauty expansion, and the company is seeking space at this year’s TFWA World Exhibition, to showcase its beauty offer. Fragrance accounts for 95% of beauty revenue, with Burberry Body being the biggest pillar, but the make-up offer (pictured) will also be heavily promoted in the coming year.

 

[For a detailed review of Burberry’s plans for beauty, see the June issue of Travel Retail Business.]