L’Oréal’s Kering acquisition fuels its China fragrance ambitions

What happened: L’Oréal acquires Kering Beauté, gaining iconic fragrance brands L’Oréal’s 4 billion euros ($4.6 billion) acquisition of Kering Beauté marks one of beauty’s biggest shake-ups in years — and a defining moment in the battle for luxury fragrance dominance. The all-cash deal, expected to close in early 2026, gives L’Oréal ownership of Creed and long-term licenses for Gucci, Bottega Veneta, and Balenciaga’s beauty lines. For Kering, offloading its beauty arm makes strategic sense. Despite revenue jumping 421% YoY to 323 million euros ($376 million) in 2024, the division was too small to offset Gucci’s ongoing decline, or the group’s wider slowdown. Kering will now refocus on reviving its core fashion houses, while L’Oréal — already home to YSL, Armani, and Prada Beauty — expands its luxury leadership. This acquisition deepens an old partnership. L’Oréal successfully turned YSL Beauty into one of its most valuable luxury pillars after taking over the license from Gucci Group in 2008. Now, it’s set to repeat that playbook. The Jing Take: Underpenetrated fragrance market in China offers growth opportunities Fragrance remains the most underdeveloped yet fastest-growing category in China’s luxury beauty market. While skincare and color cosmetics reach saturation, scent penetration remains below 5% — a fraction of the levels in Europe. This gap represents a structural growth opportunity, particularly as fragrance becomes a medium for personal identity among younger Chinese consumers. Creed’s craftsmanship and heritage give L’Oréal new storytelling leverage in a market that prizes authenticity and exclusivity. At the same time, Gucci and Balenciaga fragrances — long underexposed in China — can be revitalized through L’Oréal’s extensive retail, social commerce, and influencer ecosystem. The group’s marketing precision, especially across Tmall and Douyin, will be key in transforming fragrance into an experience, not a category. L’Oréal bets on Western heritage brands and Asian niche fragrances L’Oréal’s recent investment in Chinese high-end perfume To Summer and Seoul-based luxury fragrance label Borntostandout also complements this strategy. The provocative, gender-fluid identity of Borntostandout taps into Asia’s experimental beauty culture — and could provide insights for building relevance among Chinese Gen Z. As Jacques Roizen, managing director of digital luxury group, market research and consulting agency for luxury brands says, “In Tmall, niche fragrances are growing at twice the pace of established brands (10% vs. 5%), indicating strong consumer interest in new and unique scents.” With K-beauty’s influence surging and homegrown Chinese brands gaining ground, L’Oréal’s dual approach — marrying European heritage with Asian sensibilities — could help it sustain growth in a cooling market. Kering’s new CEO Luca De Meo streamlines the group The agreement underscores a new phase of consolidation in global luxury beauty. As the fastest-growing segment in the luxury industry, beauty is becoming a critical strategic pillar for major fashion groups. Yet, Kering’s decision to divest shows the limits of building a beauty business independently in a market dominated by specialized giants like L’Oréal, Estée Lauder, Coty, and Puig. For L’Oréal, the acquisition enhances its position at the top of the prestige beauty hierarchy. Creed reinforces its dominance in haute parfumerie, while the addition of Gucci, Bottega Veneta, and Balenciaga deepens its cultural reach and luxury credentials. The partnership also mirrors broader industry shifts — where collaboration between heritage fashion and scientific expertise is increasingly shaping the future of beauty. Meanwhile, Kering gains breathing room. The sale provides liquidity to stabilize its balance sheet and the flexibility to focus on revitalizing Gucci and strengthening Bottega Veneta, Saint Laurent, and Balenciaga. In the first half of 2025, group revenue fell 16%, net profit dropped 46%, and Gucci’s sales declined 26%. The transaction provides Kering with fresh liquidity while allowing it to concentrate on core fashion and leather goods operations. Rather than a retreat, it signals a pragmatic choice to prioritize its fashion core while maintaining a foothold in emerging categories through the new wellness and longevity venture. The all-cash transaction, expected to close in the first half of 2026, also includes a 50/50 joint venture between the two French groups to explore new business opportunities in wellness and longevity. Ultimately, the 4 billion euros ($4.6 billion) transaction reflects a structural evolution in luxury’s business model. The boundaries between beauty, wellness, and lifestyle are dissolving, and partnerships — not competition — are driving the next wave of growth. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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L’Oréal’s Kering acquisition fuels its China fragrance ambitions