Perfume and France from 80 ’ s to 90 ’ s Competition Internationalization

1. Perfume and Francefrom 80’s to 90’sCompetitionInternationalization

2. Competition in France • 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 costs • Lower prices for consumers • More innovation • Driver for productivity growth

3. 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 • For Example: • Lauder’s market share fell 40% • Chanel’s rose • More Recently: • LVMH’s market share has held strong in USA, Asia, and Europe, despite economic climate

4. Competition In France Exports French cosmetic industry is world’s fourth largest exporter. 53% of 2003 production exported. Sold in 202 Countries. Represents $8.57 billion in sales

5. The 80s Market in France!! Main features 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 [1st] France [2nd]

6. 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

7. 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

9. 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.

11. The perfume industry and foreign trade • Grasse on the French Riviera has been the capital since the 18th 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

12. 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

13. 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 businessChanel” Today Chanel No.5 sells a bottle every 30 seconds

14. Chanel and Production 1921 Ernest Beaux created Chanel No. 5 for Coco Chanel

15. 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 20th century: Perfume started to be mass produced At the height of her fame in 1935 Chanel employed 4,000 workers and sold 28,000 models world-wide every year.

16. Christian Dior • 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. BusinessDescription: • Christian Dior’s international fame dates back to 1947. • 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. • 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.

17. Business Description: 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 has tripled its revenues since 1998. • Dior was bought in 1987 and now belongs to the Louis-Vuitton-Moët-Hennessy (LVMH) Group. • 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.

18. 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 . • 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. Between 2002 and 2004, its net income grew more than 80%.

19. Date of first listing: 4/12/1991Initial listing price: €15.63 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. • Top Competitors: • Metaphora • Escada AG • Gucci Group • Hugo Boss AG • Tommy Hilfiger Corporation • Pinault-Printemps-Redoute SA • Polo Ralph Lauren Corporation • Puig Beauty & Fashion

20. 1947-Miss Dior1949-Diorama1957-Diorissimo1963-Diorling1963-Eau Fraiche (W)1966-Eau Sauvage1972-Diorella1976-Dior Dior1979-Dioressence1980-Jules for men1984-Eau Sauvage Extreme1985-Poison1988-Fahrenheit for men1991-Dune (W)1994-Dolce Vita1994-Tendre Poison1995-Eau Svelte (W)1997-Dune for Men1998-Eau de Dolce Vita1999-Hypnotic Poison (W)1999-J'Adore (W)1999-Lily (W)2000-Eau de Dior Coloressence2000-Eau de Dior Energizing2000-Eau de Dior Relaxing 2000-Diorever2000-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) Dior Perfumes In 1947 Christian Dior perfume company is set up and he christens the first perfume "Miss Dior".

21. 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

22. Conclusion