What is License and How does it work?

Licensing is an important phenomena in many industries today, especially, Fashion & Luxury. This kind of agreement gives to the licensor a big advantage of exploring new markets and brand extensions that he is not able to do on his own. For licensees, more projects and a well-known clientele is an equal win-win.

A standard licensing agreement states that the licensor will provide the licensee with intellectual property rights, such as a brand name or product creation know-how. The licensee pays the licensor an upfront fee and/or a royalty fee in exchange for the licensor's intellectual property.

Licensor:

• Develops the product stylistic guidelines and PR strategy.
  
• Defines distribution strategy and can limit the parameters in commercial policies, for example, quantity of products or certain locations.

Licensee:

• Creates prototypes according to the licensor’s directions and manufactures the final product.
  
• Formes pricing strategy and general sales conditions via various sales formats.
  
• Implement full or partial control on marketing and media plans and budgets.

Eyewear and cosmetics are the most licensed product groups. Companies like EssilorLuxottica and Safilo Group are ruling the eyewear licensing business making eyewear for luxury and fashion brands. While companies like L'Oreal and Coty are winning in the cosmetic (including fragrances) segment. Licensing in the Watch industry is not as common but still the players like Fossil are producing for many big brands.

In the fashion industry, any product can be licensed, even the ready-to-wear and the acquisition of a licensor or licensee partner, and vice versa, is a common business practice. For example, the Tom Ford brand has a longstanding licensee relationship with Ermenegildo Zegna. In November 2022, Estée Lauder Companies announced the acquisition of Tom Ford and the expansion of the agreement with Zegna Group. By the way, the Tom Ford Beauty was first introduced by Estée Lauder Companies in 2006.

Licensing in Eyewear

The global eyecare and eyewear industry is valued at over €100 billion (price to consumer). There are only a few global players who manufacture and distribute sunglasses and optical frames worldwide. It's interesting to note that almost all of the companies were founded in Italy between the end of the nineteenth century and the middle of the twentieth century.

DeRigo

De Rigo began as a family business in 1978 in Italy and has since grown to become one of the major eyewear manufacturers. The company is currently present in over 80 countries and works with 100 independent distributors. Police, Lozza, Sting, and Yalea are among the house brands. Company produced eyewear products for Chopard, Blumarine, Escada, Furla, Fila, Gap, Mulberry, Nina Ricci, Philipp Plein, Roberto Cavalli, Tous, Twinset, Tumi, Zadig & Voltaire, and others under licensee agreements.

EssilorLuxottica

EssilorLuxottica leverages over 170 years of pioneering innovation. The history of the company started in 1849, when the Société des Lunetiers, later known as ESSEL, was founded. The Luxottica company was founded in 1961 by Leonardo del Vecchio. In 2018 Luxottica Group and Essilor International successfully combined two companies. Today EssilorLuxottica is a global leader in the design, manufacture and distribution of ophthalmic lenses, frames and sunglasses, its Direct to Consumer network includes approximately 18,000 stores.

The Group portfolio includes owned brands (Ray-Ban, Oakley, Persol, Oliver Peoples, Vogue Eyewear, Arnette, Alain Mikli, Costa, Native Eyewear and Bolon) and prestigious licensed brands (Giorgio Armani, Brunello Cucinelli, Bulgari, Burberry, Chanel, Coach, Dolce & Gabbana, Ferrari, Michael Kors, Prada, Ralph Lauren, Swarovski, Tiffany & Co., Tory Burch and Versace)

Marcolin

The company started in 1961 in Veneto, Italy. Over 2,000 employees at Marcolin designs and manufactures sunglasses and optical frames for some of the most prestigious brands in the industry: Tom Ford , Guess, adidas, Bally, Moncler, Max Mara, Zegna, GCDS, Barton Perreira, Tod's, Pucci, BMW, MAX&Co., Kenneth Cole, Timberland, GANT, Harley-Davidson, Marciano, Skechers and Candie’s. Its house brands include WEB Eyewear and Viva. The company distributes its products in more than 125 countries

Marchon Eyewear

Marchon was founded in 1983 and fully owned a manufacturing plant in Puos d'Alpago, Italy. Marchon Eyewear employs over 2,700 people in over 20 countries. Marchon is responsible for production and sales of eyewear collections for next brands: Calvin Klein, Columbia, Converse, Cutler and Gross, Donna Karan, DKNY, Ferragamo, Karl Lagerfeld, Lacoste, Lanvin, Liu Jo, Longchamp, Nautica, Nike, Nine West, Paul Smith, Skaga, and Victoria Beckham.

Kering Eyewear

Since its inception in 2014, Kering Eyewear has built a business model resulting in more than €1 bn revenues. By being part of the Kering Group, the major competitive advantage, it is much closer to each brand’s DNA. Kering Eyewear designs, develops and distributes eyewear for 17 brands, which includes the proprietary brands LINDBERG, Maui Jim, and ZEAL Optics, as well as the Houses brands Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, MCQ, Pomellato, and Boucheron. Previously, Kering Group was the licensor; for example, Safilo Group licensed Gucci eyewear; however, Safilo lost the brand after Kering established its own eyewear division.

Richemont luxury group acquired a 30% stake in Kering Eyewear in March 2017, which had a positive impact on the Kering Eyewear portfolio. After ten years, Montblanc terminated its agreement with Marcolin and entered into a licensing agreement with Kering Eyewear. Similar agreements were reached with other Richemont brands. Kering Eyewear's current licensee portfolio includes Cartier, Chloé, Montblanc, Dunhill, Alaia, and Puma.

Safilo Group

Safilo Group established its first eyewear facility in 1878, the first acquisitions of the eyewear brands started in 1996 with Carrera Eyewear and Smith followed by Polaroid, Privé Revaux, Blender, and Seventh Street. Licensed brands include: Banana Republic, BOSS, Carolina Herrera, Chiara Ferragni, Dsquared2, Eyewear by David Beckham, Fossil, havaianas, HUGO, Isabel Marant, Jimmy Choo, Juicy Couture, kate spade new york, Levi’s, Liz Claiborne, Love Moschino, Marc Jacobs, Missoni, M Missoni, Moschino, Pierre Cardin, PORTS, rag&bone, Tommy Hilfiger, Tommy Jeans and Under Armour.

Licensing in Cosmetics

The global cosmetics market, excluding soap, toothpaste, razors, and blades, is estimated to be worth more than €250 billion. 59% of total revenue is generated by the top ten cosmetics companies, L’Oreal Group, Estee Lauder Companies, and Shiseido are among the biggest ones.

Coty

Founded in Paris in 1904, Coty is one of the world’s largest beauty companies with a portfolio of iconic brands across fragrance, color cosmetics, and skin and body care. Coty serves consumers around the world, selling luxury and mass market products in more than 130 countries and territories. Coty’s portfolio consists of consumer beauty and prestige brands. Under Consumer Beauty group Coty classifies Adidas, Beckham, Biocolor*, Bozzano*, Bourjois*, CoverGirl*, Max Factor*, Mexx, Monange*, Nautica, Rimmel*, Sally Hansen*. Among the Prestige brands are Burberry, Bottega Veneta, Calvin Klein, Cavalli, Chloe, Davidoff, Escada*, Gucci, Hugo Boss, Jil Sander, Joop!*, Kylie Jenner, Lacoste, Lancaster*, Marc Jacobs, Miu Miu, Orveda, Philosophy{{*, SKKN BY KIM, {{Tiffany & Co.

*Indicates an owned beauty brand

In 2016 Coty concluded the acquisition of the Procter & Gamble Co’s Specialty Beauty Business. Procter & Gamble produced fragrances for Stella McCartney, Alexander McQueen, Hugo Boss, Dolce & Gabbana, Gucci, Lacoste, Christina Aguilera, Escada and cosmetics for Dolce & Gabbana and Gucci. Not all brand licenses were transferred from P&G to Coty. Dolce&Gabbana, for example, made a deal with Shiseido, however, in 2022 Dolce & Gabbana company decided to take back full control of its beauty business from Shiseido Group and launch entity called Dolce & Gabbana Beauty which assumed 100% control of the manufacturing, sales and distribution of the brand’s makeup and fragrance portfolio.

Euroitalia

EuroItalia is a family-owned company that creates and distributes some of the Italian fragrances in the world. Established in 1978 by Giovanni Sgariboldi, who believed in the potential of the selective perfumery ‘Made in Italy’. The company makes licensing fragrances for Moschino from 1988, Versace from 2005, and Missoni from 2015. In 1992 was made an acquisition of the Dolce&Gabbana licensee. In 2022 EuroItalia signed an agreement with Michael Kors and became the exclusive worldwide men’s and women’s fragrance licensee for the brand. In its portfolio EuroItalia also has Naj Oleari make-up.

Inter Parfums

Founded in 1982, Inter Parfums, Inc. develops, manufactures and distributes prestige perfumes and cosmetics as the worldwide licensee for Abercrombie & Fitch, Anna Sui, Boucheron, Coach, DKNY, Donna Karan, Dunhill, Ferragamo, Graff, GUESS, Hollister, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, MCM, Moncler, Montblanc, Oscar de la Renta, Ungaro and Van Cleef & Arpels. Inter Parfums is also the owner of Lanvin fragrances and the Rochas brand. Through its global distribution network, the Company’s products are sold in over 120 countries.

As a percentage of net sales, product sales for the Company’s largest brands in 2022 were as follows: Montblanc (18%), Jimmy Choo (18%), Coach (15%), Guess (12%)

L’Oreal Group

L’Oreal is the world leader in beauty. The Group boasts more than one hundred years of cosmetic expertise, focusing solely on beauty business. Over 87,300 employees create products under 36 international brands.

L’Oreal Group divides the business into 4 categories: Professional products (L’Oreal Professional, Kerastase, Redken, Matrix, Pureology), Consumer products (L’Oreal, Mixa, Maybelline, Garnier, essie, NYX, 3CE Stylenanda), Luxe (Lancome, Yves Saint Laurent, Giorgio Armani, Maison Margiela, Kiehl’s, Herela Rubinstein, Biotherm, It Cosmetics, Valentino, Mugler, Victor & Rolf, Prada, Ralph Lauren, Azzaro, Diesel, Urban Decay, Carita, Takami, shu uemura), and Active Cosmetics products (La Roche-Posay, CeraVe, Skin Ceuticals, Vichy, and skinbetter).

Luxe products account for 38% of group sales, while Consumer products account for 37%. Professional and Active cosmetics account for about 12% of total sales in each category.

Puig

Puig has been in the fragrance, makeup, and skincare industries since 1914. In 1948 was launched an iconic fragrance by Nina Ricci, L'Air du Temps, followed by the establishment of the Paco Rabanne Parfums division in 1968. In 1987 Puig acquired the entire Paco Rabanne business, including fashion and accessories. Besides Paco Rabanne, the current fashion business category includes Carolina Herrera, Jean Paul Gaultier, Dries Van Noten, and Nina Ricci.

Beauty portfolio consists from Prestige brands (Carolina Herrera, Paco Rabanne, Jean Paul Gaultier, Nina Ricci), Niche brands (Byredo, Penhaligon’s, Dries Van Noten, L’Artisan Parfumeur), Wellness brands (Kama Ayurveda and Loto del Sur) plus regional and local brands. Under licenses Puig manages Christian Louboutin, Comme Des Garcons parfums, Benetton, Springfield and some other brands. In 2020 Puig acquired a majority stake in Charlotte Tilbury, a #1 makeup brand in the UK

The Estee Lauder Companies

The Estée Lauder Companies Inc., founded in 1946 by Estée and Joseph Lauder, is one of the world’s leading manufacturers, marketers and sellers of quality skin care, makeup, fragrance and hair care products. The products are sold in approximately 150 countries and territories under a number of well-known brand names including: Estée Lauder, Clinique, Origins, MAC, Bobbi Brown, La Mer, Aveda, Jo Malone London, Too Faced, Dr.Jart+, and The Ordinary. The company is also the global licensee of brand names for fragrances and/or cosmetics, including Donna Karan New York, DKNY, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna. The company has approximately 63,000 employees worldwide,

Shiseido

Shiseido was established in Ginza, Tokyo, in 1872 as Japan's first private Western-style pharmacy. The company now employs 39,000 people and operates in 120 countries and regions around the world. Asia accounts for 53% of Net Sales, with Japan accounting for 22% and China accounting for 24%.

Shiseido company divides its portfolio into prestige brands, a high-end, high-added-value cosmetic products (e.g. Shiseido, Baum, IPSA, Benefique) Fragrance (Serge Lutens, Narcisco Rodriguez), a mid-priced cosmetics (Elixir, Anessa, etc), and affordable skincare products, shampoo and other hair care and body care products.

Licensing in Watches

The traditional watch market is worth more than $600 billion. The top firms are headquartered in Switzerland and the United States.

Fossil Group

Fossil Group, Inc. is a global design, marketing, distribution and innovation company specializing in lifestyle accessories. Under a diverse portfolio of owned and licensed brands, the company's offerings include traditional watches, smartwatches, jewellery, handbags, small leather goods, belts and sunglasses. However, the Watches category generates 81% of revenue. The owned brands are Fossil, Michele, Relic, Skagen and Zodiac, and licensed brands, Armani Exchange, Diesel, DKNY, Emporio Armani, kate spade new york, Michael Kors, and Tory Burch.

Swatch Group

Swatch Group is the world’s largest manufacturer of finished watches, jewellery, watch movements and components close to 150 production facilities in Switzerland. With its 17 brands, the Swatch Group is present in all segments, and is a fully verticalized company, from production to distribution. The company is a key player in the manufacture and sale of electronic systems used in watchmaking and other industries. It is also a leader in the field of sports event timing.

Swatch brand portfolio includes Prestige and Luxury range (Breguet, Harry Winston, Blancpain, Glashütte Original, Jaquet Droz, Léon Hatot, Omega) High Range brands (Longines, Rado, Union Glashütte), Middle Range (Tissot, Balmain, Certina, Mido, Hamilton) and Basic Range (Swatch, Flik Flak).

Interesting to note that at the end of 2019 and after more than 22 years of exclusive licensing collaboration, Swatch Group has decided to let the licensing agreement with Calvin Klein. As per official statement, the decision has been taken due to the recent turbulence and uncertainties at the management level of Calvin Klein Inc., New York. Instead Movado Group launched Calvin Klein's first SS watch collection in March 2022, marking the company's new license deal. The watch company inked a licensing five-year agreement with Calvin Klein in August 2020.

Movado

Movado is an American watchmaker that was originally founded as LAI Ditescheim & Freres SA in 1881 in Switzerland, by Achille Ditesheim. The company was acquired by North American Watch Corp. in 1983.

Starting with Coach in 1998, Movado Group builds its portfolio of licensed brands: Coach, Tommy Hilfiger, Hugo Boss, Lacoste and Scuderia Ferrari. Among the owned brands re Concord, Ebel, MVMT, Movado, Olivia Burton

Seiko

Seiko is a Japanese holding company that holds subsidiaries which manufactures and sells watches, clocks, electronic devices, semiconductors, jewelries, and optical products. Seiko Nextage Co is a part of the company responsible for some licensing brands, e.g. Issey Miyake brands

Morellato

In 1930 Giulio Morellato first opened a jewellery and watch laboratory in Venice. Silvano Carraro, a close collaborator of Giulio Morellato, took the helm of the company in 1941. In the late ’80s his sons joined the company.
As the family brand developed, the company grew through a series of acquisitions.

The following are part of the Morellato Group: own brands Morellato, Philip Watch, Sector No Limits, Lucien Rochat, Chronostar, Bluespirit, La Petite Story, Oui&Me, Live Diamond, Cleor and D’Amante; Worldwide licensed brands Maserati and Trussardi, and the brands it distributes, Cluse, Scuderia Ferrari and Paul Hewitt. In 2021 Chiara Ferragni and the Morellato Group signed a licensing agreement.

Timex

Timex Group designs, manufactures and markets the timepieces around the world. Founded in 1854, Timex Group is a privately- held company headquartered in Connecticut, USA.

Timex Group companies produce watches under a number of well-known brands, including Timex, Nautica, Guess, GC, Salvatore Ferragamo, Versace, Versus, Ted Baker, Missoni, Furla, Adidas, Philipp Plein and Plein Sport

Zeon

Part of the Herald group, Zeon Ltd is the UK's largest importer and distributor of timepieces. The annual sales of over 2.5 million timepieces represent approximately 13% of the total UK watch sales. Zeons turnover exceeds GBP £39 million. As a licensee the company has partnered with the owners of some European labels, such as Vivienne Westwood and Braun. The company also owns Ingersoll and Ventura brands.