The Future Of Eyewear Licensing.
A lot to catch up on…
When I first started in optical, one thing struck me as strange about the industry: it was the only fashion related category in which the biggest selling brands were all licensed. Many of those licenses were worth tens, if not hundreds of millions of dollars over their duration.
“But why don’t those licensors just start making and selling their own product?”, I’d wonder. Although it’s true that building a distribution network is difficult and expensive, the fashion houses licensing the brands weren’t hard up for capital or know-how. It seemed like a no-brainer.
Some 15 years later, they’ve finally gotten around to doing the obvious.
First Kering (Gucci) Group formed an eyewear subsidiary for their brand portfolio, which includes:
Yves Saint Laurent
They recently partnered with Richemont Group, whose brand portfolio consists of
A. Lange & Söhne
Baume & Mercier
Van Cleef & Arpels
Perhaps most significantly, Richemont has considerable experience in the manufacture of luxury accessories that require machining. This includes a nearly 100,000 square foot factory for Cartier eyewear in Sucy-en-Brie in the Val de Marne that employs some 250 people. Their eyewear subsidiary generated nearly 45 million euros last year, but at around $700 to $4000 for most frames that’s not a lot of volume. The revenue also represented a drop of nearly 10% in the past year. It seems probable they have both excess production capacity, and a need for more effective distribution.
Enter Kering. Richemont has taken a 30% stake in Kering Eyewear, and Kering Group now owns the Sucy-en-Brie facility. I’m not sure whether the deal includes Cartier’s eyewear facilities in Besançon or Fundão Portugal as well.
Of course a few months ago LVMH purchased 10% of Marcolin to use them as preferred partner for their brand portfolio, which includes:
One wonders what licenses will be left for the optical companies to fight over?
Leonardo Del Vecchio is a rather brilliant fellow. When his business really began to boom he was busy taking steps to mitigate the giant risk factor of not owning their own brands. LVMH and Kering posed the greatest risk, since both owned a giant brand portfolio that could drive big volume if either started a new entity.
It’s no coincidence Luxottica hardly has any of their brands in its portfolio. They’ve focused on major unaffiliated brands like Prada, Chanel and Armani. In addition, they’ve been collecting strong house brands indigenous to eyewear for the past 20 years. They’re well prepared. Safilo, Marcolin, De Rigo et al., not so much.
But still, wandering past Luxottica’s main booth last Vision Expo, I noticed out of some 22 brands listed, only 3 were house brands. Has Luxottica done enough?
Even the mighty house brands they own aren’t enough to properly utilize their vast sales and distribution network, or make up for lost revenue if their bigger licensors drop out.
But my guess is they’re fairly confident this won’t happen.
Why do you suppose that is?
We’ll look into it next week…