Wella sues Gucci over licencing terms

- Last updated on GMT

Related tags: Gucci

Wella - the German maker of cosmetics and fragrances - has filed a
lawsuit against Gucci in a dispute over the length of its perfume
licensing contract. Italian luxury goods maker Gucci, has not held
the rights to produce fragrances under its own name for more than
25 years.

Wella believes it has an ongoing contract to develop, produce and sell Gucci fragrances including Rush, Envy Accenti, Nobile and Eau de Gucci until 2028, while Gucci contends the contract ended in 2003.

Wella, now part of Procter & Gamble, has held the licence to produce fragrances under the Gucci name since a deal was struck with the Gucci family back in 1978. Gucci has since joined the Pinault Printemps Redoute (PPR) fold and wants the rights to its name back.

Gucci claims the licence was set to run for only 25 years and since Wella failed to reapply for it in November 2001, the licence ran out in November 2003.

A lot of money is at stake considering that Gucci fragrances generate wholesale revenues of approximately €180m a year.

YSL Beauté division, Gucci's fragrance and cosmetics business, reported a drop in sales for the fourth quarter of 2003, standing out as the Gucci division struggling the most to overcome the two-year downturn in the luxury goods market.

Producing the Gucci fragrances in house would lead to huge company cost savings.

The Beauté division for example had to refrain from releasing a Christmas fragrance after failing to achieve sufficient returns on the launch of three product lines - Stella by Stella McCartney, Kingdom by Alexander McQueen and Essenza - earlier in 2003.

On the other hand, Wella's cosmetics and fragrance division has continued to perform. Cosmopolitan Cosmetics, under whose umbrella all activities of the cosmetics and fragrances division are bundled, continued its growth course in the 2003 fiscal year with sales rising to €842.8 million from €772.9 million a year earlier, a 9 per cent increase.

The growth was partly generated by the successful introduction of new fragrances in 2003 helped by the Gucci brand name.

Lawsuits had been filed simultaneously in New York, Milan and Cologne but Wella is keen to reach an out-of-court settlement with Gucci, according to a company spokesperson.

Wella will continue to operate the Gucci licence until a final ruling is made. No date has yet been announced.

Related topics: Business & Financial, Fragrance

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