Negotiations between the brand holder and the France-based fragrance purveyor collapsed because Burberry has decided to put its own hand to the manufacturing of its fragrance range, two sources with first hand dealings in the negotiations told Reuters.
BPI, which is the fragrance arm of luxury Japan cosmetics player Shiseido, had been in long discussions with Burberry over a possible licensing agreement, but evidently Burberry was more interested in using the company as a distributor.
Burberry recently ended another set of drawn out talks with the current license holder for its fragrances, Inter Parfums. That license will expire at the end of this year and will not be renewed, affecting approximately 60 per cent of Inter Parfums current sales.
Burberry takes control of its fragrance licensing
At the end of July Burberry confirmed that it was buying back the rights to the agreement for €181m ($220m), a sum that could enable Inter Parfums to reinvest in new business, but one that could impact its financials significantly in the short- to mid-term.
The delay caused by the fragrance licensing negotiations is equally likely to lead to further loss of time, given that Burberry will now have to go to the significant investment of having to establish its own fragrance manufacturing arm.
The Burberry brand has often been a target for gray market imports and copy products, with one of the sources stating the belief that the move to take the fragrance-making process in-house would be a means of better protecting the brand.
Burberry brand portfolio goes beyond fragrances
The current licensing agreement stipulates that Inter Parfums is under contract to manufacture and market Burberry range of fragrances and beauty products worldwide as a part of its prestige brands portfolio.
The licensing was first agreed in 1995 with the Burberry fragrance, and was then extended to include seven other product lines, including Burberry Weekend, Burberry Brit and most recently Burberry Body, which was added to the portfolio in 2011.
The line-up includes male-and female-dedicated products, that touch on beauty and fragrance categories as diverse as body spray, bath and shower gel, shampoo and deodorant.