In late July Spanish beauty-to-fashion house Puig celebrated its 100th anniversary to coincide with the Puig Vela Clà ssica yachting event in Barcelona. Martin Moodie was the sole media representative there, and took the opportunity to talk to Puig Chairman & CEO Marc Puig (right) about a century of achievement.
It’s a beautiful summer’s morning in Barcelona, with the sun bouncing off the aqua blue Mediterranean waters at the Real Club Nautico in the shelter of the Catalonian capital’s harbour. In front of the clubhouse up to 50 vintage yachts lie moored, all set for a day’s sailing in the Puig Vela Clà ssica Barcelona Regatta, an international event for classic wooden yachts built between 1950 and 1975.
It’s the perfect setting for the 100th anniversary celebrations of Barcelona fashion-to-fragrances house Puig, which has long been a major supporter of watersports in general and yachting in particular. This year it marked its centenary by not only hosting the Puig Vela Clà ssica but also the Puig 12m World Championship within the space of a few days.
Over morning coffee I’m joined by Puig Chairman & CEO Marc Puig, looking tanned, relaxed and casual in a polo shirt, shorts and deck shoes. Soon he’ll be out on the water, helping to crew the classic auric Cutter Moonbeam IV (pictured), one of the most beautiful yachts ever made.
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Marc represents the third generation of the Puig family and has led the company to considerable success since taking on his two roles in 2004 and 2007. In preparation for the interview I’d spent hours poring over “˜Puig: 100 Years of a Family Business’, an opus written by Eugenia de la Torriente, Fashion Editor of Spanish newspaper El País and Deputy Editor of its lifestyle magazine El País Semanal.
This hugely impressive work chronicles the house’s rich history, from the day in July 1914 when a shipload of founder Antonio Puig’s products was lost after an attack by a German submarine, forcing the budding entrepreneur to start again from scratch, to the company’s emergence as one of today’s leading luxury groups in fashion and fragrance.
De la Torriente’s work captures the rollercoaster journey that any great, multi-generational company undergoes. Much more than a corporate history, it reaches deep into Puig’s corporate DNA – and it is that subject that I am keen to explore with Marc Puig. How does he sum up the ethos of the company, and how it has evolved over a century, most recently under his leadership?
“The one thing that stays constant throughout the history of this company is the fact that there is a family associated with it,” he says. “There are certain values that for the family are part of who we are, that somehow transpire throughout the organisation. Put very simply, we are a passionate and driven family firm.”
Talking about such values is one thing; holding on to them across multiple generations is another, especially in a modern era where Puig is surrounded on all sides by multinational giants, I suggest. “That’s true, but one of the challenges we have in this industry is the ability to attract, retain and motivate talented people. I believe many people feel attracted and attached to Puig because they also feel comfortable with the value system that is part of who we are.
“It’s not only talking about it; it’s also making sure that we preserve that value system as carefully as we choose a business strategy. Clearly the fact that there is a family attached to this business – and one that has a certain way of seeing things and behaving – makes this company particular, and that’s something we have to protect.
“When I look at companies that are in front of us, such as LVMH, P&G and L’Oréal, they are all number one companies in some category. So when they look for talent they say: “˜Look, come to our company. We are the number one beauty company, the number one fashion house, the number one consumer company, the number one luxury company,’ and so on.
“We are number six, and with a difficult name to pronounce [Puig is pronounced Pooch -Ed],” he says with a smile. “Many companies don’t even know us, so how can we attract and retain people other than by offering what we have as a point of difference? I think that when people have a chance to know us and our value system”¦ it’s what makes us attractive. It’s part of what holds this company together.”
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A metre for every year: Puig Tower, the company’s new HQ in Barcelona |
Marc’s father Manuel Puig once said: “A successful entrepreneur is a survivor who might fall down but keeps getting up again.” Are the family still entrepreneurs? And does the adage still hold true?
“Any company that has been out there for a long time will always have its ups and downs, as we have,” Puig replies. “We’ve had to reinvent ourselves several times. I think that even if we have grown to a certain size, we still act as a very small company. I hope that we keep that.”
I recount how, at dinner the night before, Gebr Heinemann Board Member Kay Spanger noted that he can work with Puig in a faster, more flexible way – a way that is often impossible with some of its bigger competitors.
“Well, we are getting bigger too,” says Puig with a smile, “but yes, we try to keep it agile. One thing I think we still are is a humble organisation, and I keep stressing the idea that all our big competitors are number one at something. We just happen to be number six. I always believe that aspiring to that, and having a reference like that, is a motivation.”
Marc Puig’s years have been bountiful ones for his company, despite the recent Spanish economic woes. The company has particularly flourished in the fragrance sector, driven by a string of new names and hot launches such as Paco Rabanne 1 Million, Lady Million, Black XS, Invictus, Valentina, Prada Candy, Prada Luna Rossa and the Carolina Herrera 212 portfolio, while the fashion business is going strong. So what have been the key landmarks of his reign to date?
He thinks carefully for a few moments, then answers: “In the 1990s we grew significantly, organically but also by acquisition, and we created a company that had a very large portfolio and a very complex structure. And for a time we struggled; we couldn’t grow and our profitability was deteriorating. I think the biggest decision we took. and the one that helped us make a big jump forward, was to focus.
“We chose to focus on the few things we thought we could be better at, and we bet on those and took risks on them. We then designed an organisation that was at its best in doing those few things. It was about building the image of a brand through fashion and translating it into a fragrance business. It was about focusing and prioritising where we thought we could make a difference. That was probably the most significant decision we took.”
The company’s historic synergy between, and focus on, its twin pillars of fashion and fragrance has clearly been a core strength. A few years back I asked Marc Puig if he would ever enter the related cosmetics category, a seemingly obvious route given its importance to the burgeoning Asian market. The answer back then was “˜not at this time’. What’s the position today?
“I think our resources can do a limited number of things well,” he replies, “especially when you are competing with companies that are several times your size. Until we get a 10% market share in the fragrance category, which would give us at least a chance to compete with similar tools, we are not going to get distracted and that’s why [we are holding off].
“In our family group we have very successful skincare brands sold through pharmacies in certain countries, so we have the know-how. But until we reach certain milestones I would like the business to be very focused on one thing. Then we’ll see what we can do.”
In the past Marc Puig has said that one of those milestones is to become global number three in prestige fragrance by 2020. Does that remain a realistic ambition?
“I think so,” he says, quoting a market share of just 3.5% in 2004 that had risen sharply to 8.6% last year. “We are saying our mission is top three, or a 12% market share, by 2020. The next stage of growth is going to be more difficult, firstly because the same way you gain market share you can also lose market share. Everybody fights for share.
“Secondly, because when we were smaller, nobody looked at us. As you get bigger you are all of a sudden on the radar screen. But while it will be generally more difficult and more challenging, it’s about aspiration. I think we have an organisation that is very committed, and which accepts this challenge.”
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Puig Global Travel Retail Managing Director Patrick Bouchard (left) and Gebr Heinemann Board Director Kay Spanger get set to sail |
Talking travel retail
One channel in which Puig has made significant volume and share gains in recent years is travel retail, where Global Travel Retail Managing Director Patrick Bouchard and his team have scored win after win in both launch and promotional terms.
“Back in 2004 we made some choices regarding priorities,” says Puig. “In terms of portfolio of products we chose fashion and fragrance, while in geographies we chose to focus our efforts on emerging markets and other growing channels, particularly travel retail.
“We felt those were the channels that had the chance to grow. We said, if we have limited resources, let’s put those resources into territories that will grow. As long as we increase our market share in those areas that are going to grow more, then our weighted average market share worldwide will grow by mathematics. So that’s what we did.
“To grow in those channels you have to have a certain flexibility and the right framework to exploit the opportunities that come along. The challenge is that in recent years there’s no company that hasn’t said: “˜We’re going to go into emerging markets and travel retail!’
“So it’s becoming a little more difficult to make a difference; but we will keep trying. We know that the things that helped us move forward in the past may not necessarily be the ones that will allow us to keep going. So we’ll find new ways and new solutions.”
Because of its fragrance rather than skincare focus, Puig’s geographical mix remains very different to that of its main competitors, so Northeast Asia, for example, is a lower priority than Latin America, Russia and the Middle East. But things won’t necessarily stay that way, Puig says, pointing to a fast-changing consumer evolution in China.
“In certain of these territories, the younger generation has a different attitude towards fragrance than their parents did. Take China, where fragrance was forbidden during the Mao years. When you look at the 40-plus generation it’s nearly a lost generation, I’d say. But the younger generation has a very different attitude towards fragrances. We’ll have to follow that very closely.”
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Sparkling success: Puig’s new feminine fragrance Lady Million Eau My Gold! is showcased at Barcelona Airport |
Getting ready for Gaultier
Puig’s fragrances business will look very different from 2016 when it repatriates the Jean Paul Gaultier licence in-house from BPI, having acquired a majority stake in the French fashion house in 2011. Just how transformative will this deal be?
“We have stated that we want to be in the top three houses by 2020, but with a hybrid model in the fragrance category where we have our own brands and licensed brands. Jean Paul Gaultier was an opportunity. It’s a joint venture with Jean Paul Gaultier himself, so we have to do things in sync.
“We saw the opportunity to work with someone who has tremendous creativity and passion, and a very particular way of looking at life. We feel [Jean Paul Gaultier] has a lot of potential. We have a portfolio of brands, each one very different but each with big potential going forward. Jean Paul Gaultier is one of them. So we work with BPI on the hand-over, and when the time comes we’ll see how we handle the next phase.
“I look at this long term and we see that Jean Paul Gaultier has tremendous potential to translate his name in the fragrance category. I am very optimistic about this project.”
On the fashion side of the business, Marc Puig says his company is one of very few that own both fashion and fragrances.
“Two of them are very well known, Chanel and Dior; and any brand when it grows up would like to be like them,” he says with a laugh.
“The fact that you don’t have many cases like that is because it’s not easy. We entered the fashion business really by accident because we were the licensee of certain brands that came to us, and then we took them over. But at the beginning we didn’t know what to do with them. We just wanted to protect them, and then little by little we started to try to do things.
“It’s been 20 years since we started getting involved with fashion, so it’s not something we started yesterday. We know it’s still a learning process. It’s not the biggest part of our business, but as a family business looking to the next generation it’s very attractive for us to be able to build this portfolio of brands.
“Private equity is all about the short term, in and out, whereas, we think in terms of the next generation. That’s why we say that, long term, we want to be a luxury brand owner.”
Do further acquisitions figure going forward, or will the Puig focus be on organic growth? “Our main focus will be growing the portfolio of brands we have,” he replies. “We still think that there is plenty of growth from those brands, and I’d rather grow with what we have than surface with a bigger portfolio that’s difficult to handle.
“Some of the brands we have, such as Prada and Valentino, have tremendous potential which is still to be captured. Others have proven that even if other people didn’t see potential, we could make it happen – for example with Paco Rabanne and Carolina Herrera.
“So I think there is potential for us to grow organically, and not necessarily by counting on M&A. Having said this, we are always open to opportunities and looking at things that make sense for us. If it doesn’t happen, we will continue growing organically.”
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During the Puig Vela Clà ssica Martin Moodie met Marc Puig’s father, the legendary “˜Don’ Mariano Puig, one of the great drivers of the company’s success story |
Sailing time nears, and it’s time to bring the interview to a close. A couple of final questions though. Who are the people who have most inspired Marc Puig down the years?
“I think I have had great bosses,” he replies. “My father [“˜Don’ Mariano Puig] was an inspiration and a reference. Javier Cano, my former CEO, was a reference. I have been lucky in that sense. You know, when most people leave a company it’s because they don’t like their bosses. I have been lucky in that sense.”
We’ve talked at length about the Puig family DNA, but what drives its early 21st century leader? When you wake up in the morning, I ask, what is really burning inside and saying “This is how I will go to work, this is how I will be.”?
“I guess the most rewarding times for me have been when I’ve seen individuals in the organisation grow,” he replies thoughtfully, “and when we as a team reached goals that we thought were impossible a few years ago. I think that’s the most rewarding thing – to see how people achieve their missions and grow and achieve goals in their working life.”
Eugenia de la Torriente’s book refers to “maintaining the hunger” for the business, something Puig picks up on as we close. “You know I recently read a book about family businesses. They said they had interviewed many CEOs from both family and non-family firms, and there was a difference.
“The non-family CEOs always saw the upside of the opportunities. The family CEOs always saw the challenges and the risks and they feared they were going to leave a bad legacy.
“I remember when we had certain challenges in the company I always woke up at night and I could imagine an article about another third-generation company going down the tubes because of me. That was like sweating, you know!” he says with a laugh.
“But I have tremendous respect for the competition. I think they are amazing companies. How can we compete with these people? How can we challenge the big guys? That’s what keeps me on my toes, I guess.
“Companies have to fight against the budget, which is a kinder animal here [in a private company]. If a company is investing long term in a family framework, it is a better mechanism to hold on through crisis, I think. We also take fewer risks. Sometimes we may not take all the opportunities, because we are less eager to leverage the company and put the legacy at risk. In that sense we may be slower or may not capture all the opportunities, but it also helps us through the bad cycles.”
I quote to him the Heinemann’s family adage, “Out of debt, out of danger”. Puig nods and says with a wry chuckle: “Yes, in the times we have had debt and didn’t meet the covenants, I would say that that is a pill I never want to swallow again.
“My biggest fear for many years was that in this industry there will be consolidation, and mid-size players will be too big to be niche and too small to be big. I feared that our size was something that eventually could put us at risk. That’s why we have been very focused on trying to say that we have to make a dent in the categories in which we choose to compete. We are in a better position than we were a few years ago, so in that sense I feel more comfortable.”
Asked about any potential sale of the company in the future, Puig gives an emphatic answer that will delight those who champion the value of independents in this or any other industry.
“Look, I belong to the third generation of this family business,” he replies. “And basically when the second generation asked us what it was that we wanted to do with the company, we said we wanted to take the baton from the previous generation, build the business, and eventually pass it to the next. We wanted to keep a certain value system that has made us unique or particular.
“When I look at this as our mandate, I don’t see the selling of the company as meeting any of the criteria that we decided were our mission. So I don’t see that happening.”
*Note: This feature first appeared in The Moodie Report October Print Edition; click here to access the digital version and turn to page 410.
