Marc Puig (Barcelona, 59 years old) has directed Puig since 2004, when he assumed the position of CEO in a difficult situation of sales and profitability. In the last eight years he has led the acquisition of a dozen brands, the latest, the largest, last summer, when he bought part of the Charlotte Tilbury cosmetics brand. “I have never worked so much and we have never lost so much,” he says about the past year, in which the pandemic left the family group in its worst losses (70 million euros) and immersed in a profound remodeling to comply with the new instagram culture.
Question. How do you see Puig in a period of five and ten years, now that you have the new strategic plan?
Answer. Digitization and the rise of the Chinese market have made the categories of perfumery, color cosmetics and treatment cosmetics grow differently. Social networks have increased beauty products due to their visual impact. Perfume is not visual and therefore we, who have a fashion and perfume business, have not benefited so much from the growth of the generation selfie nor the digital channel. The Chinese market is and will continue to be the great engine of growth, but in Mao’s time perfumery was considered a bourgeois product, and therefore there is no tradition, there is a lost generation. Many of our competitors have benefited from these two vectors and we have not. That is why we decided to buy during the Charlotte Tilbury pandemic and incorporate Puig from the cosmetic treatment companies that the family had. Now we can benefit from global trends and we have made a growth plan, which starts from a difficult position in 2020 and has the goal of doubling in two years and tripling turnover in five.
Q. Has the pandemic conditioned that plan?
R. No not at all. We started negotiating with Charlotte Tilbury in 2019 and for years we have been talking about integrating the cosmetic treatment companies into Puig.
Q. Does Tilbury have to be the new Paco Rabanne or the new Carolina Herrera de Puig?
R. It helps us a lot to strengthen our portfolio. We have spent 15 years with a very focused model, because in 2004 things were not going well for us and we decided to focus on what we could have an impact on worldwide, fashion and perfumery. We would not be distracted from that path until we have 10% of the market, a critical mass that allows us to be sustainable. Now we are close and it was interesting to open the portfolio. But the two lighthouses are still Paco Rabanne and Carolina Herrera. The grace is knowing how to update them and make them attractive to young people.
Q. The purchase of Tilbury has been quantified at around 900 million euros. Have they bought expensive?
R. Digitization has allowed many small brands and startups to enter the market. And this has caused established companies to have seen their market shrink and generated a brutal appetite. Sure there will be many corpses along the way but some will survive. Opportunities are a rare commodity and when some powerful ones emerge there is a significant queue behind to buy. We have not bought cheap.
P. The liquidity in the market, the scarcity of great opportunities and the profusion of competitors … How do they condition a family group, which after all does not have the financial capacity that other giants have?
R. We, who can only opt for a debt that we also try not to be too high, are limited by our ability to generate cash and create a solid balance sheet. Before the crisis, we planned to buy Tilbury alone, with debt and available resources, and in the midst of the pandemic we decided to take a majority position and do it with an investor from Chicago, BDT, something we did not initially plan, to have more time and flexibility.
P. Puig wants to be familiar, but does he [el hólding inversor familiar desde el que se controla Puig y otras participadas] Has the entry of a partner ever been seriously considered?
R. Puig is 100% familiar. We have decided certain questions for the new generations and one is that the members of the fourth generation of the family do not work in the company. That already conditions. They will be part of the governing bodies but not in the management team. If we are able to create strong brands, the business does not need external resources to develop. We have proven it.
Q. Do you give up having the same financial weapons as your competitors?
R. We have very powerful competitors that are listed and that are familiar and others that are not. Our will is to maintain this situation.
Q. Did your uncle, Antonio, or your father, Mariano, give you that mandate not to sell?
R. There is no mandate. Each generation has to find its system. We have found it and we are doing very well. I pick up what they left me, I try to take care of it and make it bigger and we keep our way of doing things well done. We want to maintain the legacy we received, which is a very transcendental approach, because it goes beyond the bonus. The problem is that families work out of love, equal opportunities, but the company needs hierarchy and these two systems can collide.
Q. You will be the last CEO of the family. Do you have a departure date?
R. There is no date, but in the family there are expiration dates for different levels and I will have to fold at 65. It is less than it seems, I would like it to be more (laughs).
Q. Does the fourth generation take that decision to stay out of the direction well? The last time that external management was tried, it did not quite give good results.
R. There is no single ideal decision. But it is true that when your company takes on a certain magnitude, leadership must be sought in the world. It is risky to find the best talent in a group of 20 people.
Q. After the pandemic and this investment effort, what are your forecasts for sales and results?
R. The year 2020 had to be a historical record in both things, at the beginning everything was in this line, but the pandemic came. Our projection now is to double sales in two years and triple in five years. The pandemic has been greatly affected by social distancing. It is not only because the airport stores, where we sell a lot, have closed, it is that people have not left, they have not celebrated, they have not even gone to the office, and therefore they have not seen the need to use products of beauty or fashion. How many suits have been bought in 2020? I had never bought so little. We will not recover our previous sales figures until 2022 or 2023.
Q. The digital segment has not been able to compensate for it. What strategy do you have in this area?
R. Last year, perfumery sales grew a lot in digital because stores closed, and it was 24%, when before we were below 10%. This year it will fall again because physical sales will increase, since fragrances are important in our sector. But the goal is to reach 30% in our products by 2025, and it is clear that it will be much higher in cosmetics than in perfumery.
Q. What penetration objective do you have in the Chinese market?
R. We have set ourselves that by 2025 the Chinese market will represent 25% of our business, both in sales in China and to Chinese travelers. The tourist of this country is a great consumer of products both in duty free as in local markets. You just have to go to Harrod’s or Galeries Lafayette to see it.