British fashion brand Burberry continues to discuss the future of its fragrance and beauty licensing agreement with Inter Parfums, which may result in the termination of the contract at the end of this year.
Under the current license, which ends on December 31st, 2012, Burberry maintains the right to buy out the license rights once the contract is ended, which under the current terms would give the license a price tag of €181m ($211m).
The price tag reflects the fact that the Burberry license has been developed to become Inter Parfums leading brand, with growth being attributed to constant additions to the brand's portfolio over the years and successful marketing campaigns.
Burberry is key to Inter Parfums' performance
In recent years sales of Burberry have grown at well over double digit figures and currently account for approximately 60 per cent of the total annual revenues.
According to the two companies, all terms and conditions for the renewal of the contract have been agreed on, including the creation of the basis for a new operating model for the license, should the license be renewed.
However, according to both companies, discussions are continuing regarding Burberry’s right to buy out the lucrative licensing agreement, suggesting that the fashion brand is considering other options for its best-selling fragrance range.
Discussions are on-going...
“Discussions longer and more complex than expected have naturally led Burberry to exercise its option to buy out the license agreement before the July 31 deadline to ensure its ability to benefit from all possible alternatives,” said Jean Madar, Chairman & CEO of Inter Parfums.
“On our side, we have largely anticipated the consequences of this partnership being extended or not. For that reason, we are today particularly confident and motivated about the prospects of opening a new page in our history, regardless of the outcome of these discussions.”
Under the current licensing agreement, 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.
Burberry brand portfolio goes beyond fragrances
The Burberry licensing agreement began in 1995 with the Burberry fragrance, and has since been 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.