At the center of the dispute is Coty’s long-term license to create and distribute Gucci beauty and fragrance, which runs until 2028, and now sits in direct tension with Kering’s newly announced strategic alliance with L’Oréal.
How The Dispute Started
A Coty Inc. subsidiary, HFC Prestige International Operations Switzerland Sàrl, filed a lawsuit in a U.K. commercial court on October 20 against Gucci America Inc., Guccio Gucci S.p.A., and Kering SA over the Gucci beauty and fragrance license that expires in 2028. Public court records classify the case as a general commercial contracts matter, but the specific claims have not yet been disclosed.
Coty has held the Gucci beauty and fragrance license since 2016, giving it nearly 10 years of stewardship over one of luxury’s most coveted fragrance names by the time the license ends.
The Trigger: Kering’s Deal With L’Oréal
Tension escalated after Kering and L’Oréal announced a roughly €4 billion($4.66 billion) strategic partnership that gives L’Oréal exclusive rights to create, develop, and distribute Gucci fragrances and beauty products for 50 years, starting once Coty’s license expires in 2028.
The transition to L’Oréal is structured to begin only after the current agreement ends, which both Kering and L’Oréal stressed when the deal was unveiled.
At the time of the alliance announcement, Kering and L’Oréal jointly said that all existing contractual obligations with Coty would be fully honored, signaling that there should be no immediate disruption to Gucci Beauty operations before 2028.
What Coty Is Defending
According to Evercore ISI, the Gucci beauty business accounts for around 8% of Coty’s total sales and about 11% of its profits, making it one of the group’s most profitable licenses.
Industry estimates suggest that losing Gucci could wipe out roughly 500 million U.S. dollars in annual sales for Coty, which would raise questions about the company’s ability to maintain its scale as an independent listed beauty player. During Coty’s first‑quarter fiscal 2025–26 earnings call, CEO Sue Nabi said she would not comment on ongoing litigation but insisted, “We will defend our rights until the last day, until the last hour of the contract.” She also said that Coty continues to operate the Gucci license “under the same structure already in motion” and remains open to a solution that can “create real value,” while stressing there is currently “no change to Coty’s existing license.”
How Kering And Gucci Are Responding
In its response, Kering issued a statement rejecting Coty’s claims as “unfounded allegations” and pledged it would “vigorously defend its rights” in the U.K. court proceedings. Executives, including L’Oréal CEO Nicolas Hieronimus and Kering COO Jean‑Marc Duplaix, have also said that the Gucci license will remain with Coty until its formal expiration in 2028, despite the long‑term alliance now in place.
Analysts are watching to see whether Coty’s lawsuit could open the door to renegotiation, compensation, or even an early exit to the license, though so far there has been no official indication that the 2028 end date will change.
Why This Matters For Retail And Beauty
For retailers and partners, the lawsuit highlights how strategically critical beauty has become for luxury groups: a single license like Gucci can represent 500 million U.S. dollars in sales and a significant share of profits for a beauty conglomerate like Coty.
In the near term, both sides’ assurances that current obligations will be honored mean that Gucci counters and fragrance shelves are expected to operate as usual through 2028.
Longer term, the outcome could influence how luxury houses structure beauty partnerships, including license lengths, exit clauses, and protections when brands pivot to tighter control or shift to new strategic allies such as L’Oréal.
