Chanel SA (France)

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Chanel has long reigned as one of the world's most prestigious brands. Unlike virtually all of its rivals, it has never fallen out of style (even if it may have occasionally fallen out of fashion). Inevitably much of the credit goes to Coco Chanel's personal, ground-breaking originality, but for more than 30 years it is Karl Lagerfeld who has carried the torch for the House of Chanel. The real core of the brand is no longer its apparel but its fragrance portfolio, and above all, Chanel No 5, indisputably the world's most famous perfume, and almost certainly the most successful fragrance ever bottled. The group remains independent, privately owned by the Wertheimer family, who have controlled the Chanel fragrance business for almost a century.

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Adbrands Weekly Update 1st Sep 2016: Chanel suffered a sharp decline in revenues and profits last year as a result of the contraction in the global luxury market. According to financial results for 2015 filed with the chamber of commerce in Amsterdam, where fashion and leather goods division Chanel International BV is registered, revenues slipped 17% to $6.24bn while operating profits tumbled 23% to $1.6bn. However, net profit was down only 7% to $1.34bn. Those figures are not thought to include sales of perfumes and cosmetics, which are managed by a separate legal entity, registered in France. French business daily Les Echos said sales of these items fell 21% in 2015 to $2.91bn. The decline in performance might help to explain the unexpected dismissal of CEO Maureen Chiquet at the beginning of this year over so-called "strategic differences". The Chanel empire is privately owned by secretive billionaire brothers Alain and Gerard Wertheimer.

Adbrands Weekly Update 28th Jan 2016: In a surprise development, American executive Maureen Chiquet was ousted as global CEO of Chanel after nine years in that role, apparently as a result of a disagreement over strategic direction with the group's owners, Alan and Gerard Wertheimer. She will not be directly replaced and chairman Alan Wertheimer will assume her duties. Despite her title and nine years at the head of the global Chanel organisation, Chiquet has had only limited involvement with the creative side of Chanel's fashion business. Chief designer Karl Lagerfeld has always insisted on operating independently, reporting only to the Wertheimers. Asked this week by trade bible WWD whether the departure of the group CEO would affect him, he claimed "I hardly knew her. We didn't really work with her."

Adbrands Weekly Update 5th Dec 2014: Ads of the Week: "Reincarnation". Sometimes, we select a particular ad not because we especially want to, but because it's notable in some way. So we can't overlook this new Chanel meisterwerk, if only for its sheer star power. Designer Karl Lagerfeld once again tries to demonstrate his ability as a director of film or even - God help us - music video. However, the results are less like the timeless Hollywood glamour to which Karl seems to aspire than a lavish update of one of Andy Warhol's home movies, in which a succession of his BFFs play (not very well) at being actors. There are directors who might be able to coax a decent performance from the stone-faced Pharrell and gamine minx Cara Delevingne, but Karl ain't one of them. The end result, though pretty, is somewhat less than the sum of its parts. 

Adbrands Weekly Update 16th Oct 2014: Ads of the Week: "You're The One That I Want". Undoubted ad event of the week is the new Chanel ad from Moulin Rough and Gatsby director Baz Luhrmann, featuring Brazilian supermodel Gisele Bundchen. There's been much talk from Luhrmann about how he wanted to evolve the image of the "Chanel woman" from the pink and fluffy Nicole Kidman ad he made a decade ago to the all-round career woman/ homemaker/ sporting star depicted here by the ruggedly handsome Bundchen. The new spot is heavy on sentiment, but looks simply gorgeous throughout, and offers saturation coverage of just about every Chanel product going except eyewear. A word of advice to you though, Gisele. That's a super-expensive fragrance you're messing with there, not a room freshener. You may be the world's wealthiest model, but we suggest you get an Air Wick instead. And hey: a Chanel surfboard? Incredible. It will just about fit in my Christmas stocking.

Adbrands Weekly Update 9th Oct 2014: Coty opened talks with beauty rival Chanel to acquire its secondary colour cosmetics brand Bourjois, currently a significant rival in Europe to Coty's own Rimmel London. Coty is offering to purchase the business for around $240m in stock. If accepted, the deal would give Chanel a small voting stake in Coty and also forge links between two of Europe's wealthiest but most reclusive families, the Wertheimers who own Chanel and the Reimanns who control Coty as well as luxury group Labelux.


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Background

Free for all users | see full profile for current activities: Although she came to symbolize a life of ease and casual luxury, Gabrielle Chanel grew up in a very different environment altogether. Born in the poorhouse to an unmarried mother in the 1880s, she was raised in an orphanage, before being taken in by nuns at a convent in Moulins and trained as a seamstress. Although she showed considerable flair in this trade, she found it boring, and ran away from the convent to try out as a cabaret singer. She adopted the nickname Coco around 1905 while performing in provincial music halls as a singer of popular songs a la Piaf. At around this time she became the mistress of playboy Etienne Balsan who gave her the money to start a little hat shop in Paris in 1909. Later she swapped Balsan for English polo player Arthur "Boy" Capel, later said to be the love of her life. (He died in a motoring accident in 1919).

Capel helped her open additional businesses in the fashionable resort towns of Deauville and Biarritz, and encouraged her to begin designing clothes as well as hats. She had by now cultivated a very distinctive personal style of her own, strongly influenced by men's clothing, and designed to make the very most of a naturally tomboyish figure. A huge contrast with the fussy and corseted fashions of the time, Chanel's designs introduced what we now regard as the boyish, even androgynous look of the Roaring Twenties, and her carefree nature brought her many imitators and admirers. Her affair with the Duke of Westminster made her into the toast of European society, where she made friends with the great and the good, from artists and performers to politicians, including Winston Churchill and his wife Clemmie. She was even lured to Hollywood for a time by mogul Sam Goldwyn, who is reported to have paid her $1m a year to dress leading ladies Greta Garbo and Gloria Swanson.

It was at this point that she conceived arguably her most important creation, commissioning perfumier Ernest Beaux to create what was to be the first ever "designer fragrance". At the time, all perfumes were designed to reproduce the scent of a single particular flower, roses for example, or violets. Chanel insisted she didn't want this, but instead told Beaux to produce "an artificial perfume, like a dress, something that has been made. I don't want any rose or lily of the valley, I want a perfume that is a composition." Supposedly, Beaux created five possible fragrances, which he numbered 1 to 5. Chanel chose the last. Introduced in 1921, the perfume was very popular with her customers, and quickly came to the attention of Theophile Bader, the founder of the department store Galeries Lafayette. He felt he could sell substantial quantities of this fragrance, and persuaded Chanel to meet a possible backer who would be able to manufacture Chanel No 5 in bulk.

Pierre Wertheimer and his brother Paul controlled the enormously successful cosmetics firm Bourjois. France's oldest cosmetics company, it had been created in 1863 by perfumier Alexandre Napoleon Bourjois to manufacture fine theatrical makeup. The business was acquired in 1891 by the Wertheimer family, who built it into France's biggest manufacturer of fragrances by the 1920s. Pierre Wertheimer was impressed by Chanel, but the deal he offered was very much in his own favour. The Wertheimers would manufacture Chanel No 5, and keep 70% of all profits; Bader would receive 20% as a finder's fee, and Chanel herself would get the remaining 10% of profits generated in France. She accepted, but soon regretted that decision when Bader was proved correct, and Chanel No 5 became a huge commercial success. Towards the end of the 1920s, and then throughout the 1930s, Chanel launched a string of unsuccessful lawsuits against the Wertheimers in an attempt to win back control of the fragrance.

In 1940, the Nazis invaded France, and the Wertheimers fled to New York, successfully re-establishing their fragrance and cosmetics business there. Chanel stayed put, moving into Paris's Ritz Hotel. She soon became the toast of the occupying German army, and eventually the lover of Nazi officer Hans Gunther von Dinklage. This dalliance was later to cloud her reputation considerably. She again attempted to seize back control of her name from the Wertheimers, taking steps to declare the fragrance contract abandoned. But the Wertheimers were too smart for her, signing over ownership of the brand to arms dealer Felix Amiot. When the Nazis were defeated, Amiot was captured by Allied forces. The Wertheimers arranged for his release on condition he hand back to them ownership of the Chanel fragrance. Chanel herself was arrested by the French Resistance. According to another persistent legend, her old friend Winston Churchill himself negotiated her release after just one day. She escaped to Switzerland (with von Dinklage), where she redoubled her efforts to win back her name from the Wertheimers, threatening to launch a rival perfume, Mademoiselle Chanel No 5. This time, the Wertheimers agreed a compromise. Chanel No 5 now generated substantial sales in the US. Instead of 10% of all French sales of No 5, they offered her a 2% royalty on worldwide sales, as well as the right to produce her own scents, provided she not use the number 5 in their name.

In the 1950s, following the success of a new wave of French designers such as Dior, Balmain and Givenchy, Chanel, now aged in her Seventies, attempted to relaunch her couture label which had been in hibernation since World War II, overshadowed by the taint of her wartime collaboration with the Nazis. Luckily for her, sales of Chanel No 5 had also began to slow and the Wertheimers decided they needed some additional leverage to restore impetus. Towards the end of the decade they made a further deal with the designer, offering to pay all Chanel's personal expenses while she was alive, and to continue paying the 2% royalty to her remaining family after her death, in return for exclusive rights to her name for both fashion designs and fragrances. The Chanel couture label was resurrected and proved enormously successful among upscale ladies in the US. It was a particular favourite of the young wife of up-and-coming presidential hopeful John F Kennedy, and was widely adopted by Hollywood stars, the first fashion brand to achieve this level of fame. The perfume too regained its best-seller status, especially after an unpaid endorsement from Marilyn Monroe. Asked by a nosy newspaper interviewer what she wore in bed, the actress replied "Nothing but a few drops of Chanel No 5". Sales boomed in response. 

After the death of Pierre Wertheimer in 1963, however, the Chanel brand began to fade once more, ignored by Pierre's reclusive son Jacques. New designers such as Yves St Laurent had seized the mantle of French couture, and Chanel's stature began to dwindle. The great lady herself died in 1971, just as the brand reached its low-point, with the fashion label more or less defunct. Just three years later the brand was resurrected by Pierre Wertheimer's grandson, Alain. Aware that the fragrance products were being strangled by their slide downmarket into chain drugstores, he stopped distributing the fragrance to the mass-market, and launched a new high-priced cosmetics line. In 1978 designer Philippe Guibourge was hired to create the first mass-produced ready-to-wear Chanel line, and two years later Wertheimer took on American advertising executive Kitty D'Alessio, who had been working on the Chanel brand for years, to begin the search for a fulltime designer. She selected Karl Lagerfeld, a flamboyant and larger-than-life figure who had enjoyed considerable success with the Chloe fashion label. Lagerfeld was recruited in 1983 with strict instructions to rebuild the Chanel legend. This he has done with considerable success, producing a series of superb collections, each maintaining the Chanel tradition by revisiting the original designs unveiled by the grande dame during the 1920s and 1930s. See full profile for current activities


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