The fork between licensing and direct management
Perfumes, eyewear, watches. Who makes them, who profits, and what remains with the brand
Luxury brands may appear to produce everything themselves, but that’s not actually the case.
Perfumes are made by specialized companies, eyewear by another giant corporation, and watches by some in-house production while collaborating with other component companies. Even if the brand name is the same, the actual "ways of making" coexist in multiple models. Misreading this can make the strength of the brand and the reasons for its pricing somewhat ambiguous.
What makes this theme interesting is how simple the questions are.
Who makes it? Who profits? And what remains with the brand as a result?
When these three are lined up, licensing and direct management are not just different management styles but also reflect different philosophies about "what constitutes the core of the brand."
1 |First premise
Licensing was not "cutting corners" but was a standard feature of luxury.
When discussing how licensing has become significant in the fashion world, Pierre Cardin cannot be ignored.
Vogue explains that Cardin’s move into mass production licensing of ready-to-wear in 1959 shook the norms of haute couture at the time, and later, excessive licensing expansion came to symbolize "brand dilution."
This "Cardin issue" still has repercussions today.
In 2024, the EU imposed fines on Pierre Cardin and the German licensee Ahlers for anti-competitive agreements that hindered parallel imports within the EU. Reports indicate that the issues stemmed from license operations between 2008 and 2011.
In other words, licenses are a powerful means to expand a brand, but if mishandled—including distribution and pricing control—they can cause problems outside the brand.
What’s important here is that licenses themselves are not bad; they have long been a very rational way to expand luxury brands.
Developing highly specialized categories from scratch in-house takes time and capital. Therefore, entrusting experts in that category is the basic approach.
2 |Perfumes
The area where licenses have "worked best"
Perfumes are the category where the license model has grown most naturally.
The reason is simple: developing fragrances, bottling, regulatory compliance, global distribution, and the cosmetics retail network are entirely different industries from clothing and bags. When Burberry ended its license with Interparfums in 2012 and in-house developed perfumes and beauty products to aim for "greater profits" and "stronger brand control," Reuters described it as a "big gamble."
Burberry’s decision is quite interesting.
In 2012, owning production in-house seemed attractive for both "brand management" and "profitability." However, by 2017, Burberry shifted to granting a long-term global license for Burberry Beauty to Coty. Coty announced that it acquired exclusive long-term licenses for Burberry Beauty’s fragrances, makeup, and skincare.
This back-and-forth indicates that in perfumes, simply wanting to strengthen brand management does not necessarily mean in-house production is the best solution.
The perfume business heavily relies on expertise not only in creation but also in distribution, marketing, and retail. That’s why dedicated players like Coty and Interparfums remain strong for a long time. Looking at Interparfums' current portfolio, which includes fragrances for Jimmy Choo, Moncler, Montblanc, Coach, Lacoste, and others, it’s clear that license-based horizontal expansion is still effective.
Moreover, perfumes function easily as an "entry point" to the maison.
When Burberry partnered with Coty in 2017, it was also emphasized that beauty plays a role in guiding new customers to the brand. In other words, in the perfume business, "who makes it" is as important as "who brings people to the brand."
3 |Eyewear
The area where the "will to directly manage" is most evident now
Eyewear has long been a license-based kingdom alongside perfumes.
According to EssilorLuxottica's 2023 registration documents, licenses are held for a wide range of luxury brands including Armani, Burberry, Chanel, Dolce & Gabbana, Ferrari, Jimmy Choo, Moncler, Prada, and more.
Looking at this situation alone, eyewear is a typical category where "brands lend their names, and specialized companies produce and distribute."
However, clear changes have occurred in this field over the past ten years.
Kering launched Kering Eyewear in 2014 with the vision of creating the first luxury-only company in the luxury eyewear industry. Both the official Kering site and Kering Eyewear's official site clearly state that it was founded in 2014 with the intention of cultivating in-house expertise.
What is interesting here is that Kering Eyewear did not remain merely a "manufacturing division for its own brands."
In 2017, they began partnerships with Richemont brands, acquired LINDBERG in 2021, and in 2022, they acquired Maui Jim, further strengthening their industrial base with Visard and Mistral by 2025.
In other words, Kering shifted from "eyewear is outsourced" to "collecting profits and know-how within the brand group."
This movement indicates that eyewear brands wanted to increase what "remains" with the brand.
In licensing, what remains with the brand are royalties and exposure.
On the other hand, when moving toward direct or semi-direct management, what remains are product development insights, distribution control, customer data, and profits.
However, not everything is heading toward full in-house management.
It was reported that Kering Eyewear will handle Valentino's eyewear starting in 2025. While this is similar to a licensing model for Valentino, the fact that the partner is a "luxury-specialized company" makes it slightly different from traditional models.
In other words, current eyewear is not just a choice between outsourcing or in-house production, but rather depends on "which specialized company close to whom holds the control."
4 Watches
The area where "depth of vertical integration" is more important than licensing
Watches have a slightly different character from perfumes and eyewear.
Here, more than just borrowing or lending brand names, the value is directly connected to "how much of the movement, case, and assembly they manage themselves." In other words, the depth of vertical integration is more important than whether it is licensed or not.
LVMH advocates for vertical integration, from raw material procurement to manufacturing and selective distribution, as its own model. This point is quite clear in LVMH's mission and model explanations.
Watches and jewelry are well suited to this concept because high-end watches' credibility is directly linked to the "technology inside."
Recent movements include LVMH's watch division investing in La Joux-Perret in 2025 and strengthening development infrastructure related to TAG Heuer and Tiffany watches, as reported by Reuters.
This reflects the idea that, in watches, "having only the name" is less strong in the long term than "approaching the source of technology."
Conversely, Kering's decision to sell Girard-Perregaux and Ulysse Nardin in 2022 also suggests this. The company's documents state that the sales have been completed.
In other words, watches are not a category that becomes stronger just by owning them. Rather, only groups that can sustain long-term investments in technology, factories, parts, and development benefit from the advantages of direct management. This is much more critical than in perfumes or eyewear.
Who profits
The most practical difference between licensing and direct management
To sum up roughly, the difference between licensing and direct management is the profit share.
More precisely, it’s a matter of the difference between "profit share" and "learning accumulation."
In licensing, the brand can easily collect royalties.
The weight of inventory, equipment investments, and manufacturing know-how is taken on by the partner. In exchange, detailed product planning, distribution, customer data, and category-specific insights for improvement are less likely to remain with the brand. When Burberry aimed for in-house production in 2012, the goal was "greater profits" and "stronger control," which directly relates to this point.
In direct management, the profits and risks are borne by the brand.
In return, it becomes easier to accumulate information that influences the next products—changes in bestsellers, regional differences, material reactions, customer return patterns. Kering Eyewear's rapid growth as a "business itself" can also be seen as having retained this accumulation within the group.
What remains in the brand
What might remain at the end is perhaps "leadership" rather than profits.
So ultimately, what remains on the brand's side?
For perfumes, how much can the entry point to the brand be designed by oneself?
For eyewear, how much can the category close to the face of a fashion brand be managed with one's own logic?
For watches, how much can the authenticity of craftsmanship and technology be maintained without relying on external sources?
The strength of licensing is that it can be expanded quickly.
The strength of direct management is that learning and control remain.
Recently, looking at luxury brands, it seems they are not just shifting everything to direct management but are instead changing their approach category by category—"entry point is licensing," "categories that become the face are semi-direct," and "core technology is vertically integrated."
This is the turning point.
Brands no longer simply choose between licensing or direct management.
Which categories are used to expand the name, which are the core of profits, and which form the foundation of trust. These distinctions are made.
A dash of MOOD
What makes MOOD interesting is that even within the same brand, different expressions appear—"entry brand" for perfumes, "face brand" for eyewear, and "technology brand" for watches.
Even if the ideas of the designer and the maison are unified, you can see the true intentions of the brand based on what category they want to keep.
The interesting part of reading luxury is that it doesn't end with just clothing. When you look at how the name is used, you can gradually see what the brand aims to protect, what it entrusts to the outside, and what it wants to keep inside.
