lotte Tilbury, Rabanne, Carolina Herrera and Byredo; Estée Lauder contributes heritage powerhouses including MAC, Clinique, La Mer and Tom Ford Beauty. A giant under pressure  For much of the past decade, Estée Lauder rode the wave of premium skincare demand, powered in large part by Chinese consumers. That model is now under strain. A crackdown on grey-market “daigou” resellers since 2022 disrupted a key distribution channel, while intensifying competition from domestic Chinese brands and shifting consumer preferences have eroded its once-dominant position. The company reported an 8 per cent organic sales decline in fiscal 2025, alongside margin compression and a sharp erosion in market value. More fundamentally, the business is overexposed to categories and regions that are no longer delivering the same returns.  If Estée Lauder represents legacy strength under pressure, Puig offers a glimpse of where the industry is heading. The Barcelona-based group, which went public in 2024 but remains family-controlled, has built its business around fragrance, arguably the most resilient and fastest-growing segment of prestige beauty. Roughly three-quarters of its revenue comes from scent, supported by a portfolio that blends designer licensing with niche credibility. Its brand mix is hybrid. The global recognition of Carolina Herrera and Rabanne sits alongside the cult appeal of Byredo, while Charlotte Tilbury adds a high-margin makeup business with strong digital traction. Last year, Puig reported 5 billion euros in sales, up 7.8 per cent on a like-for-like basis, with operating margins of 16 per cent, double those of some competitors. Its growth has been broad-based, with fragrance leading the charge and makeup, particularly via Charlotte Tilbury, providing additional momentum. From skincare to scent The logic of the merger becomes clearer when viewed through the lens of a broader industry shift, though that shift may already be entering a more complex phase. For years, skincare has dominated global beauty growth, driven by innovation, high margins, and strong demand from Asian consumers. That era is fading. Growth in skincare has slowed, particularly in China, where economic uncertainty and changing consumption patterns are weighing on demand. In its place, fragrance is emerging as the industry’s new engine. Globally, fragrance grew roughly twice as fast as total beauty last year. Crucially, it is also proving more resilient in uncertain economic conditions, benefiting from the so-called “lipstick effect”, the tendency for consumers to indulge in smaller luxuries during downturns. Consumers are increasingly seeking products that resonate emotionally and allow personal expression. Fragrance, with its intimate and invisible nature, fits that demand more naturally than functional skincare. The rise of niche and artisanal brands has reinforced this trend. Labels such as Byredo have shown that scale is no longer the only path to relevance. Authenticity, creativity and a strong point of view can command both pricing power and loyalty. The merger also needs to be understood in the context of intensifying competition. L’Oréal, the world’s largest beauty company, has been steadily consolidating its lead, particularly in fragrance. Its recent US$4.7 billion acquisition of Kering Beauté, including the high-end scent house Creed, has further strengthened its position in luxury. Other players are moving in a similar direction, whether through acquisitions, licensing deals or in-house brand development. For Estée Lauder, the merger could represent a chance to reset and rebalance its portfolio and regain relevance. Further reading: From trophy acquisitions to troubled assets: Inside Estée Lauder’s brand sell-off.