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Gucci and P&G Beauty join forces for fragrance alliance

The agreements sees end of the legal dispute between German-based Wella, now owned by Procter and Gamble, and Gucci over a previous agreement that lasted 25 years, expired in 2003 but is said to have been silently renewed.

The acquisition of Wella by P&G in 2003 is reported to have prompted PPR (Pinault-Printemps-Redoute), the owner of Gucci, to try to regain the rights to the Gucci name, whose fragrances generate wholesale revenues of approximately 180m a year.

A PPR source quoted by French daily newspaper Le Figaro said that PPR tried everything to get its perfumes back but the contract with Wella was very strong and difficult to break.

The legal wrangling has now come to an end with the announcement that a new agreement between Gucci and P&G Beauty, the second largest player in the perfume market behind L'Oreal. A joint statement from the two companies said: "The existing agreement between Gucci and Wella/Cosmopolitan Cosmetics (acquired by Procter and Gamble in 2003) is therefore considered expired."

No financial details of the agreement have been released but Mark Lee, president and CEA of Gucci said: "The new licence with Procter and Gamble is an opportunity to develop the great untapped potential of the fragrance sector fro Gucci. We enthusiastically begin what we expect will be a long term successful relationship in this category."

Hartwig Langer, president of P&G Prestige Products said that the licence was perfectly in line with P&G's corporate strategy to develop faster-growing, higher margin, more asset efficient businesses.

"This is going to be a long term relationship," said Langer. "We are eager to learn from the distinct brand positioning and strong heritage of Gucci, creating together new fragrances which fulfil the dreams and desires of men and women all over the world."

P&G Beauty products already include the likes of Max Factor, Hugo Boss, Head and Shoulders, Lacoste, Dolce and Gabbana, and Cover Girl, and reported sales of over $19bn (14.9bn) globally for 2004/05.