Marc Puig Guasch, third-generation principal of the global $1.8 billion Spanish family-owned fashion and fragrance business Puig, hails his father as a “titan with a human touch” who led by listening and brought out the best in people.
The chief executive and president of Puig went on to tell CampdenFB why the family is determined to retain control and grow the enterprise but discourage its fourth generation from management.
Puig was founded by Marc’s grandfather Antonio Puig in 1914 and expanded globally by his father and former president, Mariano Puig Planas.
The Puig family business announced the passing of Mariano Puig Planas in April 2021. The 93-year-old is survived by wife María Guasch, four sons and one daughter.
Born in Barcelona in 1927, the chemical engineering and IESE Business School graduate forged enduring business relations with the United States, the Caribbean and France. He sealed collaboration, distribution and representation deals with Max Factor, Paco Rabanne and Agua Lavanda Puig among other brands.
He spearheaded both Puig’s international expansionism and the family business community as a founding member of the Family Business Institute in Spain. He served as president in 1995-97.
In 2020, Puig recorded sales of €1.5 billion ($1.8 billion) from selling products in 150 countries and operating 26 subsidiaries. The company restructured its portfolio into three divisions—Beauty and Fashion, new majority acquisition Charlotte Tilbury and Derma—from January this year. Puig declared its ambition to reach €3 billion ($3.5 billion) in sales in 2023.
CampdenFB asked Marc Puig how his father has shaped his own approach to family business, how he plans to double growth and about his attitudes to engaging the next generation, technological disruption and sustainability.
What is the legacy of Mariano Puig Planas?
My father was a titan. He really was a pillar of what Puig has become. Even if he left the day-to-day management and the governing bodies, because my father together with his brothers decided to put end dates on their involvement in the company.
My father left the Puig business in 1998, he left some of the responsibilities of governing bodies in 2003 then by 2008, he was just a shareholder attending shareholder meetings. It’s been 18 years since he was involved in the business. Nevertheless, he made his stamp, without interfering with the business. He used to talk to people, he used to listen, and he had this human touch which permeated everywhere in the organisation. He led by asking questions, that’s something that I think he left in his legacy.
I would also say his drive. I can tell you an anecdote he used to tell me, one of many in our Puig, 100 Years of a Family Business anniversary book. When Spain was still under Franco’s regime and the country had blocked borders, there was a brand that was famous at that time in the 1950s, Max Factor. The brand used to arrive in Spain through Africa, probably from smuggling.
He wrote to the Max Factor people in Los Angeles saying: “I really like your brand. Your brand is being sold in Spain, but illegally somehow. I would like to manage your brand. I’m going to take a flight to Los Angeles and would like to meet you.”
They sent him back a telex saying: “Mr Puig, thank you for thinking about us, but we are happy with the situation and we don’t want to change.”
He let them realise he had not received the telex and wrote again: “I’m on my way to New York then I will come to see you in LA.”
They wrote to him at his New York Hotel: “No, Mr Puig, we are fine. No thank you.”
Next telex: “I’m on my way to LA, I will be landing at this time and hope to meet you.”
Finally, he arrived there with my mother. They saw this young elegant couple who were simpatico, and they finally gave them the licence. Flying to LA from Spain at that time was impressive. When he wanted something, he would just go for it and it’s a typical example of my father in that case.
What are the guiding principles and values in family business that you learned from him and apply in your work?
He really led the business through his teams and he used to lead by questioning. He would listen more than talk. He always said, whoever asks the questions, gets to lead, and that’s something he was very good at. By the way people responded to him or by the things that people didn’t tell him, he found out more about those people that they even thought about.
There’s a sense of fairness in the way he dealt with people that’s also a part of our company. We don't lead by fear within, we try to help people do the best, to places they don’t think they can go by giving them ambition and pride in what they can accomplish. It’s a culture of reward, not fear that I see other companies have.
How has the family and family business coped with his passing?
He had long been away from the day-to-day management and had many other activities besides, like colleges and museums, so there’s less impact from the business point of view.
From a personal point of view, it was a big impact for the family, although he was not a young man anymore.
He always said to us: “I know I have the Sword of Damocles hanging over me, but I am so happy. I enjoy myself so much that as long as my body allows me, I’m going to keep travelling and doing things.”
He did that until the last minute. Except for the last six or nine months, he was in good shape and high spirits with a very clear and sharp mind, with an ability to really dig into what was important rather than superficial. It was tough for my family, particularly for my mother.
Have there been approaches from outside parties, such as private equity firms, to acquire a stake in Puig? What would be your reaction to such approaches?
No, we haven’t, and I guess because we have been open about the fact that we wanted to continue this project on our own. We have made some moves in the last few years that prove the company is healthy, is a cash generator and can grow inorganically when it is necessary. From a business point of view, we don’t see the need to change our structure.
The question would be when we think about what’s best for the next generation, but in my generation there’s no need to consider different approaches.
What advice would you give to family businesses which operate with both family and non-family governance?
We say a family functions with love as the main driver. Our family companies require hierarchy and meritocracy. Sometimes when two systems combine, there are clashes. What we have done to solve, or help solve, this dilemma is basically what we call self-disempowerment. For instance, in the operating boards we have more non-family members than family members. In the compensating and nominating committees, we have all non-family members who make recommendations for the boards to decide. We make those decisions objective so that leadership is not a subjective matter.
Non-family members in certain governing bodies can be very helpful, particularly in issues that have to do with leadership and hierarchy in family roles.
As businesses grow, the chances that you have the best leadership within a family are lowered, so non-family members at the board level and in certain governing bodies can help you assess whether you are well-equipped or not and can also help you have high calibre people in certain roles where decisions are very critical.
Where does the Puig family fit in the governance of the business?
We have the family level because we have a holding company above operating companies. In that holding company we have branch representation and then non-family advisory board. We have the family Puig Foundation and the family council.
Below the holding company, we have operating boards and in these boards there are always more non-family members than family members, by definition. The decisions to buy and sell, leverage at a certain amount or beyond a certain amount are made at the holding company but otherwise the operating companies are very autonomous.
Is the fourth generation being prepared to join the family business?
We have told the fourth generation that they will not work in the company. They will eventually participate in governing bodies, but they will not be part of the management team, unless they go through several difficult filters; that the board, the holding company, the family council and shareholders approve. We’ve made it very difficult because we went through a period in my generation when the processing of choosing the leadership went through choppy waters. We felt that when a company reaches a certain size it is healthier to think of family members participating in the governing bodies than in the management teams.
How did you come to join the family business?
Although I worked for a while for another company, I had no doubt my family wanted me to work at our company and that’s how they raised me. I prepared myself to do that. Now we have told the next generation, for some time now, they must find their own path. We tell them be happy with whatever you do, just make sure you learn the minimum about business, so you can read an annual report and in case you want the possibility of joining some of the governing bodies. It’s a different scenario.
What have been your toughest decisions as a family business during the Covid-19 pandemic?
When we started the Covid period, we had excess cash and a healthy balance sheet. Then Covid came and it did have a significant impact on our industry. We knew during 2020 we would be losing money for the first time in many years and it would take time to recover from the pandemic.
Despite that, we made the largest acquisition in our history. In June 2020, we realised the acquisition of Charlotte Tilbury, which is a British company, and we had to go from excess cash to a high in-debt position. We felt it was a very good opportunity to really position ourselves for the future, but we didn’t know whether it was a future in a year or three years or five years, or whether we’d be able to survive well that period.
Questions came from the family: “Why do we have to do this now? We have a healthy balance sheet, why do we take debt now? How is this going to affect our own business?” There were a lot of uncertainties and no one had the answers, but we decided to make the acquisition, so that was a tough decision, along with many others.
What made you want to complete the acquisition despite the uncertainties?
Because we had a solid business prior to Covid, but it was not exposed to the big growing waves in our industry, which are digital transformation and the China revolution. By this acquisition as well as another we did in December 2020, we are now well exposed to these trends. To project growth, you have to make it happen and compared to our 2020, our plan is to double in three years and triple in five. It’s only six months of sales from Charlotte Tilbury but we have the right portfolio to benefit from these growth waves.
What do you look for when making acquisitions?
If we buy, and we done this on many occasions, a minority or majority stake in a company that includes the founders, which is often the case, we would want to make sure we have similar values as the founders.
We have bought majority stakes in companies in the past, like Carolina Herrera, Dries Van Noten, Jean Paul Gaultier, Paco Rabanne and now Charlotte Tilbury. Eventually we’ll but 100% but in order to do that, we have to feel comfortable that we will be able to overcome the challenges that in business you will always have with a founder. You must have similar ways of thinking and values.
We also ask, is there the capacity to create value to justify the price paid?
What are Puig’s strategies to navigate and benefit from technological disruption?
We created Puig Future, which is a platform where we look for technology and advances and we have identified certain opportunities from that. Now we have fragrance profiling, which is the ability to help people identify their fragrance liking through the internet, which is very interesting and one of the most sophisticated in the industry.
Through the acquisition of Charlotte Tilbury, we have one of the most sophisticated make-up websites in the industry and sales penetration in digital is very high. That’s a way for us to learn more about applying technology in our industry.
The penetration online is very different for makeup and skincare because they are visual categories compared to fragrance. Anything that engages your human senses of eyes and ears goes very well through the web, but not so much products of scents and tastes.
How do you incorporate sustainability into your everyday business practices and longer-term strategy?
At our centennial anniversary in 2014, we made the commitment to be a greener company, so we had ambitious plans which ended in 2020. We made all our commitments, like zero-waste landfill, all our factories use green energy and our office was awarded the Gold LEED energy-efficiency certification.
But in the last year, we have had a mandate from the family to say that in whatever business or industry we participate, we want to be among the most respected in terms of ESG and at the forefront. We say we build highly desirable, unique fashion and beauty brands in a family company that aims to leave a better world for the next generation.
There is a commitment because since we told our kids they will not work in the company, if we want them to be engaged, excited and proud of the company they will be shareholders of, eventually, we know we have to be very empathetic with the needs of the new generation. Our kids are clearly even more keen to make sure that as a company we do the best we can.
We have a new moving target, to be among the most respected, and that is what we’re going to do. What that means is what the board must translate and that why we designed our 2030 ESG plan, which is very ambitious and will be soon online.