Dolce & Gabbana’s €4 billion bet on Made in Italy beauty

This article is part of our Vogue Business membership package. To enjoy unlimited access to our weekly Beauty Edit newsletter, which contains Member-only reporting and analysis, the Beauty Trend Tracker and Leadership Advice, sign up for Vogue Business membership here. Just over two years after it was brought in-house, Dolce & Gabbana Beauty has cracked €1.5 billion in sales and just rolled out its new makeup line. What used to be a modest line-up of lipsticks and powder is now a complete suite of foundations, liquid lipsticks, a plumping oil, blush, mascara and a flashy eyeshadow palette with a DG-shaped case that CEO Gianluca Toniolo proudly notes was designed with Gen Z and Gen Alpha — those currently under age 14 — in mind. He’s also particularly proud of the beauty line’s origins: every product is made entirely in Italy, outside of Milan, from concept to launch — rare for a beauty brand. For Toniolo, it’s not just about the quality of ingredients (though he says that’s there); making everything in Italy, where the brand is headquartered and employs 130 staff, gives it an agility that a brand owned by a big conglomerate can’t easily replicate. “We have developed a makeup line that combines the point of differences of the indie brand together with the strong assets belonging to a luxury brand,” Toniolo says. He’s speaking from New York’s Spring Studios, where D&G Beauty held a multipart celebration last week to mark the launch of its cosmetics collection — very much in the style of a luxury brand. In the afternoon, it hosted a three-hour, 50-guest influencer masterclass, with table settings complete with D&G earrings and homeware alongside the makeup products. In the evening, the brand threw a cocktail party in partnership with Saks, its exclusive retail partner, to fête the launch. Dolce & Gabbana’s makeup debut comes as the luxury beauty industry reaches new heights: Prada relaunched its beauty business last August in partnership with L’Oréal, which also licences YSL Beauty and Valentino’s cosmetics line. Recent entrants Hermès and Gucci are up against long-time players like Chanel (which also produces its beauty products in-house), Dior and Armani. It’s a competitive space, and in-house cosmetics operations are expensive and complex for non-endemic brands to navigate. Product development teams need to be built at scale, alongside new manufacturing and distribution systems. Other brands have failed to make it work in the past: Burberry brought its makeup and fragrance in-house in 2013, but the profit margins weren’t enough to offset steep marketing and distribution costs, and the brand entered a strategic partnership with Coty in 2017. D&G Beauty’s ambitions are big: it believes it can be a €4 billion business in the next four years. This year’s makeup launch is just the start, with 80 SKUs; 180 are planned for the end of the year and 365 by the end of 2025. Right now, cosmetics account for just 5 per cent of sales, with fragrance making up the rest. Toniolo wants that to rise to 30 per cent. Also planned for 2025 is a skincare launch. It’s been a short, fast journey to get here, enabled by the wider company’s decision to acquire the beauty licence back from Japanese beauty conglomerate Shiseido at the end of 2021, after five years. While it’s risky and expensive, the pay-off to owning beauty full stop is better profit margins and more control over the product and direction, plus a clearer connection to customers. “We want to create something big for our beauty category — not only playing in fragrances, but playing in makeup and, in the near future, entering the skincare world. This was not a given 24 months ago,” says Toniolo. A new playbook D&G Beauty can now enjoy a clear point of difference, Toniolo says — not least the involvement of Stefano Gabbana, Domenico Dolce and CEO Alfonso Dolce who, together with Toniolo, have directed the development of the beauty brand, considering everything from distribution to product design. Take the liquid lipsticks, topped with the house’s recognisable heart motif — a Gabbana idea. There are other advantages. The wider Dolce & Gabbana business might be headquartered in Milan, but has five subsidiary offices in Miami, Dubai, Singapore, Paris and Madrid through a joint venture, totalling 300 employees worldwide. Licencing agreements cut off that point of contact. “Having these subsidiaries means knowing your customer — and this is exactly what has changed,” Toniolo says. And the brand can use the D&G Beauty Instagram and TikTok accounts to understand trends, consumer interests and more. Gen Z and Gen Alpha, in particular, are a target for the beauty line. Toniolo says that resonating with this consumer was a goal from the start, “to go to market with products that would be well understood by the younger generation”. The average age of the team is 34-35, he adds, noting that this helps to keep the company in a younger mindset. In-house and Made in Italy also means that the brand can move faster. After he joined in 2021, Toniolo says the first products landed on shelves in January 2023, meaning the company was up and running in under two years. “We are a standalone group, a standalone brand, and we take a very fast and light approach to strategy decisions. We’re able to be faster than our competitors,” he says. The last piece of the puzzle was where to sell the new collection outside of Dolce & Gabbana’s site and stores. The beauty brand landed on Saks as a low-risk route to customers, as well as a gateway to everything else carried by the brand in the department store. This is where being a luxury brand, and not an indie upstart, has its benefits. Toniolo says the Saks partnership comes after 10 years of the Dolce & Gabbana brand pulling back from US department store distribution. Now, with direct ownership and more control, it’s time to return, he says. “The licensing model has a completely different goal compared to now when we manage the category. The licence partner normally tries to squeeze the brand to be more commercial. But where else than the department store can you express the DNA of your brand? Now we can say, ‘We are back with the right experience for our customers.’” Comments, questions or feedback? Email us at feedback@voguebusiness.com.

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