Europe is home to some of the world’s most iconic companies. Many started small to quell a single person’s curiosity before exploding into a global phenomenon. As a new resident, big, successful European brands have piqued my interest. What’s their story? How did they transform into the giants they are today? How have they sustained their legacy over time? Those are some of the questions I explore in this new series.
EssilorLuxottica is a colossus shaping the vision of billions around the world. Yet its veritable presence hides in plain sight, underscoring that there’s so much more to it than meets the eye.
Its labels are everywhere—from Ray-Ban Aviators and Oakley’s sporty sunglasses to progressive lenses that improve vision at different distances.
But it’s tricky to pigeonhole EssilorLuxottica into being a master of just one or a few things. It makes functional eyeglasses for daily wear, backs scientists addressing the biggest challenges hampering vision, and sells high-end branded eyewear—all at once.
The Franco-Italian company has built up its business—and, therefore, clout—to touch every part of eyewear, of which it controls 25% of the market, according to Euromonitor International. The company didn’t hit this scale of influence by accident, but built it over more than a century with an elaborate tapestry of deals.
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EssilorLuxottica’s rank on the Fortune 500 Europe
EssilorLuxottica’s methods have proved immensely successful: It reported €26.5 billion in revenue last year and has a market capitalization of €112 billion ($128 billion). It’s also a member of the CAC 40, the stock index that tracks the largest Paris-listed companies, including LVMH and Michelin. The company’s roots go back to 1849, when Essilor was founded as a cooperative association for eyewear craftsmen in Paris. Essilor became associated with scientific know-how, pioneering breakthroughs like the Varilux lenses designed for presbyopia, a condition affecting the vision of objects up close, affecting nearly 80% of those over the age of 55.
Luxottica, meanwhile, was founded in 1961 by Leonardo Del Vecchio, the brains behind the company’s ascent.
He set up a humble workshop in Agordo, Italy, to make components for the optical industry. But Del Vecchio’s ambitions soon outstripped the confines of Italy or Europe. He tapped every opportunity to expand into the eyewear industry’s value chain, which could grow Luxottica into an international giant.
Luxottica was listed on the New York Stock Exchange in 1990 (and in Milan in 2000), a rare step at the time for a niche Italian company. Luxottica’s ambition was such that when it was eyeing retail chain LensCrafters for purchase, its Ohio-based owner, U.S. Shoe, was five times as large as the Italian company. Still, Luxottica bought U.S. Shoe in 1995, only to sell off all but the one component of its business that would grow Luxottica’s retail presence in America, thus making it the first manufacturer to enter the optical retail realm.
Ultimately, Del Vecchio’s business chops and Essilor’s technical foundation would make for a powerhouse with unparalleled authority.
Both companies, Essilor and Luxottica, “are well rooted in their historical way of working … We are working always in somehow disrupting the business per se, [such as] introducing medical innovation, changing the world, and creating iconic products and iconic solutions,” Federico Buffa, EssilorLuxottica’s chief product and marketing officer, told Fortune. He covers the gamut of the company’s product pipeline as well as eyewear design and research.
When the companies were considering merging in the mid-2010s, Essilor and Luxottica had become the world’s largest suppliers of prescription lenses and eyewear, respectively. The two also had near-equal and vast market shares of 13% and 14%, respectively, in the eyewear space—a far cry from other challengers.
Typically, a deal of such scale could have set off alarm bells in Europe’s highly regulated environment. However, a European Union investigation triggered after the deal was announced in 2017 revealed that the two companies complemented each other by working concurrently rather than competitively with opticians. It said the two companies overlapped in whom they serviced, but did different things and therefore had different rivals. U.S. authorities arrived at the same conclusion, enabling the merger to be completed in October 2018.
Today, the Franco-Italian company operates in the complex convergence of eye care, fashion eyewear, and medical technology. It invests as much as €350 million in R&D annually and is chasing deals that will make its products even more critical to how people experience the world.
Its recent tech offering, the Ray-Ban Meta AI glasses, has sold over 2 million units since its debut in October 2023 in partnership with Mark Zuckerberg’s social media giant, opening up a new market that few have succeeded in: smart eye accessories. The cutting-edge side of EssilorLuxottica’s eyewear is in striking contrast to the ho-hum, predictable market for eyeglasses that help with everyday vision. That means getting every element of the basics right while changing the industry it leads.
With a company as diversified and category-defining as EssilorLuxottica, finding successful growth engines is a constant quest. But there’s no company better positioned for it.
“We are in the visual world, and indeed … we are able to look into many [different] directions,” Buffa said.
3 things that helped EssilorLuxottica conquer the world:
1. Building business prowess through vertical integration
EssilorLuxottica secured its omnipresence in the world today by masterfully capturing every segment of the eyewear value chain, a strategy for which Del Vecchio was the chief architect.
The self-made entrepreneur traced a stunning rags-to-riches story: He was raised in an orphanage in Milan and started working at age 14 as an apprentice to a metal engraver. When he began building his business making frames, Del Vecchio became a fierce leader who would start work at 3 a.m.
His shrewd vision made Luxottica incrementally bigger with each business it eyed.
In business-speak, the company learned to master vertical integration—not just for its own suite of products, as luxury brands like Louis Vuitton or sports retailer Decathlon did, but for the entire eyewear and eye care industry.
“If I had to sum up how successful the business model is, really, 90% comes from vertical integration. I think it’s the ultimate competitive advantage in this industry,” said Cédric Rossi, the vice president of equity research in luxury and consumer goods at investment firm Stifel Europe.
Being vertically integrated fueled a virtuous cycle that made Luxottica’s business boom. For instance, it began inking long-term eyewear licensing deals with Giorgio Armani, Prada, and others, and when it eventually took over the largest optical banners, such as Sunglass Hut and GrandVision, it sold these fashion sunglasses there.
“In most cases, the structure of those deals is a trademark license where EssilorLuxottica is paying a royalty, which is a percentage of sales. While that royalty can eat into the overall profit, the high margins a luxury brand’s trademark can achieve easily dwarf those royalty payments,” Douglas Hand, a fashion industry lawyer, wrote in an email.
The mystery behind markups on eyeglasses has long chased the industry, with some experts speculating they can soar as high as 1,000%. Houlihan Lokey, a Los Angeles–based investment bank, estimated that gross margins on prescription eyewear are upwards of 65%, nearing the 70%-plus often boasted by luxury goods brands.
To be sure, while high markups are common in industries like luxury, where goods are made by craftspeople in limited quantities or use high-end materials like leather, the same qualities aren’t typically apparent in eyewear.
Parts of basic eyewear are mass-produced in factories using plastic for frames and a blend of glass or plastic with chemicals poured into molds to make lenses. Remarkably, eyewear companies have still been able to justify markups as necessary to bring in vast profits, essential as consumers “purchase these products infrequently,” Euromonitor International’s eyewear analyst Natasha Cazin pointed out.
By extending its retail control, Luxottica became virtually inescapable for customers seeking eyewear. The stores put the company at the intersection of demand and supply by connecting people to optometrists, who guide them through the process of choosing their eyeglasses.
“It’s very interesting to have this combination of engineers, brand-building capability, [and] people coming from retailing activity. So all in all, you’ve got a perfect blend … which is definitely helping the company to outperform the eyewear industry,” Rossi said.
Another example of how vertical integration helped the company was in rejiggering Ray-Ban’s appeal.
The storied brand had successfully shielded pilots’ vision from the sun since the 1930s. It also made its mark in pop culture after being sported by Audrey Hepburn in Breakfast at Tiffany’s and Tom Cruise in Top Gun.
But in 1999, when Luxottica bought its parent, Bausch & Lomb, Ray-Ban was in steady decline. Still, the Italian company recognized its potential and added its magic touch (and some extra dollars to the Ray-Ban price tag).
Luxottica did a few things to change Ray-Ban inside out: It reorganized Ray-Ban’s production by using Luxottica’s state-of-the-art manufacturing capability in Italy to improve quality. It also moved Ray-Ban sales from lowbrow locations to the top retail stores where the company sold other premium frames, and began offering prescription and personalized versions of the iconic sunglasses.
Today, Ray-Ban is EssilorLuxottica’s crown jewel and the vessel for some of its breakthrough wearable innovations. It’s also the largest brand in EssilorLuxottica’s portfolio, accounting for approximately 12% of the group’s 2024 sales.
The compound benefit of vertical integration for EssilorLuxottica was ultimately that it acted as a shield from potential new entrants in the eyewear market, ensuring that no one would heavily disrupt the industry, simply because they lacked the scale EssilorLuxottica has.
“In general, by dominating the market and being vertically integrated, life is good for EssilorLuxottica,” said Hand.
2. Fine-tuning the research muscle
At the center of EssilorLuxottica’s existence is its research focus, which has yielded over 15,000 patents. The company works with a network of researchers, engineers, and designers who help address vision impairments, develop wearable eye accessories, and more.
Take Oakley’s Prizm lenses. The sports-tailored glasses help accentuate details of what the wearer sees by enhancing contrast through their tinted lenses.
“The growth plan of the company is not only by acquisition, [but] mainly by internal research [and] development,” said Buffa, EssilorLuxottica’s product chief.
The Paris-headquartered company works with research centers worldwide and funds the education of future optometrists who serve as the bridge between eyeglass makers and shoppers. The company’s R&D network includes thousands of researchers who develop over 3,500 new eyewear models a year and bolster the company’s future-minded scientific footing.
One of EssilorLuxottica’s main fields of study is myopia, or nearsightedness, which it sees as one of the “biggest threats facing health care.” With more than half the world’s population projected to suffer from it by 2050, the company is focusing some of its resources on raising awareness about myopia, which often impacts people before they’re 20 years old.
The company developed the Essilor Stellest lenses, which can slow myopia progression by 67% on average, according to clinical trial results. Now that the lenses have proved successful, selling them will be simple enough, as EssilorLuxottica has a constellation of experts and stores that can prescribe and sell them.
Euromonitor International’s Cazin noted that the demand for myopia management spectacles and contact lenses has risen at a compound annual growth rate (CAGR) of 31% and 13%, respectively, in the past five years.
“The growth plan of the company is not only by acquisition”
Federico Buffa, EssilorLuxottica’s product chief
Given the global scale of myopia, EssilorLuxottica’s OneSight Foundation has undertaken to eradicate uncorrected poor vision by 2050.
If the company isn’t already researching a condition through its capabilities, it has never shied away from striking deals to further cement its R&D. For instance, EssilorLuxottica bought a majority stake in the German imaging and IT company Heidelberg Engineering last year to improve diagnosis and patient care in matters of the eye.
Beyond the focus on ophthalmology, the company’s appetite for innovative undertakings has also recently pulled it into the wearables market.
“Growth is often based on technology, and for EssilorLuxottica, I think that’s true. They are continually innovating with lens development [by] making their medical product better and better,” Hand said.
In late 2024, EssilorLuxottica confirmed a long-term agreement with Meta to create “multigenerational smart eyewear.” Although other tech companies, including Google, have tried to crack the wearable eye tech market, it hasn’t clicked in the past for various reasons, including a clunky user interface and an awkward look.
(Pointing to his spectacles during the interview with Fortune, Buffa said: “Sticking a piece of technology here doesn’t mean eyewear that people can wear on a daily basis.”)
But EssilorLuxottica, the designer extraordinaire that it is, joined hands with Meta to give the wearables market a sprinkle of magic. Francesco Milleri, the eyewear giant’s CEO, even hailed the state-of-the-art Ray-Ban glasses as a technology that will replace most devices in the future.
He might be right—EssilorLuxottica is only scratching the surface as it’s also started dabbling in audio aids. The Nuance Audio hearing glasses carry the unmistakable stamp of a Ray-Ban sibling, but they also create a paradigm shift in how hearing devices look.
The company’s ability to fund hundreds of millions of euros worth of new research assures its future path to creative and innovative advancements, whether in style or in the science underlying the eyeglasses it makes.
Bulking up its research muscles gives EssilorLuxottica one clear advantage: It’s becoming a disrupter of the same market in which it’s also an incumbent.
3. Smart shopping
Merging Essilor and Luxottica had been “a lifelong dream” for Del Vecchio, according to the website of his namesake nonprofit foundation. It was the founder’s way of ensuring the company’s longevity after building it from the ground up, especially as he wasn’t passing on the CEO baton to any of his six children (Francesco Milleri was Del Vecchio’s protégé, but isn’t related to him).
Dealmaking savvy has been the greatest enabler of Essilor and Luxottica throughout their individual histories, as they have gone from strength to strength. That remains true today.
Buffa said the Paris-listed company’s acquisitions are generally guided by the “opportunity of that specific moment,” EssilorLuxottica’s long-term vision, and “seizing every opportunity that aligns with our ambition.”
EssilorLuxottica bought Nuance Hearing in 2023 to fight the stigma surrounding hearing aids and embed audio enhancement tools into eyeglasses. Buffa described the recently launched product as a “beautiful,” “pragmatic,” and “invisible” solution so the wearer doesn’t feel isolated.
In the past six months, the Paris-headquartered giant has bought ophthalmology group Optegra, AI audio startup Pulse Audition, noninvasive medical device company Espansione Group, and Canadian retinal imaging startup Cellview.
Now that the company has grossed $100 billion in market value (another of Del Vecchio’s goals), its long-term growth is predicated on maintaining its prominent market position.
“When you are by far the biggest player in the field, the challenge is not to gain market share versus your competitors—it’s to make sure that the market itself grows, because you have a bigger cake, and it’s better for you to operate in a larger space,” Stifel Europe’s Rossi said.
Somehow, EssilorLuxottica hasn’t struggled to grow the market yet.
In 2019, it announced a bid for GrandVision, which owned a network of over 7,000 stores globally. That prompted an EU investigation as it was one of the companies to which EssilorLuxottica sold its products. However, the Franco-Italian company argued that buying GrandVision would “allow the company to deliver a superior eyecare and eyewear experience to more people globally.”
(While pressing for the acquisition, EssilorLuxottica sued GrandVision over how it managed its business during the peak of the COVID-19 pandemic, even after the eyewear giant had already made its intent to purchase clear.)
Regulators green-lit the €7 billion deal in 2021 on the condition that EssilorLuxottica sell its stores in Belgium, Italy, and Spain, where GrandVision’s retail presence could undermine competition.
In some ways, the company is like a chess grand master. It doesn’t blindly make moves but anticipates the following paradigm change that will shape the entire industry.
Last year, EssilorLuxottica bought Supreme, the streetwear brand, which confused many observers. Rossi characterized the deal as a bid for the millennial “phone book,” to get a better grasp on this demographic.
EssilorLuxottica floated the idea of acquisitions to grow its production capabilities in the U.S. if tariffs were to kick in, although CEO Milleri said he “won’t rush a decision.” For now, the company will increase prices in the American market to offset the levies. Indirect effects of levies could hurt the parts of its business that hinge on discretionary spending, such as sunglasses, but its bread-and-butter vision care business is a necessity for billions of people.
The Franco-Italian company’s deals are often strategic—even if, in some cases, the strategy is to protect itself from global volatility.
EssilorLuxottica: A sight for sore eyes
No matter how you look at EssilorLuxottica—as a market observer, curious reader, investor, or customer—the company’s current position feels unshakable.
The company’s shares have risen about 20% in the past year, and it has reported five years of sales growth, barring 2020, when the pandemic hit.
When Del Vecchio died in 2022 at the age of 87, he was Italy’s second-richest man, following the family behind the hazelnut-flavored chocolates Ferrero Rocher. He was worth $25.7 billion at the time. Today, his family has a 32.5% stake in the business through their holding company, Delfin.
“Today, EssilorLuxottica is also fighting with Netflix, [and] with those kinds of companies, because your war … is to take a few minutes or a few hours of a customer in a day”
Cédric Rossi, analyst at Stifel Europe
Experts have questioned whether EssilorLuxottica is a quasi-monopoly—not an outlandish claim given the company’s influence. But the world’s regulators certainly haven’t thought so, making it more of a smartly erected empire.
Rossi noted that, given the fragmented nature of the eyewear market and varied input costs in different markets, the company will always coexist with smaller, lower-priced players.
EssilorLuxottica won’t have a straightforward path ahead.
It will have to contend with the likes of Warby Parker, which went public in 2021 with price competitiveness relative to the rest of the market at the heart of its appeal. Others, like Germany’s Zeiss, which makes lenses for cameras and microscopes in addition to eyeglasses, and British chain Specsavers have growing businesses, too. But none of these players have as wide-ranging operations as EssilorLuxottica, nor are they as vertically integrated as their Franco-Italian counterpart.
It’s also diversified enough to be up to the challenges of the future.
“Today, EssilorLuxottica is also fighting with Netflix, [and] with those kinds of companies, because your war … is to take a few minutes or a few hours of a customer in a day,” Rossi said.
Some of EssilorLuxottica’s bestselling products will have to contend with other players in the future, too. For instance, Kering Eyewear, a division within the broader luxury conglomerate, partnered with Google in late May to make AI-powered glasses.
It doesn’t take 20/20 vision to recognize that EssilorLuxottica stays two steps ahead in a game its opponents are still learning to play. That’s perhaps why the French-Italian giant needn’t worry too much about losing relevance.
In a 2024 report, the company acknowledged that the need for optical products will continue to grow, especially as problems like an aging population and increased screen time show no signs of abating. Hearing loss is on a similar trajectory, and the company is already carving out this new niche with help from its retail channels.
“We are considering really every innovation that is related to the zone in which we can do something, directly or indirectly, to the [eye care] industry,” Buffa said.
Fortune wants to hear the stories of European companies with a global footprint that’s touching the lives of millions of consumers worldwide. Get in touch: prarthana.prakash@fortune.com
