It's also opening two new concept stores in London and Paris - all part of the company's plans to promote a very 21st century Chanel. We've been behind the scenes to discover the secrets of brand success.

The House of Chanel is probably one of the world's most famous and exclusive luxury brands.

The Chanel brand is about more than just perfume

The company was started in 1924 by Gabrielle "Coco" Chanel for the manufacture and distribution of her perfumes.

Seventy-seven years on the firm remains firmly under private family control.

Chanel No 5 was created in 1921 - the company claims a bottle is sold every 30 seconds somewhere in the world.

So how has the company managed to keep its fashion, perfume and jewellery brands at the top?

Competitors view Chanel as a magic brand - a superbrand which is sought after.

Antoine Colonna Merrill Lynch analyst

Unlike its competitors, Chanel does not license its products. This means it is able to restrict supply and keep a tight hold on merchandise through the production process right through to point of sale.

The exclusivity and quality of the brand is exploited through very targeted marketing, while remaining true to the company's roots and the spirit of Coco Chanel.

It's a fine balancing act between pushing the brand with a modern approach, and risking alienating the existing clientele.

No 5 is still Europe's best-seller

The company remains intensely private - it won't tell anyone how much money it makes.

The brand is worth, so far as you can measure such things, nearly �3bn.

In the UK the fine fragrance market is worth around �360m - Chanel has more than 10% of that market. The European market is worth around �8bn.

Chanel No 5 remains the best selling fine fragrance in Europe. Allure, which is just five years old, is third on the list.

It's not just the smell that's important. You have to come up with a name that can be used in every part of the world.

Jacques Polge Master perfumer

Chanel, unlike most of its rivals, creates its own fragrances. Jacques Polge, known as the Nose, is Chanel's third master perfumer.

He spends his working day testing fragrances on strips of filter paper.

Jacques says: "When creating a perfume like Coco Mademoiselle it's not just the smell that's important. You have to come up with a name that can be used in every part of the world, and the packaging and publicity is also crucial."

Perfumer Jacques Polge - known as The Nose

Chanel doesn't produce many fragrances. "The company strategy is not to go for novelty because if you make too many fragrances the new one simply replaces the previous one so you can't build a family of perfumes," says Jacques.

Although Chanel is not listed on the stock market, analysts like Antoine Colonna, luxury brands expert at Merrill Lynch in Paris, still keep a close eye on what the company is up to.

Antoine says: "Competitors view Chanel as a magic brand - a superbrand which is sought after."

He believes the company is well protected and its key objective is the long-term profitability of the group rather than short term revenues.

He reckons it's all about product scarcity - the company restricts supply to ensure the demand stays alive.

Key ingredients

It has maintained growth without any compromise on licensing, franchise agreements or wholesale accounts.

So what the are the key ingredients you need to create a good brand?

Chanel's UK managing director, Olivier Nicolay, says: "You need to have quality and creativity and you need to invest in the asset of the company, which in Chanel's case is the image."

Analyst Antoine Colonna: It's all about product scarcity

He believes you also need to have a special something, which for them is Mademoiselle Chanel's spirit.

Antoine Colonna thinks a successful brand needs three key ingredients.

"The first would be the magic of the brand - which Chanel, Armani, Louis Vuitton, Hermes all have," he says.

"Secondly, you need a lot of cash, because the luxury brands business is very capital intensive. You need lots of money to be able to open directly operated boutiques.

"The third ingredient is a wonderful management team, because if you have the first two, but the management structure is too stretched then in the longer term you won't have a viable model."

What does Chanel mean to you?

Luxury? Refinement? Sophistication? Expensive? Coco Chanel created an image back in the 1920s. It has lasted ever since.

Success comes from everyone knowing just what Chanel means. How does it work? Why does it work?

Other businesses are very keen to get it right. It really makes a difference. It affects how much you can sell and the price you can sell it for.

What is a brand?

A brand gives a product a name with a message. Wearing Chanel perfume tells the world something about you. Wearing the clothes, carrying the handbag or driving the car with a famous name all tell the world about you.

A brand name creates an identity for the product and highlights the ways in which it is different from other products.

Just think...

What products do you use which have brand names?

What image do they create?

Why do you buy them?

Creating a brand

Businesses spend millions of pounds creating brands. How do they go about it?