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It was founded in 1916 and began in the city of Parma in a small perfume factory and was in manufacture until the 1940s in Europe. The brand's sales fell in the decades following World War II, but it was revived in 1993 following a management buy-out financed by Tod's owner Diego Della Valle, Luca di Montezemolo of Ferrari, and Paolo Borgomanero, a major shareholder of lingerie retailer La Perla.
The company was eventually acquired by LVMH in 2001 and it now has its headquarters in Milan.
The company's original scent, Colonia, was created in 1916 in a small perfume factory in the centre of Parma's historic old town and was intended to perfume the handkerchiefs of Italian men. Today Colonia is used widely by both men and women as a personal scent. At the time of the company's birth, the majority of commercial perfumes were much stronger and heavier in composition; the unusually light and fresh fragrance from Parma found wide success in Europe. It later became popular in the USA, where Hollywood stars, particularly those of British heritage such as Audrey Hepburn, David Niven and Cary Grant, wore Acqua di Parma's sophisticated scent.