Frederic Malle, Estee Lauder & Perfume Industry Changes

Posted on November 26, 2014 by Kafkaesque

Source: online.wsj.com

As many of you know by now, Estee Lauder has purchased Les Editions de Parfums Frederic Malle after a two-month spending spree that included Le Labo and Rodin Olio Lusso. The sale of Le Labo — a niche brand seen as hip, edgy, and expensive — came as a shock, but it was nothing compared to the outcry which greeted the news concerning Frederic Malle. He was different, he was special, he was Frederic Malle! His Editions de Parfums was considered one of the leaders of niche perfumery, adulated for its elegance and class, and respected for its innovations. For example, it was Frederic Malle who truly made us all pay attention to the men or women who actually created the fragrances by featuring the name of the “nose” on the actual bottle, and giving them the recognition that they had heretofore been denied. Malle symbolized niche and sophisticated luxury to such an extent that the Estee Lauder news was greeted with cries of “Et tu, Brute” and claims of a sell-out.

My response was something else. The very first second, I was utterly astounded but my disbelief soon gave way to an inexplicable (and admittedly hard to explain), “I’m not surprised.” My real, main, and primary reaction, however, was to see the news through the lens of Estee Lauder as the flip-side of industry trends represented by Elizabeth Arden and Coty. Most of you will probably wonder what on earth they have to do with anything but, as I’ll explain here, the Frederic Malle acquisition symbolizes the way the industry leaders respond to market changes by diverging into two, very separate, polar opposite directions, and that may be telling for the future.

As a result, the focus of this piece will be as much on the perfume industry and its market changes as it will be on Frederic Malle himself. I’m afraid that means quite a lot of financial information and business figures from the middle section onwards, but I’ve noticed a definite trend over the last 8 months that I think is significant. The Malle acquisition accompanied by the latest Estee Lauder quarterly earnings report seems to underscore my theory, to my eyes at least.

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China & Japan’s Fragrance Markets & Culture

Posted on May 28, 2014 by Kafkaesque

Source: bellasugar.com

I wanted to take a look at the Asian fragrance markets, and to specifically highlight the cultural attitudes towards perfumery in China and Japan. The former is undergoing some small changes in perception, at least amongst Chinese men, but scent still isn’t particularly important as a general matter across the population as a whole. As you will see, even attempts to sell an Axe-like body spray took a lot of effort (and a rather controversial spokesman) to succeed.

I will also look at Japan’s cultural mindset regarding perfumery. It seems to be a rather conflicted one, without any genuine love for fragrance, which is perhaps why they have traditionally had a very weak market. What surprised me there was something completely different: the significance of scented fabric softeners. I should warn you that this post is going to be a little long, so feel free to skip to whatever part interests you the most.

[UPDATE: If you’re interested solely in China, I’ve written an article focused purely on its fragrance culture, its fragrance history, & also the role of oud (沉香) in both the past and present.]

As always, I would like to stress that I have no background in finance, economics, marketing, sociology, or anything remotely mathematical in nature. I do not claim to be an expert on any of those things, there are limits to how comprehensive I can be in a single article, and I write about what interests me, as well as what I have access to. If you are more interested in another country, you can always check my prior pieces on the U.S. and international fragrance markets, the late 2013 U.S. industry figures and popular fragrances, the global fragrance market, the Brazilian fragrance market, and the celebrity perfume industry. Please note that almost all of the articles focus on the commercial, mainstream end of things, not the niche sector.

THE OVERALL ASIAN FRAGRANCE MARKET:

Premium Beauty News has a May 26, 2014 article that briefly summarizes the state of various Asian markets, including South Korea, Indonesia, Vietnam, and India. It relies on a report by the highly respected research analysts, Mintel, but it gives only cursory conclusions. Frankly, it’s not easy for me to obtain updated, annual figures for countries like China and Japan beyond what I’ve discussed from Euromonitor reports in my earlier 2013 piece, so I found it quite fortuitous to stumble across even these nutshell assessments.

Source: outsidethebeltway.com

The article states:

With the exception of Japan, where fragrance sales have declined over the last five years, the Asian fragrance marketplace is also growing at fast pace, even if it remains small relative to the Western markets. China recorded a CAGR [Compound Annual Growth Rate] of 9% over the last five years, India 25%, Indonesia 44%,Vietnam 15% and South Korea 12%.

As the likelihood for a more tailored approach towards individual cultures increases, domestic and international players will need to tailor products accordingly:

India has a strong cultural connection with fragrance as scented deodorants and body sprays are the most important products in the country.

In contrast, China is only slowly opening up to Western fragrance standards and the concept of perfume is relatively new to its consumers, who choose their fragrance to refer to Western lifestyles and special occasions.

South Korea is another example where the beauty industry is thriving but fragrance is not yet part of people’s daily grooming routine. However, fragrances are turning up in growing numbers in department and speciality stores.

In countries like India, China and Vietnam where the middle class is growing rapidly and with it the popularity of aspirational Western lifestyles, it is now a question of when and how pushing fragrance as part of daily life will begin as it is key to growing the fragrance market. [All emphasis is by PBN in the original.]

As for the other countries discussed, I was fascinated to see Indonesia leading the group with 44% growth. With regard to India, my global report piece shows that the deodorants and body sprays are indeed a massive part of their market thus far, thanks to the driving role of teenage boys. (One shudders to think of how much Axe they must purchase!) In terms of actual and proper fragrances, Indian men far outnumber women in purchases.

CHINA:

A) THE OVERALL NUMBERS & SALES FIGURES:

Shanghai skyline. Source: khongthe.com/wallpapers

I’ve talked about the Chinese market in the past, relying on an April 2013 Euromonitor report on the Chinese fragrance market. To recapitulate some of the more pertinent quotes:

Given the value sales of RMB4.6 billion in 2012, fragrances in China remained a relatively small category; around one 18th of skin care in value terms. […] As a whole, product penetration is quite low in even top-tier markets, and fragrances are just seen as unnecessary products by most consumers. No remarkable changes have been seen in consumers’ acceptance of fragrances – the Chinese account for 20% of the world’s population, but only contribute 1% to value sales of fragrances. The average Chinese person is not used to wearing perfume, unless they are extremely particular about their image, usually those who work for international companies or as high-ranking executives. [Emphasis added by me.]

Source: Fragrantica.

Despite the large number of brands present in the market, fragrances in China continued to be dominated by international companies in 2012 in value terms. Chanel accounted for a 12% share of value sales in fragrances, followed by Parfums Christian Dior with 8%. Calvin Klein Cosmetics, Hugo Boss and L’Oréal China were in third, fourth and fifth place respectively. These world-famous companies have established high brand awareness amongst Chinese consumers, as they have in international markets, mainly thanks to continued investment in advertisements on television and in fashion magazines. [Emphasis in bolding added by me.]

Source: .cosmeticsdesign-asia.com

So, bottom line, most Chinese consumers do not see perfume as a necessary product, and the main reason why seems to be that the country does not have a history with perfumery. How could it, given its political, ideological past? As a 2012 Mintel report on the country’s perfume practices explains:

“Prior to the 1980s, it was very uncommon to see any ownership or usage of fragrance in China and it was only in the early 1990s that fragrance started to become commonly owned and used. Over the last 20 years, the Chinese fragrance market has risen from practically nothing to a sizeable, though still underdeveloped category. US and UK, per capita spending on fragrance is estimated at US$10 and US$33 respectively, while per capita spend in China is only around US$0.5 (Mintel, 2011). Applying fragrance is still not considered to be a necessity for Chinese consumers, however it is slowly being integrated into the grooming routine.” [Emphasis added by me.]

B) CHANGES IN PERCEPTION:

I discovered something very interesting from the same company, outlining a slow shift in perceptions by men. The report is not new, but dates back to 2011 and 2012, and talks about the growth in the men’s market in China, their changing attitudes that fragrance is not only for women, and the slow growth of what they label as “prestige” perfumes. (Generally, those fragrances seem to fall in the $60-$80 range, roughly speaking, when discussed in America where the term “premium” is also used.)

Hayami Mokomichi, star of several popular Japanese TV dramas. Source: asiapacificarts.usc.edu/

This particular 2012 Mintel report quotes the company’s China Research Analyst, Lui Meng Chow, on men’s changing perceptions regarding perfumery, the psychological reasons why, the role of television, and the overall result of the shift:

“The word perfume often has feminine overtones among male consumers, however, thanks to the popularity of Japanese and Korean TV dramas, fashions from these countries are shaping Chinese men’s perceptions of personal grooming. As a result of this trend, younger male consumers are shifting away from their conservative traditions and have been impressed with concepts which promote individual expression. This has caused manufacturers to launch male-specific brands, including toiletries, despite the fact that they were previously associated with being a woman’s product.”

“Now this trend is extending into prestige and luxury brands and products, from aftershave to eau de toilette. Most Chinese males tend to enter the beauty-care category in the middle to high-end product category, buying into those products with credible quality, thus they are willing to spend more in their first experience of grooming products.” Lui Meng Chow continues.

Overall, the fragrance market in China grew 32% in value from RMB 3.2 billion in 2008 to RMB 4.2 billion in 2011. According to Mintel’s research, the majority of urban consumers in China use fragrance to become more attractive and well-groomed (60%) or stylish (53%). And as retail channels have developed rapidly, the outlets where Chinese consumers can purchase fragrance have diversified. Today, nearly half (46%) of Chinese consumers say they purchase perfumes and fragrances from a specialist perfume shop, 37% buy at a department store and a similar number (35%) say they purchase online. Meanwhile, 31% claim to purchase fragrances from supermarkets and hypermarkets.

Edison Chen for Lynx in China. Source: Ad Age.

People say a lot of things in response to surveys. It’s not always the truth but, rather, how they like to present themselves. I bring this up because I find some of those survey response numbers — (46%) of Chinese consumers say they purchase perfumes and fragrances from a specialist perfume shop — a little astonishing in light of a 2012 Ad Age article. It talks about Unilever’s problem in introducing their Chinese version of Axe (called Lynx over there) into the market, and how they had to resort to a star with a rather scandalous past (by Chinese standards) in order to gain men’s attention.

The article is a really fascinating insight into both the Chinese culture regarding scented products and how far some companies have to go in order to make inroads in the market. It reads, in part, as follows:

Unilever had a conundrum when it came to the Chinese launch of Lynx, the body spray known in the U.S. as Axe. The problem wasn’t persuading Chinese guys to select Lynx over a competitor but to choose it at all in a country where men have never been expected to smell good.

Source: dhgate.com

“Guys are open to grooming, but fragrance is not part of the repertoire at the moment,” said Jon McCarthy, regional brand director for Axe/Lynx in Asia. “The marketing challenge for us is to integrate our product into guys’ routines, to [help them] see the benefits of a confidence boost and to feel more attractive.”

The brand achieved that and more, becoming No. 1 in the market. And it did so using a celebrity pitchman with a past so scandalous that his Lynx ads can’t even be seen on Chinese on TV.

C) PERFUME AS SOCIAL IDENTITY:

Source: labbrand.com

In the West, many perfume users see fragrance as self-expression or as signature that is part of their identity. That is obviously not yet the case in China, where it wasn’t easy to sell even a scented body spray like Axe. When perfume is purchased, it is more about belonging to an elite luxury group, with all the social cache that accompanies such membership. Mintel’s China expert breaks down the figures:

Mintel’s research also reveals that 80% of urban Chinese consumers claim to wear a fragrance that reflects their personal style, 78% claim that wearing a fragrance helps them stand out more at social or formal gatherings and 45% always look for the latest release of perfumes so as to stay ahead of the trend. However, its not all about personal image. Some 39% of fragrance users still use fragrance with the more functional purpose of eliminating body odour, and 42% of respondents own or wear fragrance because they received it as a gift.

Chinese perfume ad. Not used in the Mintel article. Source: sucaitianxia.com

“Fragrance is regarded as a luxury item, especially if it is internationally branded. Acquiring it means buying into an identity, and also expresses an emotional sense of belonging to a luxury or stylish group identity which serves as a status symbol. Following the implementation of the 1980s Open Door policy, western culture and style have significantly influenced consumer developmental trends in China, with foreign investment also having a major impact on the Chinese economy and income in these regions. All these have resulted in demand for and spending in luxury products including fragrances, toiletries and make-up amongst the affluent and emerging middle income Chinese.” Lui Meng concludes.

80% of respondents may have claimed that they wore fragrance as a reflection of their personal style, but the remainder of Lui Meng’s analysis and what I’ve noted from other sources would seem to present a very different picture. In any event, the overall bottom line seems to be that perfume is either aspirational, or a symbol of having socially arrived — not an actual habit borne out of love, longstanding habit, or any real appreciation for how a particular fragrance may smell.

JAPAN:

A) THE OVERALL NUMBERS & SALES FIGURES:

Gwen Stefani fragrance ad for the “Harajuku Lovers” Collection. Source: tlzd.net

As the Premium Beauty News article mentioned at the start of this piece makes clear, the Japanese market is very weak. It stands out amongst the other Asian nations in having actually declining sales over the last 5 years. One reason why is the recession, while another is the continued impact of the natural disaster which hit Japan.

Still, Japan has never had a particularly robust fragrance industry. A Companies and Markets report from late 2013 has some specific numbers:

Although Japan has the second biggest market for beauty and personal care, and carries one of the most developed and mature cosmetics markets around the world, Japan’s fragrances is still in its infancy, totalling mere a ¥42 billion in 2012.

The Japanese fragrances sector is fragmented. […] ‘Various distributors’ accounted for 24% value share in 2012, with the leading distributor, Bluebell Japan, leading the field. [¶] Bluebell Japan has been operating in Japanese fragrances since 1954 and the company distributes 25 international fragrance brands, including Bvlgari and Gucci. [Emphasis added by me.]

The Japanese fragrance industry has been forecast to increase at an average annual rate of 1.4% during 2007-2017, picking up pace after two years of decline in 2009 and 2011 due to economic recession and natural disaster.

B) FRAGRANCE AS A WESTERN SYMBOL & JAPAN’S CULTURAL SPLIT:

Samurai Woman “One Love” Eau de Toilette Perfume. Source: global.rakuten.com

What I find to be interesting about the Japanese market is the underlying sociological and psychological approaches to perfumery. Now, I am no psychologist, I have not looked for any expert analysis on the Japanese psyche when it comes to perfumery, and I also have not sought any sociological reports on the same. Frankly, if such reports exist, they would be in a language I do not read or know. A few, admittedly old, Japanese newspaper reports in English have stated that there isn’t a lot of detailed information on the country’s specific usage of perfumery.

However, there is an absolutely fascinating, detailed discussion of the Japanese habits, mentality and mindset regarding fragrances by The Black Narcissus, a perfume blogger who has lived in Japan for over 17 years. He makes it clear that he is neither an anthropologist nor an expert, and that he can offer only his perceptions, the individual opinion of one man. While it may not be a scientific overview of a whole nation’s culture, it’s a lot more than we have from other sources, and I thought it was brilliant.

The Black Narcissus’ post is entitled Japan, Perfume. Though it is long, I urge you to read it in full because it is truly fascinating. It talks about his personal experiences in trying to buy perfume in places that sell expensive fragrances in Tokyo, and the detached sterility of the whole process. He explains why he thinks there is such a plethora of vintage treasures to be found in antique shops. More importantly, he talks about how perfume is either an aspirational product or something that is bought because it confers membership in an elite socio-economic class. Frankly, his analysis echoes everything said by Mintel’s China Expert up above with regard to the approach and mentality of the majority of Chinese consumers.

Source: goodfon.com

To quote just a small part of The Black Narcissus’ analysis:

As I have written elsewhere, this country, essentially, is not a perfume country, if by perfume country you mean somewhere, like the Arab countries, or France, Italy, Spain, places where a bottle of scent is sold somewhere every few seconds or so and is seen as something enjoyable, natural, a part of one’s public, and private, identity. Something to be enjoyed. Splashed on, used up, and bought again when you run out, with abandon. A bottle to be drained. This is emphatically not how it is seen in Japan. There are no perfume shops, the ‘profumeria’, like there are on practically every street corner in Rome or Barcelona: just a limited selection sold in particularly designated department stores. And even these are not frequented with anyway near as much enthusiasm as the clothes floors, accessories, and particularly make up concessions like Kanebo and Shiseido (Japanese women do love their skin care). Perfume, here, is very much an afterthought. […][¶]

.. [O]n the whole, the wearing of perfume, in this country, is simply not something commonplace or even ‘natural’. It is sold; it is worn; there are customers milling about the perfume stands at the department stores as you would expect, but even here there are crucial distinctions between the pleasurable act of perfume shopping in Berlin or Los Angeles and the museum-like, hygienic perfection of the testing out a high-end scent at at top level deparment store such as Isetan, Shinjuku – the busiest, biggest, and most gleaming fashion emporium in all of Tokyo. […][¶]

Isetan’s fragrance floor. Source: globalblue.com

Ultimately, like non-Japanese or gaijin (the derogatory-tinged word that is applied to all foreigners, white ones in particular), perfume, of the expensive, western variety, is seen, I think as The Other. And The Other is basically something you don’t (want to) understand, you fear, or conversely have an untoward level of respect, even deference, for, but, for me, the fact remains that ‘the other’ is a huge and integral part of the general Japanese psyche, and I would personally place perfume within its unloving, distancing, and paranoid frame. […][¶]

Source: entertainment.desktopnexus.com

… [C]oncurrently – and this brings, us finally, to Chanel, and Guerlain – a strange combination of hierarchy and snobbery (the desire to purchase expensive, branded foreign goods; the fierce, ubiquitous impulse to have the latest fashion – Japan is fad/craze/boom central par excellence -the seemingly almost genetic impulse to copy and follow other people so as not to stand out, plus the very deeply entrenched inferiority complex […] all of it creating, in the package of stylish, expensive, and particularly French, designer perfume, a very potent and covetable status symbol. […][¶]

… that perfume, in that box, baby, is there to be admired.

I OWN you, you fancy, little, French imported, Kokyu (‘high level’) objet.

And though it is possible that I may, one day, open you, to wear, perhaps, to the opera, or a classical concert, a play, or an afternoon tea party in Ginza with some of my old friends, you know, on second thought, I think that I probably won’t.

Who knows how strong this concentrated perfume will actually be?

What if in some way I were to offend others?

What if the foreign smell makes me stand out too much, and look ridiculous? No, no. I don’t think I will wear you actually. I’ll put you just in this drawer, here by the bedside. Fourth drawer down. There you go…. […][¶]

You know why all those glorious perfumed treasures were there, waiting for me, in that old, locked up glass cabinet? Because nobody, basically, wanted them. For the vast majority of the people here they would be nothing but a signifier, something that the majority of this perfume-hating nation basically never wants to understand, because, in end, wearing perfume is a foreign custom – it is not Japanese.

Old Japanese fragrance ad from The Black Narcissus.

It is fascinating, isn’t it? The Black Narcissus makes a point that one definitely does smell perfume in Japan: from young kids with their “trashy, pink and blue perfumes;” the young mothers with their de rigueur uniform of L’Occitane‘s L’Eau des Quatres Reines; the glitzy, middle-aged women who will occasionally rock Poison, Coco, or Dune; or the men on the prowl wearing what they think of as lady-killer scents (Aramis or Platinum Egoïste, according to The Black Narcissus). Yet, the bottom line is that these all appear to be exceptions to the general rule, and were noticed simply because they stood out.

The Black Narcissus goes out of his way to state he is not trying to provide any anthropological or sociological expert conclusions, but I think the economic numbers from research groups like Mintel and the Euromonitor support a lot of his conclusions. The Japanese may buy perfume, but they don’t buy a lot of it — and the vast majority of them have a mental approach to the product that is about something other than how it actually smells. For them, it’s not about an olfactory escape into other lands or times; it’s not about a love for amber or floral aldehydes; and it’s certainly not about perfume as self-expression. It’s about a symbol of Western luxury that amplifies their aspirations, or about class identity amongst the group. It is a mere object.

Ad for Japan's Mystic Angel perfume. Source: Emirates.com

Ad for Japan’s Mystic Angel brand of perfume. Source: Emirates-perfumes.com

Japan’s tricky, complicated relationship with scent is underscored in another Westerner’s account of the situation. A 2009 piece called Scents and Sensibility: Perfume in Japan by Sylvia Saracino for GaijinPot reads, in part, as follows:

What’s the biggest pot hole just waiting to receive a foreigner’s foot? His or her artificial fragrance of choice. While perfume overdoses are rightly taboo in most cultures, even a tiny whiff of store bought scent could be deemed inappropriate in a Japanese workplace.

[¶] Consider some unfortunate cases: “One day, after a pretty great lesson, my head English teacher approached me. Assuming that she’d heard about the students’ participation, I asked for her opinion and was met with this awkward silence. With what looked like a great deal of difficulty, she finally said, ‘Your perfume is very strong! The children can smell it.’” Despite the temporary embarrassment, Leela concedes that it was better to have been informed of her inadvertent transgression early on. “I got the message and, clearly, wanted to die,” she continues, “but the woman insisted on clarifying that the only ladies in this country who wear perfume are either ‘very important’ or ‘working at night’.” [Emphasis added by me.]

Ad for the Mystic Angel brand’s Milky Pearl. Source: emirates-perfumes.com

There seems to be a generational divide in Japan, based on the accounts in that piece. There is a story of about an older teacher who wore no perfume or frippery of any kind, and it is placed in sharp contrast to the account of Emiko, a young Japanese woman. Her tale:

“I studied abroad in Europe as a teenager,” explains Emiko, a young mother in Akasaka. “I love perfume! On the subway one day, I was wearing some and an old man yelled, ‘You stink!’” Momentarily miffed, Emi, then in her early twenties, took it upon herself to teach the heckler a lesson: “I got up out of my seat, went over and sat down right beside him!” In the end, personal style will always be a matter of choice.

How can fragrance companies do well in Japan when faced with such a complicated cultural and mental mindsets towards fragrance? Companies like Kilian and Estée Lauder’s Tom Ford are specifically making fragrances designed to appeal to the Asian market, whether in name, softness, style, or notes. For example, Tom Ford’s Atelier d’Orient Collection or Kilian’s Flower of Immortality. I have no idea how well they’ve done, as companies don’t release sales figures for specific products, let alone profitability statements for specific markets. I’m sure some luxury-loving Japanese people have purchased them, but I have to wonder how many.

C) PERFUME SUBSTITUTES & THE LOVE OF DOWNY:

Source: walmart.com

What I do know is that there is one olfactory genre that seems to be very successful in piercing the Asian market — and it’s not actual perfume. It is household fragrance and cleaning products! The Asahi Shinbun is a very well-established, influential Japanese paper, and it wrote an article entitled Fragrance to the Forefront in May 2013 which talks a lot about… Downy fabric softener. In fact, the newspaper article made the thoroughly disturbing, depressing suggestion that “consumers increasingly regard scented fabric softener as a replacement for perfume.” [Emphasis added by me.]

It gets worse. According to the Asahi Shinbun, Japanese consumers are experimenting with combining various fabric softeners to create their own signature scent. One company even has a “Make Your Own Happiness” center to facilitate mixing and matching its products. No, I’m not joking.

Lenor’s “Make Your Own Happiness” center where you can mix and match various scented fabric softeners. Source: carpediemjapancom.blogspot.com

The rest of article explains just how successful household items have become as a substitute for perfumery:

With their sense of mild body odor, Japanese generally frown at the idea of splashing themselves with strong fragrances.

In recent years, however, scented fabric softeners have taken off in a big way.

The surge in sales suggests that consumers increasingly regard scented fabric softener as a replacement for perfume; some are even blending softeners to come up their own original scents.

The product that triggered the trend was Downy, which is manufactured by Proctor & Gamble (P&G).

Sales of household products that leave a pleasant fragrance or freshness on clothing after washing began to soar at foreign-affiliated supermarkets and other outlets from around the mid-2000s,

In 2008, P&G released Lenor Happiness, a softener touted as having a strong fragrance. Since then, the market has been inundated with fabric softeners that are sweeter, more intense and have longer-lasting aromas. […][¶]

The Lion company’s “aroma rich” fabric softener. Source: global.rakuten.com

Among fabric softeners offered by [another Japanese household cleaning company called] Lion, products emphasizing aroma saw sales in 2012 close to three times greater than those of 2005. Japan’s overall market for softeners grew from 62.6 billion yen ($644 million) in 2008 to 78.7 billion yen in 2012 according to market researcher Intage Inc.

Indoor air fresheners, insect repellents, cleaning products, kitchen detergents and other housecleaning items are also highlighting scent.

Under the concept of “Fragrant Housework” last year, Kao Corp., a major player in the Japanese consumer products market, pitched the idea of homemakers actually enjoying housework with the use of soothing fragrances. It started releasing rose-scented cleaners and other fragrant household products.

“Cleaning and washing is tedious. However, soothing fragrances can help motive people,” said brand manager Junji Shiratsuchi, 49.

TV commercial for Kao, a japanese brand of fabric softener, called “Haunted hay”. Source: YouTube.com

In an attempt to explain the situation, the newspaper turned to a Japanese scholar who has written about fragrance in the past. And he came up with a rather unexpected explanation for the whole thing:

Shigeru Kashima, a scholar of French literature who translated Alain Corbin’s “The Foul and the Fragrant,” noted there are instances in other countries of people preferring scent-free environments after a period of concealing offensive odors with fragrant smells.

Yet, he said the time eventually comes when people feel a need to start using fragrances as a means to stand out.

Still, why do people in Japan prefer scented fabric softener over perfume?

Kashima, trying to come to grips with the idea, came up with the following notion: “Japanese men seek immaturity and childishness in women rather than sexiness associated with maturity. As such, people probably prefer the cleanliness emphasized by fabric softener over the sexiness linked to perfume.” [Emphasis added by me.]

There are no words to express my astonishment. To put it politely, it seems clear that the chap is struggling to come up with any sort of possible explanation, and is making quite a stretch. If he is correct (which I’m dubious about), then his assessment seems to say more about gender-roles and gender perceptions in Japan than anything else.

What I can say is that none of this seems to indicate a widespread, actual love of perfumery amongst the Japanese. The cultural state of mind is simply not there. Fragrances may be purchased for a variety of non-olfactory reasons, but there is no genuine historical, cultural and philosophical appreciation for them. (That appreciation seems to be reserved for cleanliness, and the household items which provide it.) Without such a foundational structure, I wonder how the industry can ever really grow to strong, vibrant levels, especially in the immediate future.

ALL IN ALL:

This has been a long piece, and I want to thank you for any parts of it that you may have read. The problem in discussing any of this is that mere economic numbers are dry, while anecdotal evidence is hardly indicative of any larger trends. One must therefore combine the two together to get even a faint semblance of what may be happening within a particular country.

It’s hard not to contrast the situation in China and Japan with that of Brazil whose massive perfume market is the biggest in the world. It wasn’t always that way, but the country has an incredibly strong perfume culture and you can see the result. In the case of the two Asian countries, one can really only speculate about the larger or cultural reasons for why perfume hasn’t taken off as a modern trend. China with its booming economy and its vast population is particularly hard to categorize with any blanket statement other than the fact that its history prevented a longstanding, widespread tradition of perfumery from taking root.

Source: perfuglamour.es

As for the future, it may require a team of experts — sociologists, historians, economists, and psychologists — in each country to do a detailed study of the various socio-economic groups, their generational differences, and their attitudes to scent in order to really understand whether fragrance has a chance of taking a firm hold in their psyche. I’m talking about an actual love of perfumery, not mere purchases. In my opinion, a genuine appreciation for scent is necessary to drive a truly strong market. If it happens, I think it will take a generation, or perhaps two. The seeds are there — even maybe in Japan — but it’s going to take time.

What might help are celebrity fragrances. They capture the attention of the youth demographic which can be a very significant force in driving overall sales, as evidenced by the U.K, and America, and in creating perfume awareness as a whole. Even in India, it is the young who are demonstrating the greatest interest in perfumed creations, though it is mainly centered on hygiene products for now.

One thing is certain, though: the Japanese really love their scented fabric softeners.

The Global Fragrance Industry: World Markets, Popular Fragrances & Sales Figures

Posted on February 20, 2014 by Kafkaesque

Source: style.uk.msn.com

The numbers are in for the perfume industry’s sales in 2013 as a whole. In Part I, I covered the U.S. market, but this time, I’m going to look at the global perfume industry, from sales in various countries, any trends that may crop up, and the astonishing financial forecast for 2018. I’ll also talk about the degree of profits in 2013 for L’Oreal, LVMH, Givaudan, and IFF. Then, I’ll look at the international picture: from a perfume Fatwa from a Grand Mufti in the Middle East (yes, I’m being serious), to Valentine’s day in the U.K.; from best-selling fragrances in France and the companies which dominate that sector, to those in Germany. I’ll also briefly examine the perfume industry in Italy, the Netherlands, Spain, and India.

As always, I would like to emphasize that I am the furthest thing imaginable from a financial expert. Also, please note, that all of the articles focus on the more established and significantly larger commercial fragrance market, not the niche one.

THE GLOBAL PERFUME INDUSTRY & ITS FUTURE VALUE:

Source: psdgraphics.com

The global perfume industry is generally valued at around $28 billion (based on a 2012 report) per year, and Elizabeth Arden’s Wiki-Invest page states that the industry has a market cap at $36.6 billion dollars. I believe that means that most people cap the perfume industry’s future worth at around $36 billion. And, in fact, that is the usual number that I’ve read when people are calculating how much the industry will be worth in 2017 or 2018.

A more recent report says it’s going to be far, far bigger than that. Perfumer & Flavorist cites a 2013 study by Global Industry Analysts which says the industry will “reach about $45.6 BILLION dollars in 2018,” a mere 4 years time! Unfortunately, the P&F article is not written in a very readable, straight forward manner, and, more importantly, they bury the lede, so I’ll turn your attention to a more useful source which makes it clear that it is (alas) celebrity fragrances that are really expected to drive the overall surge to a $45.6 billion dollar a year business.

Laurent Dumont’s “Cash Game, Homme.” Source: mimifroufrou.com

Companies and Markets states it boldly in its headline: “Global perfume market driven by the demand for celebrity inspired scents“:

The global perfume market has been forecast to reach a value of approximately US$45.6 billion by 2018, driven primarily by growth expected in the underpenetrated emerging markets and innovative product launches. [¶]

The market is set to benefit from the growing trend towards consumer urbanisation, higher spending propensity and the heightened importance on personal appearance and grooming. In addition, increased demand for youth-oriented, floral and exotic fragrances and celebrity perfumes will set the pace for rapid market expansion.

Perfumes today have evolved into a mainstream business in the cosmetics, and personal care industry. From being non-essential and frivolous, perfumes have emerged as essentials, owing to the increasing trend of appearance and personal care becoming part of pride, self reliance, and confidence.

Source: bloggers.com.br

No longer considered as an extravagant grooming accessory, perfumes have metamorphosed into a “feel good” factor, which complements the consumer’s need for expressing individuality, and personal style. The wide range of themes and choices enable consumers to choose fragrances that complement respective personal and characteristic traits.

Dictated by the fickle trends of haute fashion, the world of perfumes is beginning to witness the entry of new apparel designers, and pop, music, and movie superstars making a dent on the market. The demand for celebrity inspired scents shows no signs of abating, thanks to the increasing number of celebrity fragrances hovering in the market.

The perfume industry is primarily consumer driven. Consumers have a unique cultural attitude to “fragrance” and an uncritical concept of possessing a certain kind of identity through wearing fragrance.

Source: 123rf.com

Currently on the global radar are low penetration markets such as China, and Japan, where huge untapped opportunities are the focus of large international players. Fine perfumes are increasingly looking at the teenage segment as a potential growth market. Women’s fragrances continue to dominate the market, with a maximum number of product launches and innovations aimed at the fairer sex.

The scenario is however set to change with men’s fragrance segment beginning to witness strong growth patterns, as the importance of grooming tops the list of men’s priorities. Typically, the men’s market was confined to the after-shave fragrances, but today the cards are being turned and men’s fragrances for specific occasions are witnessing huge growth, holding the promise of emerging into a mainstay market.

L’OREAL & LVMH:

L’Oreal reported its earnings on February 10th, but, try as I might, I cannot find the fragrance figures in the tsunami of information for the beauty industry leader. For once, even I was overwhelmed by the details! If I spent a few days on the shareholder reports, I know I could find it, but I lack the motivation. Suffice it to say that the company posted record earnings as a whole for 2013 in almost all its global markets. The exceptions seemed to be Japan, China, and India where sales were less substantial, while the South Korean market was depressed. Either way, I suspect that fragrances constitute only a microscopic portion of their revenues, even if they do own YSL fragrances and Armani perfumes.

LV’s Paris Headquarters in animated art by Studio Cyrille Thomas. http://www.cyrillethomas.com/

According to a New York Times report, LVMH did not do so well in 2013, but, again, it is impossible to find specific details on perfume sales or revenue. In addition, LVMH doesn’t seem to release revenue figures for its individual companies, so it may not be possible to know how Guerlain and Dior fared last year. What the newspaper does report is LVMH’s bottom line:

its profit was almost flat last year amid flagging demand for some of its core fashion brands in key markets like China and the impact of weaker currencies in its main overseas markets. [¶] LVMH … recorded a net profit of 3.4 billion euros, or $4.6 billion, for the year to Dec. 31, up just 0.4 percent from 2012.

While this post is supposed to talk about the perfume industry, I have to partially digress for a moment to talk about LVMH’s luxury sales in general. The article has an utterly fascinating reference to what seems like a backlash against Louis Vuitton’s gaudy, overly loud new bags. (Okay, it only says — quite diplomatically — that they aren’t “subtle,” but I find them to be gaudy, not to mention cheap-looking. They weren’t always that way.) The NY Times also talks about how LVMH is trying to deal with some of its problems by appealing to the super-rich, but it’s not having a lot of luck in China where sales are flagging. Given the role of LVMH in the perfume industry through its ownership of Guerlain and Dior, I thought you might find it interesting to know how they are faring in general.

Some excerpts from the NY Times report:

Revenue grew 4 percent, to €29.1 billion, a sharp decline from the double-digit increases seen in previous years [due to unfavorable exchange rates and currency conversion charges]. […][¶]

Both Kering — the French company formerly known as PPR, whose brands include Gucci, Bottega Veneta and Yves Saint Laurent — and Prada of Italy also cited unfavorable exchange rates as contributing to weaker sales in the third quarter. [¶]

Limited Edition LV bag. Source: bocaratonpawn.com

Louis Vuitton, which accounts for more than two-thirds of [LVMH’s leather] division’s sales, has suffered recently as many high-end consumers have begun to shun its familiar logo-emblazoned handbags for subtler products. To compensate, LVMH has increased its investment in smaller brands like Fendi, Céline and Berluti.

Faced with a protracted economic downturn in Europe and slowing growth in important emerging markets like China, Louis Vuitton, like its rival, Gucci, has sought to jump-start sales by repositioning itself even further upmarket, pursuing superrich clients, rather than the merely rich. [¶]

Revenue at the perfumes and cosmetics business, which includes brands like Guerlain and Loewe, rose 3 percent to €3.7 billion. Watch and jewelry sales fell 2 percent to €2.8 billion, reflecting in a slowdown in China, where a government crackdown on giving lavish gifts has crimped sales.

Specialized retailing activities, including the Sephora cosmetics chain and Duty Free Shops, recorded strong growth, buoyed by a surge in tourism spending, particularly by Asian travelers. [Emphasis added by me.]

Source: perfumemaster.org

As a side note, I found nothing detailing Chanel‘s sales or revenues in 2013. The company is privately owned, so it has no need to release official figures. However, I did find Hermès 2013 annual report. The company’s core business of luxury goods is doing astonishingly well, particularly in Asia (in contrast to LVMH, it would seem). But Hermès also sells fragrances, and those were quite successful in 2013:

Perfumes (+15%) confirmed their momentum in 2013. The new fragrance for women Jour d’Hermès was warmly welcomed whilst Terre d’Hermès continued its growth and established its position as a classic male fragrance. [Emphasis to names added by me.]

GIVAUDAN:

Javanol via Givaudan.

While the EU moves slowly to restrict natural perfume ingredients to draconian levels, Givaudan — the maker of aromachemical synthetics and one of the big backers of IFRA — is raking it in.

For those of you unfamiliar with the name, Givaudan is a Swiss company founded in 1895. According to its Wikipedia page, it is reported to be the largest company in the world producing fragrance ingredients and flavours. It controls 25% of the market share, as “the company’s scents and flavors are developed most often for food and beverage makers, but they are also used frequently in household goods, as well as grooming and personal care products.” In 2011, Givaudan had sales of 3.9 billion Swiss Francs with an overall market share of 25%. “It is one of Switzerland’s 30 biggest listed companies in terms of market capitalization[.][…] The company has a leading presence in all major markets and operates through a network of more than 40 subsidiaries” in established and emerging markets.

Givaudan’s new 2013 Mumbai Flavour Innovation Centre. Source: article.wn.com/

And it had a great year in 2013. RTT News provides Givaudan’s full-year report, starting with the fact that its annual income climbed to “490 million Swiss francs ($546.6 million) from 410 francs in the prior year.” In addition:

Gross margin increased to 44.7 percent from 42.4 percent.

Fragrance Division sales rose 3 percent to 2.083 billion francs and increased 5.1 percent on a like-for-like basis. Fine Fragrance witnessed strong growth in Latin America, while Consumer Product saw strong performance in developing markets.

INTERNATIONAL FLAVORS & FRAGRANCES (IFF):

ISO E Super. Source: Fragrantica

Givaudan may control 25% of the global fragrance and flavouring market, but IFF is definitely a powerful force in the field. And it, too, did well in 2013. According to Perfumer & Flavorist, IFF’s

full-year 2013 local currency sales increased 5% to $3 billion, reflecting 10% growth in emerging markets and 2% growth in the developed markets. Reported net income for the full year totaled $353.5 million.

Emerging markets grew 10% last year, accounting for 49% of sales.

The fragrances business unit reported that revenue for the full year increased 6% to $1.5 billion. The fragrances segment contributed 52% of the company’s consolidated revenue in 2013, up from 51% in 2012. Local currency sales increased 6% for the full year, supported by double-digit growth in Greater Asia and Latin America and solid growth in EAME. [Me: I think “EAME” refers to the Middle East and East Asia.]

Source: FoxBusinessnews.com

For the 4th Quarter in specific, the article states that

IFF fourth quarter 2013 revenue increased 7% to $725 million compared to the prior year. A full 50% of consolidated IFF sales were achieved in emerging markets, according to the company.

The fragrance unit reported that revenue increased 8% to $382 million in the fourth quarter of 2013 compared with $354 million in the fourth quarter of 2012.

Fine fragrance and beauty care achieved 9% local currency sales growth, due to strong growth in fine fragrance owing to strong new business wins in EAME.

Fragrances gross margins improved over the prior year quarter primarily due to moderating input costs and other strategic initiatives including mix, innovation and cost reductions. Segment profit increased 16%, or $9 million, to $62 million in the fourth quarter of 2013 compared with $53 million in the fourth quarter of 2012.

In short, emerging markets and the Middle East are responsible for the surge in sales. I will jest, and say that IFF’s invention, ISO E Super, probably helped as well, judging by how many bloody fragrances contain the damn thing. (No, it’s not actually paranoia if they really are out to get you. 😉 But, in any event, I’m merely joking to alleviate any numbness you may feel at this point from all these details.)

THE U.K. FRAGRANCE MARKET:

Source: Maria Rogerson at ourtipsfor.com

Fragrance sales in the U.K. rose 9.3% in 2013, boosted by the fortnight before Valentine’s Day 2013 during which there were £32 million value sales and 1 million units sold. The numbers come from NPD, as quoted by Premium Beauty News. Apparently, the two weeks before Valentine’s Day are a huge deal in the UK, though not as much as in the U.S. where the day accounts for 4% of perfume sales. The article reports:

“Valentine’s fortnight remains a key focus for prestige beauty products, with fragrance representing 2.7% of annual fragrance value sales and 3% of total beauty sales in the UK – beating both Father’s Day and Mother’s Day sales,” says The NPD Group.

The market research firm notes there is an opportunity for growth in the UK fragrance market when comparing sales in other key markets. “In France and the United States, 2013 Valentine’s fragrance sales represented 4% of annual fragrance value sales, generating just over £67 million and £81 million, respectively.” [¶]

Trend data reveals that while fragrance sales peak around Valentine’s Day, at 42% of prestige beauty products sold based on 2013 figures, sales are less concentrated at this time of year compared to Christmas.

Men were spending away as well:

“Men look set to be the winners in the fragrance stakes this year if the 2013 trend continues, with men’s fragrances for Valentine’s 2013 representing 35% of all fragrance value sales – up from 33% in 2012,” points out The NPD Group.

However, it seems that everyone was after less expensive fragrances for the most part:

Data from Valentine’s 2013 reveals that consumers may become more price conscious with their fragrance purchases. On average, both women’s and men’s fragrance sales were down £1-2 on the annual average price at £33 and £31, respectively. Leftover Christmas gift sets were also popular for Valentine’s 2013 in the UK.

Davidoff Cool Water ad, October 2000. Source: coloribus.com

In terms of the best-selling perfumes in the U.K, I found a list dating back to 2009. It comes from the Daily Mail which makes me cautious as to its accuracy, but there really isn’t else that I found on the subject. The newspaper states that it “asked Britain’s top department stores which scents fly off their shelves the fastest – the results were unanimous…”

Chanel No. 5

Calvin Klein Eternity

Prada Eau de Toilette

Davidoff Cool Water

Gucci Rush

Ralph Lauren Romance

Sarah Jessica Parker Lovely

Issey Miyake L’Eau d’Issey

Estée Lauder Beautiful

Tom Ford Black Orchid

THE FRENCH PERFUME MARKET:

Source: hdwallpapers.in

According to the Perfumer & Flavorist, “France’s fragrance market [is] the second most important sector in the country’s health and beauty industry.” The Euromonitor research group calls it is an extremely competitive market, and provides a fascinating breakdown of the market share of the three market leaders, Chanel, Dior, and Guerlain (in that order):

Source: entertainment.desktopnexus.com

Fragrances is fragmented, with more than 40 different players operating in the category. Amongst them, the leading companies are Chanel, Parfums Christian Dior and Guerlain, with 12%, 11% and 8% value shares respectively in 2012. These three operators offer several well-recognised premium fragrances for women and men, which are well-positioned in the market. Chanel N° 5 from Chanel and J’adore from Parfums Christian Dior, for example, were the leading brands in premium women’s fragrances in 2012. These two popular fragrances are constantly promoted on television. Over the years, these three players have been able to maintain their leading positions thanks to important investment in advertising, but also due to some product and packaging innovation. [Emphasis to names added by me.]

Paco Rabanne 2013 Invictus Ad.

Even if the Big Three control the greatest portion of the market, they don’t necessarily have the best-selling perfumes in France. In fact, Chanel No. 5 isn’t even on French Sephora’s 2014 list of top sellers, a list which obviously has to be based in large part on prior sales in 2013. That list, as provided by the French-based blog The Scented Salamander, is as follows:

Sephora
1 – Invictus by Paco Rabanne
2 – La Petite Robe Noire EDP by Guerlain
3 – La Vie est Belle EDP by Lancôme
4 – J’Adore EDP by Dior
5 – Shalimar by Guerlain – (boosted by sales price)
6 – 1 Million EDT for men by Paco Rabanne
7 – Flowerbomb EDP by Viktor & Rolf
8 – Si by Giorgio Armani
9 – Le Mâle EDT by Jean Paul Gaultier
10 – Boss Bottled EDT by Hugo Boss

Invictus for men and Si for women, a fruity chypre, are two 2013 entries and have already reached the top.

Source: LOreal.com

For the beauty chain, Marionnaud, which features a more “mature” clientele and an “atypical” dated lineup, their list of best sellers for 2014 is even more different. The Scented Salamander reports:

Marionnaud
1 – Boucheron Femme EDP by Boucheron
2 – Flowerbomb EDP by Viktor & Rolf
3 – Alien EDT by Thierry Mugler
4 – Féminité du Bois by Serge Lutens
5 – Eau Sauvage EDT by Dior
6 – Magie Noire EDT by Lancôme
7 – Chloé EDP by Chloé
8 – 1 Million EDT for men by Paco Rabanne
9 – Only the Brave EDT by Diesel
10 – 0 de Lancôme EDT by Lancôme

Coco Mademoiselle.

The lists are interesting, especially when you compare to what was selling back in prior years. Surrender to Chance lists what it says were the best-sellers in France for 2011:

Chanel No. 5 EDP – “iconic decades-old perfume that has topped the best-seller list for most of those decades.”
Dior J’Adore – “now overtaking Chanel no. 5 worldwide[.]”
Thierry Mugler Angel
Chanel Coco Mademoiselle
Kenzo Flower
Guerlain Shalimar EDP
Lolita Lempicka
Christian Dior Miss Dior Cherie
Nina Ricci Nina
Yves Saint Laurent Paris
Yves Saint Laurent Opium
Jean Paul Gaultier Classique
Lancome Tresor EDP
Nina Ricci L’air du Temps
Clinique Aromatics Elixir
Lancome Cuir de Lancome.

Naomi Watts in Thierry Mugler’s Angel campaign ad. Source: Basenotes.com

Going back further, Marie-Claire magazine has a listing of the most successful fragrances in 2008 in France, as compared to the U.S. and China at roughly the same time:

FRANCE
1. Chanel No. 5
2. Thierry Mugler Angel
3. Dior J’adore
4. Kenzo Flower
5. Lolita Lempicka 1er Parfum

UNITED STATES (2006)

1. Estee Lauder Beautiful
2. Chanel No. 5
3. Donna Karan Cashmere Mist
4. Estee Lauder Pleasures
5. Calvin Klein Euphoria

CHINA (FIRST HALF OF 2007)
1. Chanel No. 5
2. Dior J’adore
3. Lancôme Miracle
4. Chanel Chance
5. Dior Addict 2

I don’t think you can look at the 2014 Sephora and Marionnaud lists as being completely representative of French sales as a whole. There are a variety of reasons. First, Sephora’s clientele generally skews younger and towards a certain financial bracket, while Marionnaud’s doesn’t seem representative for other reasons. (I’ve been in their stores, and The Scented Salamander is correct in saying that they skew extremely old and their merchandise really is dated.) Plus, how can you take figures from 2 chains to be representative of the country as a whole? At best, their lists may demonstrate a gradual shift amongst certain groups away from the classics and the market leaders. Moreover, I find it difficult to believe that Chanel No. 5 and Dior’s J’Adore would lose their many years-long death grip if you looked at numbers from all vendors and across all segments of the population.

Regardless of what fragrances are the most popular, French consumers are buying less of them and reducing their spending in an effort to save more money. The Perfumer & Flavorist has the details of market research by a company called Canadean, but there is a lot of gobbledygook about Compound Annual Growth Rate (CAGR) which hurt my head, so I’ll just give you the summation as I understood it:

France’s perfume market showed only the seventh fastest growth rate out of the nine health and beauty markets that Canadean follows. The reason is the very high personal saving levels in France at 15.5%, as compared to the average 2.5% rate in the United States.
French fragrance is forecasted to show much slower growth until 2017. Women’s perfumes dominate the sector with a value share of 62.8% and volume share of 65%. It is expected to show the strongest growth in the upcoming years, especially as compared to men’s fragrances.
“Men’s fragrances made up less than half the volume of the market in 2012, at 31.7% volume and a slightly higher value of 33.8%. In growth terms, 2012–2017 is projected to see volume and value for men’s fragrances significantly lower than both sector levels and female fragrances[.]”
The third category, unisex fragrances, recorded just over 3% of the sector for both value and volume of sales in 2012, and its growth is projected to be even lower than that of men’s fragrances at 0.2% in the upcoming years.

In other words, the main buyers of perfume in France now and for the next 4 years are women. Yet, even they are buying less these days, and they’re certainly not buying unisex fragrances in large quantities or buying enough to drag France’s perfume industry out of 7th place from the 9 big markets that the research group follows.

ITALY & THE NETHERLANDS:

Supermodel David Gandy for D&G Light Blue. Source: Pinterest.

Italy doesn’t have a booming perfume market right now, and won’t for the ostensible future. According to Canadean as reported by Perfumer & Flavorist, the sharp drop in Italy’s GDP since 2007 means their perfume sector won’t see growth rates above 2% growth until 2017. Women’s fragrances take up 60% of the market in terms of sales, but they are forecasted to have the slowest growth. Men’s fragrances are expected to perform slightly better but the real surprise pertains to unisex fragrances. They are expected to do the best in the upcoming years, even though they have a much lower market share, with 1.5% for both value and volume in 2012.

The Netherlands may be a small country, but they have a great economy on average. According to Digital Journal, back in 2008, the Netherlands had the 16th largest economy in the world, and ranked 10th in GDP per capita. It reported that fragrance sales were booming in the “600-million Dutch perfume market” which was dominated first by the Douglas chain of shops, then by those of Ici Paris XL perfumeries. If you fast forward to 2013, a report by the Euromonitor states that Dutch perfume sales continued to increase, despite a difficult economy, but the research group saw only modest growth lying ahead. It adds:

L’Oréal (NBO: Prestige & Collections Nederland) is the leader in fragrances with a 12% value share in 2012, with some of its popular brands including Trésor, Acqua di Giò, Ralph Lauren and Emporio Armani. In 2012 the company registered a very small decline in terms of value sales, but overall it had a stable market share. [Emphasis in bolding added by me.]

Source: myfdb.com

As noted above, one of the top beauty chains in the Netherlands is Ici Paris XL, and they have a list of their Top 10 Bestsellers amongst female fragrances. The same caveats that I raised for the French Sephora list applies here, too, but it’s still interesting to see what is selling in each country. So, here are their top-sellers:

Lancome La Vie est Belle

Chanel Coco Mademoiselle

Dior J’Adore

Paco Rabanne Lady Million

Chanel No. 5

Thierry Mugler Alien

YSL Manifesto

Jil Sander Sun

D&G The One

Cacharel Noa

Their list of Top 10 Men’s Fragrance Bestsellers is:

Paco Rabanne One Million EDT

Chanel Allure Sport EDT

Jean-Paul Gaultier Le Male

Chanel Bleu de Chanel

Giorgio Armani Acqua di Gio

Hugo Boss’ Boss

Dior’s Dior Homme EDT

YSL l’Homme

D&G The One

Davidoff Cool Water

GERMANY & SPAIN:

Germany has a large fragrance market, and it did well in 2012. According to a September 2013 report by the Euromonitor,

Fragrances in Germany experienced a positive performance in 2012, with retail current value growth of 2%, reaching €2.0 billion. Volume growth of fragrances in Germany only increased by 1%, which was lower compared with 2011. This was due to the poor volume performance of unisex fragrances in both the mass and premium segments.

Procter & Gamble Prestige Beauté was the leading player in fragrances in 2012, with a 17% value share. The company is strong in both mass and premium fragrances. In the mass segment Procter & Gamble Prestige Beauté markets a broad range of established brands, such as Mexx Woman. In premium fragrances it has a significant presence with popular brands such as Gucci Guilty Pour Homme and Boss Woman. The company managed to maintain its strong position thanks to well-supported new product launches in 2012.

Fragrances in Germany is expected to see a rather negligible growth to reach €2.1 billion in 2017. It is expected that the living standards of German consumers will start to slowly decrease in response to the economic crisis, which will limit the growth rate of fragrances to a certain extent in constant value terms. [Emphasis added by me.]

Lacoste Pour Femme. Source: shop-cosmetice.ro

One of the biggest perfume chains in Germany is Parfumerie Douglas or Douglas. According to a Basenotes discussion, in 2004, Douglas announced that its top-selling women’s fragrances were:

1. D&G Light Blue
2. Pure by Jil Sander
3. Lacoste pour Femme by Lacoste
4. Chance by Chanel
5. Touch of Pink by Lacoste
6. Jean Paul Gaultier by Jean Paul Gaultier
7. Pure Poison by Dior
8. Chanel No 5 by Chanel
9. Hugo Deep Red by Hugo Boss
10. L’Eau d’Issey by Issey Miyake

Exactly 10 years later, now, in 2014, only two of those scents remain on Douglas’ new list of its top-selling women’s fragrances. They are Lacoste and Chanel No. 5:

Thierry Mugler Alien

Chanel Coco Mademoiselle

Lancome La Vie est Belle

Chanel No. 5

Paco Rabanne Lady Million

Toni Gard Honey

Lacoste Lacoste Pour Femme

Escada Born in Paradise

Giorgio Armani Si

Dior J’adore

Alien ad, via sandiinthecity.onsugar.com

Douglas’ list of its current best-sellers for men is:

Hugo Boss’ Boss

Paco Rabanne One Million

Jean-Paul Gaultier Le Male

Davidoff Cool Water

Paco Rabanne Invictus

Chanel Allure Homme Sport

Giorgio Armani Code Homme

Hermès Terre d’Hermès

Chanel Bleu de Chanel

Hugo Boss Hugo

Finally, a brief look at Spain. It may be one of the countries most affected by the Eurozone crisis, but the Perfumer & Flavorist reports that Spanish consumers, particularly men, like to treat themselves to fragrance. The market is “set to be one of the five fastest growing health and beauty sectors in Spain to 2017.” Men’s fragrances will display the highest volume growth through 2017. “As the women’s fragrances category matures, women’s fragrance is predicted to become the slowest growing category of the sector over the next five years[.]” Unisex perfumes, in contrast, will do the best over the next five years, even though they have the smallest market share at this moment.

THE MIDDLE EASTERN MARKET:

The Grand Mufti of Dubai. Source: emirates247.com.

A Fatwa was issued by a Grand Mufti in the Middle East on the issue of perfumery, and no, I’m not being facetious. It was actually a positive edict, according to the Euromonitor. Its October 2013 summary report states that:

A Fatwa was issued in June 2012 by Dr Ali Ahmed Mashael, Grand Mufti at the Department of Islamic Affairs and Charitable Activities in Dubai. This stated that Muslims can use alcohol-based fragrances, due to the proportion of alcohol in fragrances being low. While the Fatwa stated that cautious Muslims could use oil-based fragrances that are alcohol-free, it also stated that the use of alcohol-based fragrances would not affect the purity of a Muslim’s prayers. This Fatwa thus encouraged many Saudi consumers to expand their purchase of fragrances to include alcohol-based fragrances from prestigious global brands such as Estée Lauder’s Tom Ford or DKNY. [Emphasis to names added by me.]

I really hope the Euromonitor is the one providing those brand examples, and that the Grand Mufti did not personally mention DKNY! I can’t read the full report unless I pay $725 — which I most certainly do not want to do — so we shall just have to rely on the Euromonitor’s synopsis.

They also mention Arabian Oud, writing “Arabian Oud defines traditional Saudi fragrances for many consumers and was the clear leader in fragrances throughout the review period. The company accounted for 34% share in 2012. This company benefits from its history and its strong premium image.”

Arabian Oud via their website.

Arabian Oud also comes up in the Euromonitor’s report on the fragrance market in the United Arab Emirates, and I found the mention of private agarwood plantations to be fascinating:

There is a strong tradition for fragrances in the United Arab Emirates, with local men and women using perfumes on a daily basis. The country is particularly known for its oud-based fragrances and benefits from the strong presence of premium oud specialists such as Arabian Oud Co and Ajmal International Trading Co LLC. While oud is expensive and rare, being more expensive than gold, these players have their own agar plantations, enabling them to offer premium quality products at a profit. […]

COMPETITIVE LANDSCAPE

Source: unperfume.es

The leading players in fragrances perfectly represent the dual nature of this category. Traditional oud specialist Arabian Oud Co remained the leading player, accounting for a 14% value share thanks to a wide range of both oriental and Western-style fragrances and opulent outlets in Dubai. Global giant Estée Lauder Cos Inc ranked second with a 13% value share, benefiting from a fashionable global image for brands such as Estée Lauder, DKNY, Clinique Happy and tommy. Both players maintained their value share from the previous year. [Emphasis to names added by me.]

The fragrance brands mentioned as market leaders in that October 2013 report seem to have changed from a 2011 Euromonitor PDF report that I sampled. It states:

Fragrances remain largely fragmented amidst continuous launches, with fragrances leader L’Oreal Middle East holding a retail value share of only 6% in 2010[.][…] Emporio Armani continued to be the best-selling premium brand for both men and women with over 5% of value sales of premium fragrances overall.

The report makes, clear, however, that the only thing which really sells in the UAE is premium. Premium anything. None of this celebrity stuff is going to pass muster with the largely unimpressed population soaking in Petrodollars. Furthermore, the UAE citizens regard perfume as an essential part of every part of their life and culture. A few other tidbits gleaned from the PDF:

The UAE posted one of the highest per capita expenditures on perfumery in 2010, and despite some small economic slowdown that year very few people “traded down” to cheaper, mass fragrances.

Premium fragrances accounted for 73% of perfume sales in the UAE in 2010.

“Beauty specialist retailers” like the niche-selling Paris Gallery account for 42% of sales, while (very high-end) department stores like Harvey Nicks and Debenhams only account for 19%. Clearly, niche and uber-luxury fragrances sell! And the main category or genre of perfume that sells is… well, obviously, Orientals.

All socio-economic groups in the UAE buy perfume which they see as “essential.” They are “part of the basic attire and are consumed throughout the day and during any occasion or outing.”

The “global trend towards attaching celebrity names to fragrances works less well in the Emirates due to the diverse population – many celebrities are simply not known by Western, Emirati and Asian parts of the population.”

One of the most fascinating parts of the PDF sample file was something buried far at the end and in the back. The leading UAE perfume manufacturer, the Adjmal International Group mentioned earlier, buys some of its stuff from Givaudan, IFF, Firmenich, Symrise and the rest of the big Western ingredient and aromachemical companies. The PDF sample report states:

In addition to the company’s own agarwood plantations in Assam, India, which account for around 40% of the required raw materials, Ajmal sources the balance from the Far East[.] Raw materials are sourced from world-renowned suppliers like Symrise, IFF, Firmenich, Givaudan, Drom and V. Mane Fils.

Apparently, there is no getting around Givaudan and its brethren’s tentacles. So, the next time you smell something very synthetic in your supposedly purely Middle Eastern, “local,” oud fragrance, you may want to blame the big guys in Switzerland and Europe.

Asghar Ali Perfume Company, Bahrain. Source: YouTube.com

As a small side note, the UAE is not the only part of the region that is experiencing a healthy perfume market. In the Gulf coast kingdom of Bahrain, the fragrance and beauty industry is on the verge of a massive shift upwards. An article in Gulf News Daily discusses the findings of the Euromonitor research group which found that, sales “are expected to hit $29.9 million by the end of the current year amidst positive growth trends in other parts of the GCC.” One Middle Eastern perfume executive is quoted as saying that the amount of money spent in the Gulf as a whole is “relatively higher… than in other parts of the world as fragrances and perfumes are an important part of the Gulf lifestyle coupled with a high disposable income[.]”

INDIA:

Aishwarya Rai. Source: ibnlive.in.com

I was surprised to find details on the Indian perfume market. I actually tried once before for an earlier article, but gave up in frustration. This time around, I’ve had better luck. I’ll start with the brief synopsis from April 2013 from Market Research. In a nutshell, it states that the current Indian perfume market had revenues of $227 million in 2012, and that the figure is expected to go up to $510 million by the end of 2017:

The Indian fragrances market had total revenues of $227.4 million in 2012, representing a CAGR of 19.4% between 2008 and 2012.

Market consumption volumes increased with a CAGR of 14.9% between 2008-2012, to reach a total of 18.7 million units in 2012.

The performance of the market is forecast to decelerate, with an anticipated CAGR of 17.6% for the five-year period 2012 – 2017, which is expected to drive the market to a value of $510.6 million by the end of 2017.

Source: National Geographic

A report by Canadean (which costs over $1,300 to read in full) states that young people (up to the age of 30) are driving demand, and that age dynamics are key to the market. It also adds:

In 2012, 20.7% of Fragrance use among Indian consumers was motivated by the desire to seek better quality products. Apart from the attraction of the newness factor, quality is also being sought after, from the product ingredients to packaging.

India saw minimal impact from the global economic slowdown and the market displayed a positive trend during 2007–2012, growing at a CAGR of 16.0% during this period in local currency terms. The upbeat mood of the economy and its increasing integration with globalized lifestyles and consumption patterns will drive the growth.

Analysis of India’s Fragrances sector between 2007 and 2017 highlights a number of clear winners and losers. Large categories posting moderate growth such as Female and Male Fragrances will gain a larger market share than smaller categories such as Unisex Fragrance, indicating consumers’ preference for gender specific Fragrances.

Source: Askmen.com

The Economic Times of India has an interesting article from 2012 which talks about consumer tastes. It spends a large amount of time talking about deodorants, which it classifies as part of the “fragrance industry,” so please keep that fact in mind when you read the quotes:

Nearly 60 per cent of the whole fragrance market is dominated by the men’s category which is also highly fragmented and keeps evolving with change in attitudes and lifestyle. Besides, high-end perfumes in the male category are also doing a brisk business courtesy the growing urge among urbane Indian males to stay well-groomed.

Though there are limited options for women but the segment is likely to see an upsurge with various existing brands and new entrants resorting to sustained media campaigns to cash in on the untapped category with enormous growth potential.

Model Simon Nessman for CK One, Winter 2010-2011. Source: MaleModelSceneNet

Teenagers are a significant segment in both male and female categories as an average teenager at an urban centre tends to spend anywhere between Rs 500 and Rs 2,000 only on fragrance including – deodorants, roll-ons and perfumes. [¶]

Armani, Azzaro, Burberry, Chanel, CK 1, Dior, Escada, Estee Lauder, Ferrari, Hugo Boss, Lacoste, Nina Ricci, Polo, Shiseido etc. are certain most sold leading perfume brands in India. Amid the deodorant category Axe, Park Avenue, Nivea, Set Wet, Wild Stone, Garnier, Yardley etc. are leading. [Emphasis to names added by me.]

ALL IN ALL:

It is clear that the fragrance industry is booming. Sales may be soft in the U.S., but they aren’t overseas. And there is so much money involved! An estimated $46 BILLION a year by 2017 or 2018, which isn’t all that far off.

Source: timeoutbahrain.com

Companies are trying to tap into this lucrative market by issuing more and more new fragrances each year. Just 21 years ago, there were only 132 new perfume releases. Now, there are a thousand more. Jordan River of The Fragrant Man, has a post on Michael Edwards‘ new book, Fragrances of the World, which details the rise in the number of perfumes released each year. Jordan writes:

In 1993 there were 132 new perfume releases, by 2003 the number had grown to 581. As noted above, 2012 saw 1330 releases and in 2013 retail shelves made room for a further 1492 new perfumes.

If you’re exhausted from all these numbers, I don’t blame you. What you should take away from all this is the same thing that I repeat in all my posts on the perfume industry’s growth and sales: the future lies in new emerging markets.

Justin Bieber’s Girlfriend perfume. Source: getitwrighthere.com

I think the Western markets are starting to be over-saturated, something that is certainly true of the Celebrity Perfume Industry which drove a lot of U.S. sales for a while. My post on that issue covers the astronomical, utterly mind-blowing numbers, especially from Britney Spears! Whether it’s a billion bottles or over a billion dollars, she’s raked it in for Elizabeth Arden, while Justin Bieber drove the entire U.S. market in terms of sales for 2012. Yet, as the 2013 sales figures for Elizabeth Arden discussed in Part I demonstrate, things may have changed a little in the short-term. The market has probably over-flooded — One Direction‘s massive success in the U.K. notwithstanding. Companies like Elizabeth Arden who are so centered and focused on the American sector are going to have problems in the future, I think.

The companies that will succeed are the ones who are targeting the markets of the future. Europe seems dead, with the unique exception of Russia and its oligarchs. However, the future is bright in India, not to mention Latin America (Brazil is frequently mentioned), and it’s raining down gold in the Middle East with their long tradition of perfumery and enormous disposable income.

Asia is less certain for the near future, in my opinion and for the reasons outlined in my earlier post on the 2013 Global Perfume Industry. I can’t see a dramatic change by 2017, the date selected by many of these research reports for their analysis of the growth curve. However, companies like Estée Lauder, LVMH, Kilian, Tom Ford and others are clearly trying to lay the foundation for future growth there. I have no doubt they will succeed to a small extent in capitalizing on social aspirations and the hunger for luxury products with their Asian exclusives and targeted marketing. However, I personally believe it will be years and years before cultural issues in perfume usage will be overcome to the point that Asia will join North America and Europe as market leaders.

Source: Hongkiat Lim at hongkiat.com

In the more immediate future, I see a small silver lining in all this news, even if it is a rather philosophical one: the love of perfume is slowly turning both global and wider in scope. Not only is perfume interest spreading out to new parts of the world, but even those who already loved perfumery are broadening their horizons. Things are changing to become more universalist: women seeking out woody orientals; Middle Eastern ouds have filtered out to the West, while, over there, Grand Muftis are issuing Fatwas to wear alcohol-based perfumes; unisex fragrances on the rise in various European markets; and men are poised to compete with women in terms of perfume addiction. (I think any perfume blogger or member of a perfume group could have told NPD that last fact!)

Unfortunately, the cynic in me is whispering that none of this really matters, because the Golden Age of Perfumery is at an end. There are a lot of reasons why I’m dubious of the quality of what may lie ahead of us: the EU restrictions on rich natural ingredients; the impact that draconian regulations on everything from testing to packaging will have on small, truly niche, independent perfumers; the growing conglomerization of the industry through takeovers by wealthy multi-national corporations like Estée Lauder or L’Oreal; the way many of these entities are in bed with the corporate ingredient (and aromachemical) giants who provide both their materials and their stable of “noses”; the important role of cheap celebrity perfumes in driving sales; and the increasingly generic profile of fragrances put out under increasingly tight schedules to meet the publicly held companies’ quarterly-earnings report and shareholder expectations. (That explains Tom Ford’s numerous releases each year, with each collection having at least three fragrances in it. And, based on what I’ve tested thus far, they are almost invariably created by a Givaudan perfumer with Givaudan ingredients.)

Still, notwithstanding my personal pessimism, it’s good news to know that our love of perfumery is spreading out to more parts of the world than ever before. And I think we can all agree that an industry whose future may be valued at almost $46 billion in annual sales is an industry that matters.

The U.S. Fragrance Industry: Sales Figures, Popular Fragrances & Market Changes

Posted on February 19, 2014 by Kafkaesque

Source: knozhawa.com

The numbers are in for the perfume industry’s sales in 2013 as a whole. I’m always interested in the financial side of the fragrance industry, especially how perfume is doing as compared to the overall beauty market. However, the most fascinating thing this time were changes that occurred in people’s perfume tastes, in the categories of perfumes that were purchased in the last year, and in who was doing the buying. I’m not hugely surprised by what men are doing in the U.S. and U.K., but I was a bit taken aback by a change in the American woman’s buying habits and tastes. I’ll cover all of that in this post, along with: the U.S. sales figures for market leaders like Estée Lauder, Elizabeth Arden, Coty, and Inter Parfums, along with what those figures tell us about the overall fragrance industry in America.

Another post will look at the broader picture by focusing on the global perfume market. The topics include: the most popular perfumes for women and men in different European countries; the role of Valentine’s Day in the UK; the 3 perfume houses that dominate the French market; a perfume Fatwa by a Grand Mufti in the Middle East (no, I’m not joking, but it was a positive edict); the industry’s astonishing projected growth; the degree of profits for L’Oreal, LVMH, IFF, and Givaudan; and the different international perfume markets in the UK, France, Italy, Germany, The Netherlands, Spain, India, and the Middle East. [Update: there are also posts on the Brazilian and Asian markets (China and Japan). In another 2014 post, the second half has newer figures for L’Oreal, Estée Lauder, Coty, and P&G.]

As always, I would like to emphasize that I am the furthest thing imaginable from a business expert. I often can’t make heads or tails of the specific fine point and details in financial reports. In fact, I intentionally went to law school to stay as far away as humanly possible from anything mathematical or financial in nature. Still, I hope you find some of the reports below interesting. Please note, however, that all of the articles focus on the more established and significantly larger commercial fragrance market, not the niche one.

Source: goodfon.com

U.S. BEAUTY & FRAGRANCE INDUSTRY:

I’d previously quoted and discussed the flat U.S. sales in the first part of 2013 in a post on the 2013 business reports for the perfume industry. To put the new figures into context, I want to start with the numbers for the beauty market as a whole. A MediaPost article quotes the NPD global market research group as saying, in part:

sales of prestige beauty products — those sold in department stores — gained 5% in 2013. But the lower-end brands sold in drugstores struggled, gaining just 1%.

Among the prestige labels, NPD reports that skincare and makeup was especially strong — both up 7% in dollar sales from the prior year — while fancy fragrances were flat. Direct-to-consumer sales grew 19%. But the more expensive products were, the better they sold. Fragrances priced $100 and higher jumped 30% in sales, and makeup priced at $60 and up climbed 28%.

Drugstore brands had a tougher go of it. […] Makeup gained 2%, while mass fragrance sales sank 6%. [Emphasis added by me.]

In short, prestige makes a difference to sales. I have to wonder how much of that was driven by niche perfumery or, to be more precise, the impact of niche perfumery on more mainstream brands (like Chanel, for example) raising their prices.

Source: marieclairvoyant.com

I found a CNBC article that added some interesting details. For one thing, it notes that Christmas is perhaps the biggest time for perfume sales. In fact, 45% of all such purchases usually occur between October and December. The article, which came out in November 2013, didn’t have such an optimistic view this time around. More interestingly, it quotes a Euromonitor expert on which specific perfumes were popular:

What used to be a go-to Christmas gift is no longer smelling quite as sweet.

After gaining back some of the ground lost after four years of negative sales during the economic downturn, fragrance sales are basically flat on the year, and experts predict they will continue their holding pattern during the holidays.

According to The NPD Group, 15 percent of shoppers will purchase a fragrance this holiday, which is unchanged from 2012; similarly, Euromonitor forecast that the category’s sales will tick higher by only 0.2 percent this year. […][¶]

Jo Malone fragrance via joyce.fr.

Most of the growth in the prestige fragrance category—sales logged primarily in department stores—has come from pricier, niche fragrances such as Demeter Fragrance Library’s Oud, and scents from Jo Malone and Tom Ford, [Virgina Lee of Euromonitor] said.

She pointed to Bond No. 9, Estée Lauder’s Modern Muse and Coty’s Marc Jacobs Honey as other fragrances she expects to perform well.

While celebrity perfumes continue to saturate the market—including scents from Rihanna, One Direction and Taylor Swift—the category’s real value growth is now being driven by an older, more sophisticated shopper who doesn’t care to smell like a pop star, Lee said. She also predicts prestige will continue to outperform mass offerings, as higher-income shoppers have the money to burn on a $250 fragrance, she said.

Bloomingdale’s, Sephora and Saks all listed fragrance as one of their top areas of focus for the season, with Bloomingdale’s calling out its Tory Burch fragrance exclusive; Sephora its multibranded fragrance samplers; and Saks its mini-fragrance collections and fragrance sets, including Carven and Viktor & Rolf’s Flowerbomb. [Emphasis to names added by me.]

SPECIFIC PERFUME COMPANIES:

So, what happened when Christmas ended, the sales were tallied up, and the reports were released? Well, as noted above, NPD says that 2013 perfume sales were flat for “prestige” (ie, department store) fragrances, while drug store ones sank by 6%.

Britney’s Curious perfume.

However, some specific companies really took a hit. Elizabeth Arden, a huge corporation which distributes everything from Brittany Spears‘ many lucrative fragrances to the super-popular ones from Justin Bieber and Elizabeth Taylor, fared poorly in its second-quarter, in part because of those flat U.S. perfume sales. According to Medill Reports:

Net income fell 22%;
On an adjusted basis, quarterly earnings fell 32%; and
“Quarterly sales totaled $418.1 million, a 10.6 percent drop from $467.9 million in the second quarter of 2013. Revenues from its North American business, which account for about two-thirds of total sales, fell 13.3 percent to $269.6 million from $311.1 million.”

It’s actually a pretty big deal if a company like Elizabeth Arden does poorly in the U.S., because it controls such a big portion of the market here. According to the Elizabeth Arden Wiki-Invest stock page:

The global fragrance industry has a market cap at $36.6 billion dollars. Currently Elizabeth Arden has a 15% market share from their owned and licensed brands North America compared to the 2% market share in Europe. Europe has largest fragrance market at $13 billion which is currently twice that of North America.

Photo: Bruce Weber for Bottega Veneta. Source: stylefrizz.com

Coty didn’t do enormously well in 2013, either. The company’s fragrances generally seem to average out to the mid-level range in terms of department store offerings, as its brands include: Bottega Veneta, Calvin Klein, Chopard, Cerrutti, Marc Jacobs, Chloé, Roberto Cavalli, Sarah Jessica Parker, Beyoncé, Lady Gaga, Madonna, Vivienne Westwood, Vera Wang, and Davidoff. Coty said its fiscal second-quarter earnings for 2013 dropped 33%, though much of that was from weak cosmetics sales. The fragrance sector reported a 2% loss in revenue, but the company’s revenue as a whole sank 4.1% to $1.32 billion.

For the Estée Lauder behemoth, fragrance is only a small portion of their sales. According to Trefis, 49.9% of their stock price comes from skin care, 39.5% from makeup, and only 7.5% from fragrance. The company continues to beat all quarterly estimates with a very strong performance. The full Trefis report states:

The contribution of fragrances to overall revenues has seen a consistent decline for the company, from 19% of total revenues in 2007 to 13% by 2012, driven by higher skin care product demand globally. During the same period, skin care revenue share increased from 37% to 44% by 2012. The skin care product market worldwide reached $100 billion in 2012, growing at an annualized rate of 4.1% between 2007 and 2012 while the worldwide fragrance market reached $37 billion.^[1]^[2] […]

However, despite its declining share, the fragrance division witnesses a strong growth rate in Q2, supported by holiday season spending on luxury fragrance products.

Source: Fragrantica.br

The fragrance division registered a 32% growth in revenues during Q2FY13 while other divisions such as skin care, hair care and make up registered growth rates of 15%, 16% and 9% respectively. Premium fragrance brands such as Jo Malone, Modern Muse and Tom Ford have historically been strong drivers for divisional revenues. Furthermore, the company launched various limited edition fragrance products exclusively for the holiday season which could boost revenues. We expect another quarter of strong performance from the company’s fragrance division. [Emphasis added by me.]

Another company with slightly more “prestige” fragrances also did well. Inter Parfums reported a 19% increase in fourth-quarter sales, according to a report in the Wall Street Journal. You may not know Inter Parfum’s name, but you certainly know the perfume brands it distributes: Lanvin, Van Cleef & Arpels, Balmain, Agent Provocateur, Boucheron, Jimmy Choo, Karl Lagerfeld, Montblanc, Paul Smith, S.T. Dupont, Repetto, Alfred Dunhill, Anna Sui, Shanghai Tang, Oscar de la Renta, Gap, Brooks Brothers, bebe, and Betsey Johnson.

There is clearly a vast divide in the fortunes of Elizabeth Arden and Coty, on the one side, and Estée Lauder and Inter Parfums, on the others. It comes down to the nature of the respective companies’ perfume brands, and underscores the conclusion of one market researcher: prestige sells, even in today’s economy. The NPD global research group states:

Value is important to consumers, but premium-priced offerings are thriving is US prestige beauty. Even though sales for the total prestige fragrance category were flat, fragrances priced $100 and over grew 30 percent in dollars, while face makeup priced at $60 and up increased 28 percent, and skincare for the face gained 15 percent in dollar sales (compared to 2012).

THE SHIFTING SCENT OF THE U.S. WOMAN:

Now that you have the context as a whole, I wanted to talk about one of the more interesting things I discovered. When the average American woman wants to buy a new perfume from a department store, they are increasingly choosing woody orientals! According to an NPD report entitled “The Shifting Scent of a Woman“:

While total industry dollar sales declined slightly to $2 billion in the 12 months ending December 2013, sales of woody oriental scents, the second largest fragrance family, and smaller segments grew during the same time period.

“Floral fragrances aren’t fading away, but less traditional scents are gaining more of the attention from female consumers than ever before,” said Karen Grant vice president and senior global industry analyst, The NPD Group, Inc. “Fragrance is a powerful tool that can exude an image and even empower an individual as an expression of personal preference. With the emergence of more artisanal scents on the market, women are welcoming the opportunity to experiment and explore different options.”

The standalone oriental, woods, citrus, and fruity fragrances are still a small portion of the market, at just 7 percent of women’s fragrance dollar sales, but they are growing at the expense of the larger segments, including the top selling fragrance family, floral. Woody oriental is the only one of the larger blended fragrance families to experience growth in 2013. Two of the top 5 women’s prestige fragrances sold in the US are part of the woody oriental fragrance family, while the other three in the top five are florals and a soft floral.

“The recognizable classics remain strong, but new players are important rising stars to watch,” said Grant. “Today, the opportunity for reinvention afforded by a novel scent coexists with the instant indulgence provided by the classics.”

In my admittedly biased opinion, I am going to credit niche perfumery as having some role in why less traditional categories of perfumery may be gaining ground with the average American women. Just as with fashion being influenced by trends that slowly trickle down from Haute Couture, so too must the more inventive fragrances put out by niche houses eventually trend the commercial perfume giants. You can see it with oud which started as a revolutionary failure with YSL’s M7 (under Tom Ford), but which has now trickled down into every conceivable type of perfume at every price point.

Source: blogs.nordstrom.com

WHAT MEN ARE UP TO:

It seems American and British gentlemen really, really love their fragrances. The Yanks in particular are spending a fortune, which is why I’m including this section here and not in Part II with the rest of the global analysis. An NPD report has the figures for men’s purchases between November 2012 and October 2013:

men’s fragrance juice sales drove positive dollar performance for the overall fragrance category in the US and UK[.] Total fragrance performance was soft elsewhere in Europe, with declines across men’s and women’s offerings, primarily in the EDT segment.

“While women’s individual juices continue to be the top selling fragrance segment across the US and Europe, new launch activity has been a boost for men’s sales across most countries,” said Karen Grant, vice president and senior global industry analyst, The NPD Group, Inc.

In addition to men’s juice sales, the other positive growth segments for both the US and UK prestige* fragrance industries in the 12 months ending October 2013 were women’s juices, and both men’s and women’s fragrance gift sets. With the exception of Spain, which had declines across fragrance segments, there were segments of flat to positive performance in other European countries. Men’s gift sets were the star in France during this time period. In Italy, men’s juice and women’s gift sets held steady.

ALL IN ALL:

Although there seems to be movement in specific areas, I think if you look at the picture as a whole, you will see that the perfume industry in the U.S. continues to struggles. Sales are generally soft, not dynamic and huge. The percentages reported are always very small, moving upwards by about 2% in a lot of cases, or else dropping by 6% to 7%. If you take a bird’s-eye view, make-up and skin care do gangbusters in the U.S., but not fragrances. Even the expensive ($100+) perfumes are only selling moderately if you look at picture as a whole, as opposed to taking a narrow view of “prestige” fragrances vs. drugstore ones.

And remember, the definition of “prestige” here revolves around department store perfumes, not niche. Given the nature of a niche or artisanal company, and the fact that it is privately owned with no need to report to shareholders, I think it would be virtually impossible to find data on how that sector of the industry is doing. The individual companies are certainly not going to report it. I also can’t see niche distributors like Luckyscent, Osswald, First in Fragrance, or Essenza Nobile releasing sales figures by perfume house.

Still, I think it’s always interesting to know how the industry as a whole is doing. To that end, Part II will focus on the global picture, from market titans like LVMH and Givaudan, to popular perfumes and sales in individual countries such as the U.K., France, Germany, The Netherlands, Italy, Spain, India, and the Middle East.