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Mass Picks Up Slack from Premium’s Decline

By: Carrie Lennard, Euromonitor International
Posted: November 5, 2010, from the November 2010 issue of GCI Magazine.

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A number of premium fragrance companies tried to adapt to the downturn by offering smaller, and therefore more affordable, sizes as a way of providing consumers their preferred brand but at a lower price. For example, Estée Lauder brought out 30-mL and 50-mL bottles of Clinique Happy, which is normally sold in 100-mL bottles.

Deodorants/Body Sprays Profit from Market Saturation

In emerging markets, there is a penchant among low-income consumers for using body sprays as a less expensive substitute for fine fragrances. However, even in developed markets, the use of body sprays has become more prevalent during the global downturn as consumers opt for deodorants instead of fine fragrances—prompting 7% value growth in 2009, according to Euromonitor statistics, despite the economic slowdown. There seems to be a preference for the lighter scents offered by body sprays as the richer, more heavy perfumes have fallen somewhat out of fashion. Furthermore, although it is difficult to quantify, the vast array of scents on offer has arguably led to a backlash against fragrance purchasing. The sheer number of new launches means fragrance purchasing no longer feels special or exciting.

Major companies have recognized the opportunities offered by body sprays. In March 2010, Procter & Gamble announced the introduction of the Fresh Collection of deodorants, under the male-specific Old Spice brand name. The range is marketed as providing “fresh fragrances that are subtle and not overpowering.”

The Markets Driving Global Growth

According to Euromonitor International, Western Europe remained the most valuable region for fragrances in 2009 with value sales of $13 billion, but stagnant growth in the region pulled down overall global growth. Likewise, North America was hit by a decline of 6% in 2009 due to consumer worries about jobs and the economy. Consumers continued to limit discretionary purchases and gift-giving, hurting sales of fragrances. Consumer apathy about the fragrance category in general, in addition to reduced consumer budgets, are the key factors behind sluggish growth in the region.

Latin America was the regional shining star, propping up global fragrance growth. The strongest growth (18%) was seen in mass men’s fragrances, driven by the entrance of more young men into the workforce and the strong economic climate in the region—meaning men had higher disposable income and a need to look and smell good for work.