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Super Premium Beauty on Cusp of a New Era of Growth
By: Fflur Roberts, Euromonitor International
Posted: August 31, 2011, from the September 2011 issue of GCI Magazine.
page 3 of 4Chinese cards are not compatible with chip-and-pin terminals in the U.K., so the CUP terminals are crucial to bulking out purchases, especially for ultra-high end products. One Chinese customer in 2011 used CUP to splash out $225,000 on a diamond. And it is increasingly common for a Chinese shopper to buy four or five units of a product, such as a bottle of perfume or a luxury accessory. Such multiple purchases (normally for gifts at home) were much less visible before the terminals were put in place. Selfridges & Co in London has also installed CUP terminals, and much stronger CUP penetration across Western Europe is expected over the next five years as more upscale retailers tap into the lucrative luxury spending capacity of Chinese tourists.
The Most Expensive Smell in the World
Beyond Russia and Saudi Arabia, luxury fragrances was still a nascent category in emerging markets in 2010. However, that is likely to change going forward as wealthy consumers from China, Brazil and India develop a keener interest in the world’s most expensive perfumes, just as they have for the world’s finest wines. Indeed, to 2015, Russia, Brazil, China, India and Saudi Arabia will comprise five of the 10 biggest projected growth markets for super premium fragrances, according to Euromonitor International.
But, what type of super premium fragrances are the Chinese and high net worth individuals from other the emerging markets after? The fragrance industry appears to be falling over itself to get a steer on what BRIC luxury trendsetters are likely to go for in a perfume. Yet, does scent per se play a decisive factor? The world’s most expensive perfume is the limited edition Clive Christian No. 1, which costs around $200,000 for a 30mL bottle. It is not, of course, just any old bottle. It is made of Baccarat handmade crystal, adorned with a 5-carat white diamond and an 18-carat gold collar.
The packaging of Clive Christian No. 1 is the main driver of the price, and this is the key point about luxury fragrances. The scent is important, but it is still a sideshow to the presentation of a bottle and the luxury credentials of the brand. For the new generation of emerging market trendsetters, with cash to spend, the core of luxury attraction is related to how much a brand says about its social status. It is aspirational consumption on a scale that fast-moving consumer goods markets have never seen before.
The latest super premium fragrance from Giorgio Armani (Armani Prive La Femme Bleue) is limited to 1,000 bottles, with a price tag of around $600 for a 100mL bottle. This type of limited edition branding is common in luxury wines and spirits, because it flexes the type of exclusivity that gets fashionistas’ pulses racing. The limited edition brands themselves are not about making money but about creating an aura around an umbrella brand. In fragrances, brand loyalty is strong, but the loyalty is often to the label, not necessarily to a specific scent. Armani Prive La Femme Bleue could, in short, give significant impetus to the Armani fragrance line as a whole. Indeed, much more limited edition branding is expected in luxury fragrances going forward, which in turn will give impetus to the super premium fragrances category.
The Luxury Aspiration X Factor