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New Strategic Challenges for Fragrance

By: Rob Walker, Euromonitor International
Posted: November 1, 2011, from the November 2011 issue of GCI Magazine.

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More than ever before, fragrances will need to differentiate from the crowd. And one of the key trends is likely to be a greater emphasis on the personalization of brands, particularly in the higher value developed markets of Western Europe. There will, for example, be a stronger strategic focus on artisanal and natural products. Fragrances that break with convention could also become popular. The key is that innovation departments will be looking to come up with products that stand out for their intimacy and uniqueness.

The cult beauty brand Illamasqua is a case in point. In its first foray into fragrances, it is tapping into the personalization trend by launching Freak in the U.K. Packaged in an art deco bottle that reclines on its side, Freak was inspired by the darker side of Stanley Kubrick’s 1999 film Eyes Wide Shut, according to Illamasqua founder Julian Kynaston. It is a potentially risky strategy to design a fragrance that self-consciously appeals to the alter ego of its consumers—mixing less conventional blends such as opium flowers, belladonna and black davana—but this is an illustration of how the bar is being raised in terms of the creative risk-taking behind branding.

Critically, 20- and 30-somethings across the developed markets are the key consumer target. They are also the world’s most tech-savvy, sophisticated and demanding shoppers. And if brands need to differentiate in their design and scent to entice this Generation Y, the marketing and advertising must do the same. As a result, there will be more personal, even intimate engagement with consumers, both through real and virtual platforms. Ultimately, the more innovative companies are in their branding and marketing, the greater their point of differentiation from competitors.

Super-premium Brands for Bulletproof Consumers

Emerging markets are beginning to see ramped-up investment in super-premium fragrances as companies seek to harness the spending power of the world’s most financially bulletproof consumers.

Russia, Brazil, China, India and Saudi Arabia are forecasted to comprise five of the 10 biggest projected growth markets for super-premium fragrances by 2015, according to data from Euromonitor International. Indeed, Russia is on course in 2011 to dethrone the U.K. as the highest value market in the world for luxury fragrances.