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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.
page 4 of 4The fragrance industry is currently falling over itself to understand what high net worth individuals in emerging markets want from a scent. Yet, aspiration issues, probably more than the scent itself, are likely to be key. Specifically, prestige credentials and what brands convey about social status will tend to determine performance in the upwardly mobile consumption bases of luxury goods hot spots, such as China and Brazil.
The latest super-premium fragrance from Giorgio Armani (Armani Prive La Femme Bleue) has, for example, the type of prestige value that will appeal to luxury goods fashionistas from emerging markets because it is limited to only 1,000 bottles. This type of limited edition branding is common in luxury wines and spirits, and is likely to become increasingly visible in fragrances going forward. The limited edition brands themselves are not about making money, but about creating an aura around an umbrella brand.
What seems clear is that a new and potentially tougher period of global economic instability does not necessarily mean a curb on fragrance spending or on investment from the leading players. The industry has shown itself to be resilient to negative shifts in discretionary spending power, especially in mature markets, while the emergence of a spendthrift Generation Y has created a lucrative new consumption pool. The strategic difficulty, as ever, is how to differentiate from competitors, and in the year ahead, that will be the sternest test.
Rob Walker, senior fast-moving consumer goods analyst, Euromonitor International, can be contacted at firstname.lastname@example.org.