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Global Fragrance Market Booms

By: Diana Dodson
Posted: February 11, 2008, from the February 2008 issue of GCI Magazine.

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Innovation is central to the fragrance market, where launch rates are high, and globalization (besides opening up new markets to international players) is providing opportunities for new product development. Rather than trying to convert new country markets to international trends, for example, some companies are creating brands tailored to a particular local market or ethnic group. In autumn 2007, for instance, Disney launched a Pirates of the Caribbean cologne in the U.S., specifically targeting Hispanic boys ages 4–11. The reverse is happening, too, with manufacturers taking a trend from abroad and introducing it into another market to stimulate new demand. The introduction of baby fragrances by premium brands such as Bulgari and Burberry in countries where there is no traditional usage, such as the U.S. and U.K., is one example.

Appealing to the Younger Set

As in the rest of the cosmetic and toiletries market, women are the primary consumers, with women’s fragrances accounting for almost two-thirds of total sales. However, the men’s segment has seen a surge in demand in the past two years—the result of changing male grooming patterns, in which the average man now spends longer in the bathroom and a larger portion of his income on shaving products and toiletries. Manufacturers’ efforts to attract men away from inexpensive body sprays, through the introduction of new lines, partner scents and widespread advertising, have also helped to spur value sales.

Targeting younger market segments, teens in particular, is a more recent development, and one which holds strong potential for premium fragrances. Today’s 13–19 year olds (of which there were approximately 860 million globally in 2007) have far more spending power than any generation before them and are serviced by a global teen products market worth nearly $250 billion per year, according to Euromonitor International estimates. Not only are they more affluent, today’s teens are generally more sophisticated consumers than ever before, boding well for premium fragrances.

Ralph Lauren, Christian Dior and Yves Saint Laurent are just three of the high-end fragrance franchises that have begun targeting a younger demographic. Valentino joined their ranks in late 2006 with the launch of  Rock ‘n Rose, the aim of which is to inspire a new generation of young Valentino consumers. A year on and the fashion house has followed up with a line extension, Rock ‘n Rose Couture. Burberry has unveiled plans for a new youth fragrance called The Beat to update the label’s image with a more energetic, trendy edge.

No Slump in Celebrity Trend

Celebrity scents are the biggest phenomenon to hit the global fragrance market in recent years. By riding on an established image with a pre-existing consumer base, fragrance makers can cut back on marketing—an important savings in a launch-heavy sector that involves high innovation costs. Although it can be risky to rely on a celebrity’s image, too easily tarnished by today’s ubiquitous media, the trend currently shows no signs of abating. Thirty new celebrity scents have hit U.K. shelves alone in 2007. According to a U.K.-based fragrance retailer The Perfume Shop, they account for 40% of the total market and have enjoyed a sales boom of 2,000% since 2004.