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Growth for the Long-term

By: Briony Davies
Posted: October 5, 2006, from the October 2006 issue of GCI Magazine.

Players in premium fragrances have for some time been blighted by saturation of usage in key markets, increased consumer price consciousness and competition between retailers. Yet, growth of 3% in 2004 is indicating that manufacturers’ attempts at rejuvenation of this highly mature sector are having some impact. Euromonitor International looks at key regions and markets, monitors trends throughout the last year and recommends future strategies for maximizing the category’s potential.

Meltdown in Mature Markets

Western Europe and North America account for almost 80% of global premium fragrances sales in value terms. In spite of their formidable size, average annual growth since 2000 has been somewhat disappointing with both regions consistently registering rates below the global average. After three years of shrinkage, North America appears to be coming out of the doldrums with gains of nearly 3% for the second year running in 2005.

The beleaguered U.S. market received a boost from a number of new launches in the men’s arena, including Armani Code, Ralph Lauren Black and Kenneth Cole Signature. All were supported by bold advertising campaigns, resulting in 5% growth in men’s premium fragrances versus 2.5% in women’s fragrances.

The explosion of celebrity fragrance launches after the success of Curious Britney Spears in 2004 fueled growth in premium women’s fragrance. That high growth witnessed in 2004 was not quite echoed in 2005.