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Fragrance in Good Times and Bad

By: Jeb Gleason-Allured
Posted: October 5, 2009, from the October 2009 issue of GCI Magazine.

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Karen Grant, NPD’s senior global industry analyst and vice president of beauty, notes, “In 2009, we recognize that while consumption will not stop for prestige beauty, it has changed. It has become more careful, more selective and more meaningful. Across all three prestige beauty categories, there were areas that experienced growth despite overall soft performance. We saw growth in premium price, natural and new innovations among trusted brands as well as alternative brand types.”

Resilience Seen in Other Fragranced Consumer Product Categories

Meanwhile, fragranced consumer products categories suffer to a lesser degree—with The Freedonia Group, in its April 2009 report U.S. F&F Market ~$5.3 billion by 2012, predicting growth in the cleaning products and cosmetics and toiletries categories through 2012. “When you look at the consumer products business, volumes can begin to pick up again to a certain extent,” says Carlos. Here, he cites the laundry care category: “You can use a little less, but you will buy laundry detergent.” However, he says, “In categories like air freshening, people may move out of the category for some time; then again, some people may not come back at all. You’re going to see variations.” “When you look at the consumer product side for flavor and fragrance houses,” Carlos adds, “I think you’ll see more of a shift into developing markets. Fragrance houses that want to grow and be strong into the future will need to see their investments into developing markets increase even more compared to what they have in the recent past.”

Opportunities: Developing Markets and New Categories

“The developing world is growing much faster than the developed world,” says Carlos. “I think that’s going to be further accentuated as a result of this crisis. One would expect that in the BRIC (Brazil, Russia, India and China) countries, where growth rates were very high for the past few years, we will still get fairly decent growth rates moving through 2009 and 2010.”

Globally, he notes, “The challenge is: How do we build some potentially new categories in which fragrances can really deliver? There’s a lot of data out there that says consumers will pay a premium for products, provided they see an inherent benefit. [For example], there’s so much noise being made in the United States about cold-water washing detergents and how environmentally friendly they are. It’s hugely reducing the consumption of electricity. There is an inherent economic advantage. [Consumers’] normal cost of wash is greatly reduced. There will be opportunities, provided you can prove you’re bringing some benefit either economically or [via] a brand point of view, which is very important to a final customer.”

Courtesy of Perfumer & Flavorist magazine.