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Fragrance stood out in the 2006 cosmetics and toiletries market, showing strong growth in 2006, with an increase of 7% to reach $30.7 billion—making it the third largest sector after sun and baby care. In 2005, fragrance was the sixth most dynamic sector, bested by emerging categories such as men’s grooming products and skin care, where value-adding has been aggressive. Euromonitor International looks at what’s driving this change by examining key regions and markets and looking at trends over the past year.
Reverse Meltdown; Direct Sellers
Together, Western Europe and North America account for almost 60% of global fragrances sales in value terms. In spite of these markets’ formidable size, average annual growth since 2000 had, until 2006, been somewhat disappointing, with both regions consistently registering rates below the global average.
Euromonitor International’s 2006 data, however, indicates that fragrances is coming out of the doldrums, with both markets showing growth of over 2%. The premium sector in these markets is driving growth, however, this is somewhat deceptive in that it is in the lower end of premium or discounting that is fuelling sales. In the U.S., for example, manufacturers are exploiting the migration of consumers toward the mass retail environment with innovative strategies geared to this arena. Elizabeth Arden introduced its Curious Britney Spears premium fragrance into the mass-market channels with specially designed smaller packages at price points under $20 to attract younger consumers, which proved a great success. Similar tactics were employed in the U.K., illustrating that creativity and perseverance can go some way toward reviving an ailing category.
Latin America and Eastern Europe led growth in the fragrances sector in 2006, with sales increasing by 21% and 13%, respectively, in U.S. dollar terms. Both markets have a strong tradition of wearing scents, particularly the Latin American market where there are fragrance products marketed for babies and young children, as well as adults. Here, mass fragrances were the engine of growth, as consumers are more concerned about the actual scent than the image of the product; thus, are they more price conscious than those in other markets.