Frederic Malle, Estee Lauder & Perfume Industry Changes



As many of you know by now, Estee Lauder has purchased Les Editions de Parfums Frederic Malle after a two-month spending spree that included Le Labo and Rodin Olio Lusso. The sale of Le Labo — a niche brand seen as hip, edgy, and expensive — came as a shock, but it was nothing compared to the outcry which greeted the news concerning Frederic Malle. He was different, he was special, he was Frederic Malle! His Editions de Parfums was considered one of the leaders of niche perfumery, adulated for its elegance and class, and respected for its innovations. For example, it was Frederic Malle who truly made us all pay attention to the men or women who actually created the fragrances by featuring the name of the “nose” on the actual bottle, and giving them the recognition that they had heretofore been denied. Malle symbolized niche and sophisticated luxury to such an extent that the Estee Lauder news was greeted with cries of “Et tu, Brute” and claims of a sell-out.

My response was something else. The very first second, I was utterly astounded but my disbelief soon gave way to an inexplicable (and admittedly hard to explain), “I’m not surprised.” My real, main, and primary reaction, however, was to see the news through the lens of Estee Lauder as the flip-side of industry trends represented by Elizabeth Arden and Coty. Most of you will probably wonder what on earth they have to do with anything but, as I’ll explain here, the Frederic Malle acquisition symbolizes the way the industry leaders respond to market changes by diverging into two, very separate, polar opposite directions, and that may be telling for the future.

As a result, the focus of this piece will be as much on the perfume industry and its market changes as it will be on Frederic Malle himself. I’m afraid that means quite a lot of financial information and business figures from the middle section onwards, but I’ve noticed a definite trend over the last 8 months that I think is significant. The Malle acquisition accompanied by the latest Estee Lauder quarterly earnings report seems to underscore my theory, to my eyes at least.


We should probably talk about Frederic Malle first, as that is what most people are interested in, and what a few people have already asked me about already. The honest answer is that I think it’s impossible for any of us to reach a set, definitive conclusion regarding his reasons in the absence of an actual statement from him. Everything is just speculation as to his motives, and heated, wildly emotional conjecture doesn’t really serve much purpose. Plus, being upset about it feels presumptuous, inappropriate, or rude, as though he owed us something simply for buying his fragrances. I don’t think he does, and I don’t share that degree of fervour.

Malle as "publisher" of a library of perfume novels. Source:

Malle as “publisher” of a library of perfume novels. Source:

In all candour, I wasn’t particularly upset about the news. One reason why is that I’ve always seen Frederic Malle exactly as he’s presented himself: a curator or publisher of other people’s novels. I have no idea how much of a personal imprimatur he places upon the development process or on a perfumer’s final direction, which may be why I’ve never had the sense that he’s a creative director like Serge Lutens or Amouage‘s Christopher Chong. Perhaps I’m mistaken, but the end result is that his decision to continue on as an advisory consultant didn’t seem to be the most drastic of changes. It was merely a matter of degree, as opposed to any real likelihood of Frederic Malle forever disappearing from the perfume world.

The real reason for people’s outrage seemed to be because they viewed Estee Lauder as a symbol of the anti-niche. I understand that one much better. Yes, the company is a behemoth whose main focus is the financial bottom-line and, yes, I have no doubt that the nature of “Malle” perfumes will change under their control to a degree, even with Malle continuing on as an advisor. After all, Jo Malone changed under Estee Lauder with the fragrances being reformulated or turned weaker, so it’s bound to happen with Le Labo and Les Editions de Parfums Malle to some extent as well.

Oakmoss or tree moss, one of the EU's targeted ingredients.

Oakmoss or tree moss, one of the EU’s targeted ingredients.

But let’s be honest, Frederic Malle has already reformulated his fragrances over the last year or two in anticipation of the additional EU restrictions. He’s flat-out said so, and longtime Malle fans I know who have recently re-tried some of his scents have noticed a definite difference already. Estee Lauder had nothing to do with this. Did the upcoming IFRA/EU legislation? I find it a bit of a silly stretch to think that the proposals — solely by themselves — forced Frederic Malle to sell his entire company. He is not in a position similar to Grasse, an area so impacted by current EU perfume regulations that they’ve sought UNESCO protection as a World Heritage site. (You can read all about Grasse, Robertet, and the split within the perfume industry in a piece I wrote earlier this year.)

Still, I’m sure the regulations were one small factor in his overall considerations. In a January 2013 piece on perfume reformulations and IFRA/EU regulations, I noted how Malle told Reuters that the restrictions had cost him “hundreds of hours” and “endless tests.” In fact, he told Reuters:

‘If this law goes ahead I am finished, as my perfumes are all filled with these ingredients,” said Frederic Malle…. The impact on luxury perfume brands as a whole would, he said, be “like an atomic explosion and we would not have the means to rebuild ourselves.’

He was equally frustrated about the matter this year, perhaps even more so. Another EU/IFRA piece I wrote covers it in more detail, but Monsieur Malle told Reuters that:

he was forced to reformulate about a quarter of his scents due to the upcoming EU regulations, leading to extra costs – but costs which he found difficult to quantify as they also represented time invested to rework the formulas.

“It can take more than six months to reformulate a perfume, and a minimum of some 30 tests … and this is precious time that cannot be spent on creating new perfumes. So to protect a small portion of the population, we are making the rest suffer,” he said.

Source: Forty Five Ten.

Source: Forty Five Ten.

Be that as it may, I think the issue of the upcoming EU regulations raises an interesting set of competing, opposite arguments. If Monsieur Malle found the regulations to make his life more difficult in guiding perfumers to make the sorts of “novels” that he or they wanted to make, would he then go to the extreme of selling to a company which might force him to change his ingredients, style or luxury aesthetic even more as a cost-cutting measure? In other words, if he thought IFRA/EU regulations were bad in terms of their effects, wouldn’t Estee Lauder be even worse in that regard? In a sense, his views about the IFRA/EU situation would actually make it seem less likely for him to sell to someone like Estee Lauder, instead of being the cause of that sale. On the other hand, one could argue the opposite as well.

Personally, I think the spectre of Estee Lauder as a corporate bogey-man or destroyer of companies is an argument that fails to take some practical business realities into consideration. First, they are not L’Oreal — which is truly a vile, parasitic, destructive organisation in my opinion, though I am the first to say that I have a huge bias and hostility to the latter stemming from their handling of YSL Parfums. Still, in my view, L’Oreal would take anything it got its grubby hands on and run it into the ground for the sake of the almighty dollar. Estee Lauder, in comparison, seems closer to Shiseido which is, in essence, the parent company of Serge Lutens. No-one can say that Shiseido dictates to the Great Serge what sort of perfume he will put out, and I highly doubt they have an input on perfume quality or the cost of the ingredients he uses.

Tom Ford. Source:

Tom Ford. Source:

Estee Lauder seems slightly more hands-on than Shiseido, but the second reason why I think one shouldn’t automatically see them as a bogey-man that will fully and completely destroy Frederic Malle is because I think they treat the luxury brands under their purview (like Tom Ford) differently than, say, Jo Malone. The reason is simple: they bought (or funded the creation of) Tom Ford’s luxury, high-end brand to make money, and the best way to do that is to let the brand director do his thing. Estee Lauder provides the massive distribution network and resources, but it seems more of a supporting role, in my eyes. Yes, there may be occasional guidance such as the likely suggestion to make flankers of existing, really popular fragrances (e.g., the new trio in the recently expanded Oud Wood Collection and the new duo in the Neroli Portifino one), or push business-related ideas in order to break through barriers in new markets (Asia and the Atelier d’Orient Collection).

Edie Campbell for YSL Black Opium. Photo: Txema Yeste & Daniel Wolfe. Source:

Edie Campbell for YSL Black Opium. Photo: Txema Yeste & Daniel Wolfe. Source:

But I think the basic reality of most multi-national conglomerates makes it rather ridiculous to assume that an Estee Lauder overseer is telling Tom Ford what to do on a constant basis, let alone how he should make his fragrances. Corporations don’t become that successful by micro-managing their stable of “talent,” and they’d get better results if they let their stars do the very thing which made them successful in the first place. (This argument does not seem to apply to L’Oreal because, as the continuing case of YSL parfums demonstrates, L’Oreal is an idiot. The fact that Saint Laurent‘s own Creative Director, Hedi Slimane, publicly distanced himself and decried any involvement — any involvement whatsoever — in the creation of the new Opium flanker, Black Opium, is merely the latest example of how L’Oreal has destroyed their YSL Beauté division.)

The key difference between all these brands may be the strength of their creative directors. Tom Ford has a clear vision, as does Frederic Malle. I haven’t the faintest clue what cretin runs L’Oreal’s YSL perfume division. L’Oreal’s YSL Beauté page mentions a creative director for the makeup division but noticeably gives no name at all for their perfume one. (And that’s on a page about its fragrances!) There certainly doesn’t seem to be a strong, central command that everyone knows about in the manner of Tom Ford, Serge Lutens, Christopher Chong, and the like. So, in fairness, perhaps L’Oreal does need to micro-manage as a result. Then again, it’s their own bloody fault for not putting the division under a strong leader with a hardcore perfume background and vision to begin with. Plus, L’Oreal seems to cut costs, issue flankers, avoid perfume innovation, and eschew a focus on truly luxury creations in a way that is quite different from other companies, so they’re a double idiot.

John Dempsey, Estee Lauder Group President. Source:

John Dempsey, Estee Lauder Group President. Source:

In short, I don’t think Estee Lauder will do the same thing to Les Editions de Parfums, but it really may depend on just how much of a role Frederic Malle will play in the company’s future. A Cosmetics Design Group report says that someone called John Dempsey will oversee Malle. However, he is Estee Lauder’s Group President with far-reaching responsibility for many brands, including the newly acquired Le Labo, and Rodin Olio Lusso. I highly doubt that he will have day-to-day responsibilities for (or control over) the future perfumes that the new Malle brand puts out.

John Dempsey, left, at a gala in New York with designer Donna Karan, in black, actress Robin Wright, second from right, and fashion photographer Peter Lindbergh. Photo: Elizabeth Lippman for The Wall Street Journal. Source:

John Dempsey, left, at a gala in New York with designer Donna Karan, in black, actress Robin Wright, second from right, and fashion photographer Peter Lindbergh. Photo: Elizabeth Lippman for The Wall Street Journal. Source:

Plus, where would he find the time? M.A.C. (and then cosmetics in general) seems to be his main area of interest, and he needs one assistant just to manage his busy social calendar! I admit, I found a detailed 2014 WSJ piece on the social butterfly, gala-hopping Mr. Dempsey to be a little alarming to read, but a man who goes out “four nights a week … all in the service of keeping M.A.C cool and current” is hardly going to bother much with Les Editions de Parfums. More importantly, I do not believe that Malle himself would fully abandon what is essentially his brainchild and legacy, let alone to someone with as much on his plate as John Dempsey.

So, those are a few of the main reasons why I don’t think the sale necessarily and automatically constitutes “the end times” for the Malle brand, and why he may have been willing to consider making a heck of a lot of money out of the deal in the process. But there are other factors which I’ve wondered about as well. One of them is the issue of possible fatigue, and how that has affected other perfume houses. Frederic Malle founded Les Editions de Parfum in 2000 but, according to his Fragrantica page, he first began learning about and working with perfumes in 1986.

Serge Lutens in the Palmeraie Gardens, Morocco. Photo: Patrice Nagel, courtesy of Serge Lutens and Shiseido, France.

Serge Lutens in the Palmeraie Gardens, Morocco. Photo: Patrice Nagel, courtesy of Serge Lutens and Shiseido, France.

Nevertheless, he hasn’t been at it as long as Serge Lutens who may be his only peer in terms of leadership of the niche world, as well as the respect and veneration accorded to him. Uncle Serge released his first fragrance in the early 1980s and I have to say, with the greatest love to him, that his time in the trenches is starting to show. There has been a marked shift in the style of his perfumes over the last 5 or 6 years and — while I hate to say it, I must — there has also been a sharp decline in their revolutionary brilliance, innovative spirit, and distinctiveness. After a 30-year stretch in the field, with twice yearly releases, it’s not too surprising that one might suffer from a subsequent paucity of fresh ideas or creative exhaustion.

In the case of Frederic Malle, perhaps fatigue and/or a desire for new, artistic pastures beckoned in addition to all the many other reasons? We will never know, particularly as the full parameters of Malle’s forthcoming duties, responsibilities, and involvement as an advisory “consultant” have not been made clear at this point. Still, a lot of artists want to go out at the height of their careers, so perhaps it’s not a truly terrible thing that Malle is going to take a step back or avoid staying until the horse is beaten into the ground. For me, personally, his last release (Eau de Magnolia) showed a lack of distinctiveness, as well as an unimaginative, simplistic blandness that felt quite commercial. Perhaps it’s better this way in the long run, and we’ll be spared the Malle equivalent of something like Laine de Verre or La Vierge de Fer, two recent Lutens fragrances whose names I can never write without wincing. Still, I must repeat what I said at the start, which is that we’re all stuck with speculation, so talking about the future is even more hypothetical. None of us can really know what fueled Monsieur Malle’s decision, or what may happen down the road.


For me, Frederic Malle’s motivations were never my main thought upon hearing the news, and my mind went almost instantly to… Elizabeth Arden and Coty. Yes, I know that sounds extremely odd, but bear with me for a while. I’ve written quite a bit on the overall fragrance industry from the U.S. market to the global perfume industry, the celebrity one, how Brazil has the largest market in the world, China and Japan’s markets and fragrance culture, general perfume usage or cultural trends, and sales figures for certain companies or best-selling perfumes within various countries. As a result, I skim over financial reports a few times a week, and get daily alerts on perfume sales. About 6 to 8 months ago, I noticed an emerging pattern in the Elizabeth Arden and Coty articles that were popping up in my inbox. Both companies were suddenly, and quite seriously, starting to struggle. That’s significant because they are both industry leaders who individually control a big portion of the fragmented U.S. perfume market.

Let’s start with Elizabeth Arden. According to the company’s Wiki-Invest stock page:

The global fragrance industry has a market cap at $36.6 billion dollars. Currently Elizabeth Arden has a 15% market share from their owned and licensed brands North America compared to the 2% market share in Europe. Europe has largest fragrance market at $13 billion which is currently twice that of North America. [Emphasis added by me.]

The company distributes everything from Brittany Spears‘ many lucrative fragrances to popular scents from Justin Bieber and Elizabeth Taylor. As discussed in my Celebrity Perfume Industry piece, one of Justin Bieber’s fragrances was reportedly responsible for driving the entire U.S. perfume industry one year with its record sales. Meanwhile, Britney Spears has reportedly sold billions (yes, with a “b” as in BILLIONS) of dollars worth of perfume, while Elizabeth Taylor may still the greatest of them all and seems to rule the roost each year for annual celebrity sales.

As a whole, the company’s portfolio of brands skews toward the celebrity and lower-end designers, not the “luxury” market, as Tom Ford is considered to be, let alone the actual “niche” one. Unfortunately for Elizabeth Arden, the celebrity market has been sinking from its once-great heights, with the rare exception of Paris Hilton. WWD says she has sold over $2 billion dollars worth of perfume for another company (Parlux) over the course of the last 10 years, though mostly overseas. Elizabeth Arden’s brands haven’t held up as well, despite controlling Britney Spears’ creations which have probably outsold Paris Hilton’s over a longer period of time.

In 2014, events that had their roots in 2012 and 2013 culminated with the overall U.S. fragrance market having stagnant sales — and it completely clobbered Elizabeth Arden. In February, Medill Reports reported:

  • Elizabeth Arden’s net income fell 22%;
  • On an adjusted basis, quarterly earnings fell 32%; and
  •  “Quarterly sales totaled $418.1 million, a 10.6 percent drop from $467.9 million in the second quarter of 2013. Revenues from its North American business, which account for about two-thirds of total sales, fell 13.3 percent to $269.6 million from $311.1 million.”

In October, Elizabeth Arden posted its third, straight quarterly loss. The Guardian newspaper states that they “reported a 25% drop in share prices and a worrying 28% fall in sales,” and that the company “partly attributes its misfortune to the waning popularity of celebrity perfumes.” (That led one British tabloid to stupidly write “Perfume bosses blame Justin Bieber for sales slump.”) However, Justin Bieber is not responsible for all the ills in the world, much as it pains me to admit, and Elizabeth Arden had a more logical response: they continued their corporate restructuring plans that they’d first announced in June, bailed on any further expansion, engaged in massive cost cutting, and put an end to some unprofitable fragrance licensing contracts.

Bottega Veneta's new Knot perfume. Source:

The new Knot perfume from Bottega Veneta, one of Coty’s big brands. Source:

Coty may be doing even worse than Elizabeth Arden, but they are similarly important in terms of U.S. market share. A USA Today newspaper report from March 2014 states that “Coty is No. 2 with $740 million in sales, or almost 13 percent of the market.” That percentage means that you know of their lines even if “Coty” itself is not a name that you immediately think of when you go to Sephora or to a department store. Some of the brands in their portfolio include: Bottega VenetaCalvin Klein,Chopard, Cerrutti, Marc Jacobs, Chloé, Roberto Cavalli, Sarah Jessica Parker, Beyoncé, Lady Gaga, Madonna, Vivienne Westwood, Vera Wang, and Davidoff. As a whole, Coty’s arsenal skews more high-end than that of Elizabeth Arden, but there are some exceptions, so I’d say that Coty thereby averages out to the mid-level range

Unfortunately, being at the middle of the industry spectrum hasn’t helped the company. For 2013, Coty said its fiscal second-quarter earnings dropped 33%, though much of that was from weak cosmetics sales. Its fragrance sector reported a 2% loss in revenue, but the company’s revenue as a whole sank 4.1% to $1.32 billion. In May 2014, Coty continued to lose money, and the Motley Fool said they had “given investors a year-over-year loss of more than 27%. The company’s dull performance continued into the fourth quarter, when it posted yet another big loss.” [Emphasis added by me.]

It got worse. This month, a Cosmetic Design report said that Coty’s CEO had stepped down and a new management structure was put in place after the company reported a quarterly profit of only $10.6 million as compared with a year-earlier profit for the same quarter of $93.5 million! That is a walloping difference, and a lot of it had to do with perfumes. The Cosmetic Design group states that fragrances are Coty’s “top revenue driver,” but that previously stalwart group was now losing money. To be specific, a 2.7% decrease in sales to $640 million.

Coty’s response to its revenues losses and to the stagnancy of the U.S. perfume market (which probably triggered it) has been the complete opposite from Estee Lauder which, as I’ll discuss shortly, has also had to deal with some sales issues. In a nutshell, Coty’s reaction was to go low-end and team up with Avon of all people, mostly in an attempt to leverage the latter’s strong foothold in Brazil which has the largest fragrance market in the world. You can read about Brasil’s voracious perfume appetite and Avon’s network there in my piece on the subject but, for our purposes here, let’s just agree that brands like Chopard or Bottega Veneta are not in the same class as Avon’s offerings.

So, for me, Coty’s new partnership reads as a sign of desperation, particularly as I don’t view Avon as being either a luxury company or the most reputable entity around. The Motley Fool article states that, in 2008, “Avon was accused of paying bribes in China to develop new markets,” and that the company might now have to pay as much as $132 million to settle the issue. While payola might be seen as ” the cost of doing business” in some emerging markets and on occasion, it sounds as though Avon took it to quite an extreme — and I think that says something.

Coty and Elizabeth Arden’s plight matters because they have a much larger share of the perfume industry in America than Estee Lauder. A March 2014 USA Today article (on how Procter & Gamble’s “prestige” fragrances generates $2.5 billion dollars a year for the company) ranks the U.S. perfume industry leaders by market share as follows:

  1. L’Oreal.  (“No. 1 L’Oreal holds less than 17 percent of U.S. fragrance sales with $975 million, according to industry tracker Euromonitor.”)
  2. Coty. (“$740 million in sales, or almost 13 percent of the market.”)
  3. Elizabeth Arden. (Roughly 11%, according to that article, which differs from the 15% that I’ve read elsewhere).
  4. Estee Lauder. (A bit less but roughly 11% as well.)(Other reports quoted below say that Estee Lauder’s perfume division is only 7.5% of the company’s size and revenues.)
  5. P&G/Procter & Gamble. (They have “nearly $600 million in sales and 10 percent of the market.”)

So, if you really want to know how the perfume industry is doing in a major market like the U.S., the key is not Estee Lauder’s purchase of Frederic Malle as much as these other companies. I think they reflect wider trends because they control the largest sectors within the industry, from celebrity fragrances up to the middle of the range. And the main trend they are reflecting now is that low-end or more affordable fragrances are not selling well.


There is one glaring exception to the perfume industry’s ongoing struggles: the niche and luxury perfume markets. As a point of clarification, various analyst reports seem to posit a definitional difference between the “prestige,” “luxury,” and “premium” sectors, as does the Fragrance Foundation’s classification of particular scents when it hands out its FiFi Awards. But none of them ever really define their terms, and it seems to me as though “luxury” is often used synonymously with “prestige” or “premium.” In all cases, though, it appears as though “luxury” is defined at a much lower pricing bar than it would be for the niche market. We’re not talking about Amouage or Roja Dove, but things priced over the $100 barrier for the most part. Still, it is that sector, along with the niche one, which has seen the strongest growth in an otherwise stagnant to declining market.

It’s been that way for a while now, with the momentum only growing stronger. Consider a 2012 report from the market-research company, NPD, which examined two sectors that they categorized as “luxury” (or “high-end designer”) and “jewellery and niche fragrance.” For the second group, NPD’s chief analyst, Karen Grant, lumped jewellery brands like Boucheron, Cartier, and Bulgari with “niche fragrance brands like Creed and Jo Malone.” She then put all the sectors under the “prestige” umbrella (which seems a bit different than what I’ve seen from some other researchers), and provided the following data:

  • In 2012, the prestige fragrance industry showed robust sales of 1.6 billion dollars (1.24 euros) in U.S. department stores year-to-date (January to September 2012), with men’s fragrance sales growing slightly faster than women’s.
  • Jewellery and niche brands boosted those U.S. sales of prestige fragrances.
  • The brands may only account for a tiny 9% of the U.S. prestige fragrance market, but they are “creating a new market dynamic.” In fact, “they are growing faster than any other type of fragrance in the prestige space and their combined sales are actually more than double the size of prestige celebrity fragrances.” [Emphasis added by me.]
  • “In addition to niche and jewellery brands experiencing the largest dollar growth, they generate sales at one of the highest average price points in the prestige fragrance market. While the average price in women’s and men’s for these fragrances are about 70 US dollars, selections in this space may be in excess of 350 US dollars and leading brands are often in the 200 US dollars range.”
Source: NPD

Source: NPD

That was 2012, but both the prestige/luxury and niche sectors continue to do well. For 2013, NPD’s Karen Gilbert later reported: “Even though sales for the total prestige fragrance category were flat, fragrances priced $100 and over grew 30 percent in dollars.” For 2014, she told MediaPost in September that “[s]ales of prestige fragrances sales are up 2% in the U.S. this year, with A-list designer brands, such as Chanel, accounting for about 70% of the market.”

If you ask me, 2% is not a truly significant figure, and somewhere, in one of the gazillion things I’ve read each week, I recall a report that the purely niche (not designer or luxury) industry is actually doing even better. I’ve looked and looked, but can’t find that quote now, so I’ll stick with giving you something recent from Karen Grant regarding how “artisanal” brands (which seems to mean “niche”) have “more than doubled” in sales since 2009 and have “consistently been the fastest-growing part of the fragrance market[.]”

'My Burberry' campaign starring Cara Delevingne and Kate Moss. Photo: Mario Testino. Source:

‘My Burberry’ campaign starring Cara Delevingne and Kate Moss. Photo: Mario Testino. Source:

The success of higher-end, more expensive perfumes in the face of the industry’s otherwise flagging momentum seems to have led one company with big aspirations to take a very revolutionary, drastic path. Last year, Burberry decided to rock the boat completely by dumping its 20-year beauty distribution partnership with Interparfums SA, and acting as a free agent or lone wolf. Then, they went rather 21st century in order to sell their new Francis Kurkdjian perfume, My Burberry, all by themselves.

Two articles from the Business of Fashion and MediaPost detail their efforts but, in a nutshell, it ranges from multi-platform releases to the harnessing of modern social media. For example, there are smartphone digital uses of monograms (or something like that), the chance to create your own personalised My Burberry commercial that you’d then be able to see on Britain’s Channel 4 On-Demand television service, and interactive billboards. Going more old-school, Burberry also launched what had to be an astronomically expensive media campaign. As Business of Fashion describes it,

The multi-pronged launch will incorporate several of the brand’s key marketing pillars, including iconic British models and British music. The campaign, lensed by Mario Testino, features Kate Moss and Cara Delevingne, appearing together in marketing for the first time, while British musicians Jeff Beck and Joss Stone’s rendition of “I Put a Spell on You” provides the soundtrack. But it’s the sophisticated digital customisation elements that really set the launch apart. [Emphasis to names added by me.]

Part of the My Burberry video. Source: YouTube.

Part of the My Burberry video. Source: YouTube.

Companies often spend a ton on media campaigns, with Chanel No. 5 being a prime example, but I think the perfume industry’s sagging sales means that many of them have to do more than ever before. Burberry has chosen to act alone, without a massive distribution arm behind them like everyone else, so they must try even harder still. The ever-present Karen Grant of NPD calls their solo approach risky but “revolutionary,” telling MediaPost that Burberry’s use of “the online space to distribute the product might allow them to be less restricted in their approach. The brand resonates with a very young audience, who see it as new and fresh.”

Burberry is a complete outlier in terms of what a company is willing to do in terms of changing its fortunes in the perfume industry. The norm is better represented by Coty and Elizabeth Arden’s approaches which is namely, to shrink back, avoid expansion, cut costs, and/or go low-end. However, on the complete flip-side of the equation, there is the Estee Lauder route.


Estee Lauder has also suffered sales losses, but they’ve taken the exact opposite approach to other perfume giants, by spending more money, aiming bigger, and going even more high-end. It might be compared to “doubling down” in poker. Yet, their expansion into a niche brand like Frederic Malle is really a logical extension of their existing portfolio which already contained luxury names across the beauty, skin care, and perfume sectors. Elizabeth Arden, in contrast, had no such names. Mid-range Coty really didn’t either, at least nothing equivalent to the caliber of Tom Ford. Their options were limited as a result.

For Estee Lauder, the timing was now perfect for a number of reasons. First, there was the shocking news that the company had not only experienced a  2% decline in sales, but that their cornerstone “skin care division, which is the largest segment for Estée Lauder, solely contributed to this decline in sales.” [Emphasis added by me.] A truly brilliant, detailed report from Trefis explains Estee Lauder’s finances in detail and by sector, but the bottom line is still quite astonishing. For decades now, Estee Lauder’s skin care division seems to have powered through everything in its path and raked in the money. Even more shocking, their perfume division actually performed better in comparison! Instead of declining, fragrance sales grew to $377 million, “supported by brands such as Jo Malone and Tom Ford.” I had to read several other reports just to believe it, but it’s true, fragrance outperformed skin care on a sales percentage basis, and it is largely thanks to the “niche” or “luxury” brands.

Jo Malone fragrance via

Jo Malone fragrance via

In fact, an earlier 2014 Trefis analysis shows just how well Estee Lauder’s tiny perfume division has been doing. While the group’s overall size as part of the company or its contribution to Estee Lauder’s revenues has declined over the years, it has actually achieved three times the growth rate of other divisions. Trefis states:

despite its declining share, the fragrance division witnesses a strong growth rate in Q2, supported by holiday season spending on luxury fragrance products.

The fragrance division registered a 32% growth in revenues during Q2FY13 while other divisions such as skin care, hair care and make up registered growth rates of 15%, 16% and 9% respectively. Premium fragrance brands such as Jo Malone, Modern Muse and Tom Ford have historically been strong drivers for divisional revenues. [Emphasis added by me.]

Obviously, as the Le Labo and Malle purchases demonstrate, Estee Lauder wanted to capitalize even further on that growth by expanding into the truly “niche” (as opposed to “luxury”) sector, and the timing was finally perfect due to favorable currency rates. The EU’s economic recession has put the dollar in a stronger position than the Euro for the first time in a while, meaning that corporate acquisitions of European firms will cost less than before.



Plus, I’m pretty sure that Estee Lauder has huge cash reserves to spend on expansion. I really wish I could show you Trefis’ graphics for the company because they are a thing of simplified beauty. One overview chart puts Estee Lauder’s total revenues at $10.80 billion dollars. (Fragrances make up $1.40 billion of that figure.) After subtracting operating expenses, Trefis puts Estee Lauder’s net income of $1.17 billion. I’m not a finance or marketing expert by any stretch of the imagination, and would place my business understanding at a level only slightly higher than the village idiot, but a net income of more than a billion dollars after expenses seems rather flush to me.

Finally, there is supposedly some sort of favourable tax benefit to investing in European companies, which is where I assume Malle and Le Labo are registered. My father has a finance background and tried to explain the European corporate tax situation to me, but I’m afraid the details went over my head. My mind tends to shut down before anything mathematical or financial, and there is a reason why I avoided business school like the plague. This is not an area I enjoy, especially when the word “taxes” comes into play, but the essential gist of it seems to be that there are a number of tax benefits and loopholes for U.S. parent corporations who own European subsidiaries. I have the sense, perhaps mistaken, that the parent company actually pays taxes under their children’s law, instead of their own. Consequently, any future profits by Frederic Malle or Le Labo would be taxed under the more lenient EU tax rate or be protected by any tax loopholes which may apply, thereby sheltering Estee Lauder’s revenue from the stricter U.S. laws. (The NY Times had a piece just last week on the extent to which U.S. investment has flooded into European countries like the Netherlands, Ireland, and Luxembourg, among others, as a result of favourable tax treatment. There are not only loopholes galore, but many multinationals also seem to carve out secret deals with individual governments. Starbucks, Amazon, and Apple are a few examples.)

In Estee Lauder’s eyes, the overall financial analysis probably looked like this:

deep pockets + weaker EU currency rates + lower acquisition costs of European perfume houses + niche’s increased market profitability + better EU tax situation = WINNING!

Beauty Industry players. Source:

Beauty Industry players, from a 2013 piece by Chandan Dubey.

One of the few companies who could possibly do the same thing as Estee Lauder is L’Oreal. I don’t count LVMH because they already focus solely on luxury companies as it is, while L’Oreal is more mainstream. They are ranked No. 1 in terms of U.S. perfume market share, and No. 1 for beauty worldwide, so they have deep pockets as well. Plus, they have an existing quasi-luxury portfolio, so niche brands would fit in more appropriately than, say, in Unilever’s business. In point of fact, I think L’Oreal might have been the very first to target niche or edgy brands for acquisition with the goal of global expansion. For example, they took over Urban Decay in 2012 and planned to expand the latter into China in 2013.

Yet, L’Oreal’s efforts seem limited to the cosmetics or beauty sector, and there is nothing comparable to the Malle or Le Labo purchases. I’m not surprised one whit. To my eyes, L’Oreal barely bothers with its own, existing perfume brands as it is, so I hardly see them buying out someone else’s company. Yet, I admit that my unrelenting anger and bitterness regarding YSL is probably at play here.


One of Estee Lauder's higher-end, quasi-"niche" Middle East exclusives, Wood Mystique. Source:

One of Estee Lauder’s higher-end, quasi-“niche” Middle East exclusives, Wood Mystique. Source:

Estee Lauder’s recent spending spree is significant for a few reasons. First, I think they alone have had the foresight to see niche’s potential, both as added value to their overall corporate identity but also as a way of shoring up the sales of other divisions. Unlike other companies like, say, Dior or Chanel, they are not merely launching a quasi-niche, more exclusive fragrance collection of their own. (Estee Lauder has already done that, by the way, with certain Middle East exclusive perfumes.) No, they are actually taking over entire niche companies, one after another. This is a new development for the industry, as well as a recognition of niche’s growing strength and overall financial profitability.

Second, Estee Lauder’s acquisitions are the flip-side of the coin from what other fragrance giants are doing and, as a result, they symbolize the extremely divergent paths that perfume leaders are taking when faced with market declines. One heads downwards (Coty), one goes down but mostly side-ways (Elizabeth Arden), but only one of them reaches upwards, doubling down like this was a Las Vegas poker game. Remember, Estee Lauder is actually smaller than those other companies when it comes to their share of the U.S. perfume market, so it says something that they’re spending so much on what is only a tiny portion of their core business. If I were in Las Vegas, I’d make a wager that Estee Lauder is going to make more money in the long run, simply by virtue of tapping into the only area that has consistently shown solid growth: the luxury/niche sector.

Last, but most definitely not least, all of this has a bearing on private niche brands going forward. The perfume industry is shifting, and it seems as though its market leaders are camping out at either the low or the high ends of the spectrum in order to maintain profitability. I think Estee Lauder is setting an example, but also sending a signal to other giants who may be in a similar situation: niche is a way forward through the industry’s morass. They will shore up or guarantee sales growth, while adding luxury cache, edgy hipness, and/or relevance to the youth market. Plus, the financial and cultural benefits come with few financial downsides, particularly if one takes advantage of the European tax loopholes and favorable currency rates.

Andy Tauer of Tauer Perfumes. Source:

Andy Tauer of Tauer Perfumes. Source:

If niche brands become increasingly attractive targets for acquisition, the question then changes to whether they will agree to sell. Frederic Malle’s example proves that no-one is totally immune to the amount of money that a company like Estee Lauder can throw at them, but I think it will depend on the individual company and its situation. I truly can’t see someone like Andy Tauer or Mandy Aftel ever giving in, mainly because they both see their work as creative self-expression and wholly personal artistry. Plus, I think they are too small for a company like Estee Lauder to really be interested, since they couldn’t be “revenue drivers” the way that Jo Malone or Tom Ford are.


Roja Parfums’ Nuwa. Source:

A larger niche brand might consider it, depending on their resources. I wouldn’t be shocked if LVMH has wanted to absorb a luxury house like Amouage, but the latter has an actual sultan’s petrochemical dollars to keep it afloat for as long as it wants. Serge Lutens already has Shiseido watching his back, while Roja Dove might be too profitable by himself to perhaps be tempted by something seemingly less upscale in nature, like Estee Lauder. Those who lie somewhere in-between the Tauer and the Roja Dove spectrum and who don’t have a vast financial back-up might possibly succumb if all the circumstances are right. One never knows these days.

A few of those mid-to-large size companies would be good fits for an Estee Lauder portfolio, in my opinion. To name just two off the top of my head, Atelier Cologne  and Ramon Monegal are both the right size and/or have a certain vibe/cache to them. A Lab on Fire would add hipness, but they’re probably too “niche” for now. Arquiste has the benefits of Carlos Huber (whom Estee Lauder would probably try to turn into the next Tom Ford), as well as a certain luxury, intellectual vibe to it, but it may be too small as well. I’m sure there are others but this has now become a ridiculously long piece, so I’ll cease with the hypotheticals.

I realise that all of this is a much broader or bird’s-eye view of the Frederic Malle news than what most people would have expected, not to mention more detailed or business-oriented as well. Thank you for bearing with me.

46 thoughts on “Frederic Malle, Estee Lauder & Perfume Industry Changes

  1. Estee Lauder is hogging up the money and the market! Just to err on the safe side of things, I will stock up on a bunch of Musc Ravageur, which is actually the only Malle that I like (a sweet loving kitty). I wear Oilio Lusso body and face oil for a few years now. It will be terrible to lose the quality and beauty of those. Le Labo’s move, somehow, doesnt really surprise me……..
    Thanks for this super detailed and thoughtful article.

    • Musc Ravageur is my favorite Malle, too. It doesn’t smell like a “sweet, loving kitty” on me (LOL!), but I do love its golden, spicy coziness.

  2. Fascinating post! I have a lot to say about this – as a JD/MBA student who is focusing on the luxury goods industry in general – but it will have to wait until my Torts exam is over and I have some time to pore over the details of IFRA regulations, etc.

    (btw, I forgot to respond to your comment about Trader Joes’ asian foods in a previous post. Their frozen shu mai gets the thumbs up from me and my Chinese friend! The tangy sauce it comes with is especially good.)

    • Good luck with Torts! It was never my favorite First Year subject, but it was far from being the worst, either. I’m sure you’ll ace your exam. 🙂 I look forward to hearing your thoughts on the Malle piece when you get the chance, but be kind to me, and avoid a ton of B-school finance gobbledegook, if you don’t mind. Some of us have a numbers phobia. LOL. 😉

      (OT: yay for another fan of Trader Joe’s Shu Mai. Their Gyoza is also tasty, though not quite as good.)

  3. Kafka, this was brilliant! Thanks so much for the rundown–it’s a really fascinating topic (at least to me) and you present it so well. I think Burberry’s move makes total sense if you consider its branding, although it’s not something that many other companies could pull off. For some reason, I have a feeling it will. I just went into my first Frederic Malle boutique (downtown Manhattan) this past weekend, and the only thing that bums me out about these acquisitions is the risk of cheaper, lesser quality reformulations. I’m not anti-reformulation (I actually love my current, reformulated EDP of L’Heure Bleue) in general, but that’s the big concern for me, personally, as someone who hasn’t smelled everything there is out there right now. To think that I might come to a niche brand late and not be able to smell what it was, that kind of thing. There’s always vintage/eBay but that’s never foolproof. I suppose we’ll have to see how it all shakes out.

    • Burberry’s new route fascinates me, but it also perplexes me as well. I had meant to mention in my post their Amazon deal, but I think I had serious informational overload of my own at that point and forgot. In a nutshell, Burberry has teamed up to sell its fragrances on Amazon, which would seem to counter the luxury-oriented vibe of by their media campaign. So, they’re going high AND low, both at the same time. But they seem to be quite determined on their path and are throwing quite a lot of resources at the situation. The Business of Fashion site says this in a piece on the Amazon deal:

      In October, Burberry started selling its fragrances via Inc., a retailer known more for price than prestige. That deal came after Burberry last year ended a two-decade relationship with fragrance maker Interparfums SA.

      Burberry has built a team of about 100 specialists for the business, including new hires from companies such as P&G and Chanel. […][¶]

      Going solo is a strategy that some say is a mistake for a company of Burberry’s size. The cosmetics business, even at the high end, resembles consumer goods — where it’s important to have the broadest possible distribution, according to Exane BNP Paribas analyst Luca Solca.

      So, very risky, indeed. Like you, I hope they pull it off.

      As for Malle, you’re right, there is the chance that additional, future reformulations would be even lower in quality under Estee Lauder. But, honestly, there would be that same chance under solo Malle ownership, too. Each new reformulation is one more step in the direction of weakness or sheerness. Down the road, there is the even greater possibility of companies using synthetic alternative to save money in lieu of more expensive raw essences. It’s happened to Lutens, it’s happened to others.

      And reformulations will continue to happen again and again over the course of a perfume’s lifespan. A perfume that has been around for 20+ years is likely to have been reformulated quite a few times. And all of that is going to happen REGARDLESS of who owns the perfume house. It’s the simple but unfortunate nature of the business.

      In the case of Malle, it’s in Estee Lauder’s best, personal interests to keep the brand as luxury and high-end as possible, so there is hope they won’t engage in the sort of butchering that some other company might do. (e.g., L’Oreal.)

  4. No need to have written “Thank you for bearing with me!” That was absolutely fascinating! Thank you, Kafka!

    Why aren’t you being paid to write articles such as this (and why aren’t you working in the perfume industry)?

    You say your “business understanding [is] at a level only slightly higher than the village idiot.” This is obviously not so and/or I’m lower than the village idiot. Well, in terms of my own business acumen, that might be true, but you sell yourself short (to say the least, my dear.

    My takeaway from this (other than knowing a lot more than I did before) is that it’s another piece of evidence that the rich are indeed getting richer while “the rest of us” are not. Luxury markets will continue to grow and are thus the best place to invest one’s money and energy.

    Btw, I spoke to someone at Malle’s shop in NYC last week. She was gushing about the acquisition and how it would allow the company to continue. My samples, btw, were a disappointment. Much more sheer than I remembered them being. But, I’m open to the idea I was experiencing a “reverse placebo effect.”

    Thanks again for the in depth research and analysis! I am sure I’ll re-read this. I don’t know why I find it so fascinating, but I do. Cheers!:-)

    • Thank you for your kind words about the piece, as well as my business understanding. Perhaps “finance” would have been a more precise term, but I truly have a genuine mental block towards math, numbers, business, finance, accounting and the like. When I hear things like amortization, Gross Profit Margins, SMI, capital expenditures, share dilution, or taxation, my immediate response is: “Nooooooooooooooooooooooooooooooooo! Make it stop, make it stop!!” LOL. I remember a sibling once tried to explain Derivatives to me when I was 18; my brain melted, I felt a growing panicked claustrophobia, and I had this desperate urge to flee the room. It’s always like that when people talk about business to me. And don’t get me started on taxation issues! So, yeah, I have very limited business acumen — by choice. LOL.

      Re. Malle, I’m not surprised that the fragrances felt disappointingly sheer to you. For one thing, many have already been reformulated, and that means more weakness via a dilution of materials. For another thing, though, your tastes may have changed to something heavier, deeper or bolder in style, after falling for fragrances from lines like SHL 777. Malle never had the boldest, strongest, or richest scents around, imo, let alone really hardcore orientals or massive powerhouses. (That includes Carnal Flower which, imo and by my standards, is not a powerhouse at all, even if other people find it so by their standards.) All those factors are a reason why Malle has never really done much for me, personally and for my tastes in light of my baselines. Musc Ravageur is an exception, but it’s hardly an Amouage, Xerjoff, attar, Bogue, either in olfactory bouquet or body. I remember trying all the Malles at his Paris shop last year, and the salesperson said Musc Ravageur was the strongest, richest, most oriental one in the line. Well, it may be so relative to Eau d’Hiver, for example, but not as compared to other brands.

      My point is that your perfume tastes may have changed to skew in the same way since the time that you first tried Frederic Malle’s perfumes. But, yes, their reformulation doesn’t help matters much.

      • Wow. The new warning about personal attacks was a bit startling (but after my recent experience with hate mail, I do understand)!

        A VERY good observation on your part, my dear Kafka, about my changing taste in perfume. I have loved scent since, well, forever, but eschewed wearing any for almost a decade. In the mid 2000’s, I purchased bottles of two fragrances I once loved, Hermes Caleche and Chanel Cristalle. What a disappointment!! My taste had changed and so had the scents. I got on line to do some research and discovered the early perfume blogs and OMG!! Lutens’ line was the gateway drug. . .and you know how it goes. . .

        And here we are. My taste has gotten deeper and darker and louder and since I now mostly work from home, I don’t have to worry about “offending” anyone ‘cept my husband and cat.

        Oh, and I do get what you’re saying about finances. I get it. I, too, can talk about economic theory, but don’t ask me to reliably cash out a register. . .”Please do not talk to me while I’m counting.” LOL!

        Btw, Happy Thanksgiving! Hope you had a lovely day. The smell of turkey seems to be more tenacious than any scent I own!

  5. Thank you! This post held my interest from beginning to end. It’s great to know what lies beneath the surface. It helps explain what/why things are happening.

    • Thank you, Maya. I’m so glad to hear that it kept your interest and that even the big business, numbers, sales sections weren’t a bore! I’m like you, I think what is going on in the background or under the surface always ends up explaining quite a lot. 🙂

  6. Thank you for the insightful article. You are far from having a village idiot’s understanding of business, Kafka!! You made me understand, which isn’t easy when numbers are involved.

    Happy Thanksgiving…..

    • Heh, another one with a numbers and business phobia! 😀 Tax issues have to be the absolute worst, though, especially corporate taxes. I swear, my mind completely shuts down when people start talking about either one. But I’m glad I could explain everything in a way that didn’t send you fleeing for the hills. lol

      Happy Thanksgiving to you, too!

  7. Very interesting analysis, and well presented.

    What do you make of the push to ~$1,000 bottles within the “niche” market? Is that a sign the niche market struggling, also? And if they are, how would we know, most of the real niche folks aren’t public companies. Is Roja Dove really making money? His unit sales have to be minuscule.

    • I don’t think the niche industry is subject to the same issues as the overall, lower-end, general perfume industry, so you can’t automatically take the new trend towards ultra-expensive pricing in the niche world to be subject to the same sort of forces or factors that impact the general perfume world. Nor can you assume that the new pricing schemes have anything to do with the niche market struggling. The worlds are not parallel or similar.

      One reason why is what you yourself noted: we can’t know anything for certain because niche companies don’t release their revenues, earnings, or losses in the way that public companies do. So, we can’t make assumptions.

      I have no idea how Roja Dove is doing financially, but what you have to understand about most of these companies is that they have a lot of financial backing and private, secret partners behind them. Very few of them have innate, personal deep pockets of their own, like Kilian Hennessy. Roja Dove is bound to have silent partners. In the case of small perfume houses, in contrast, the founder may use all their personal savings or personal finances.

      In terms of Roja Dove’s unit sales, it may be miniscule as compared to someone like Paris Hilton, but he doesn’t need to move as much product because of a significantly higher per-unit price. Does Rolls Royce sell as many cars as Lexus? No, but then they, too, don’t need to in order to stay afloat. Of course, Rolls Royce is now owned by one of the big automobile behemoths (BWM, I think it is now), so their example isn’t perhaps the perfect analogy. Let’s say, Tesla then. Privately owned, super expensive cars that don’t sell en masse, but the company still manages perfectly well due to their per-unit price and the financial backing behind it.

      Bottom-line, though, everything to do with the niche perfume houses’ profitability and sales comes down to speculation since they don’t release their numbers. But I don’t think one can make assumptions about how they’re doing based on how the wider perfume market is doing, or companies like Coty and Elizabeth Arden. Not that you were doing so, James, but I’m just saying that the two worlds aren’t similar at all, imo.

  8. Kafka, this was a very well researched and written piece.

    My first thoughts when I heard the news were along the same lines as yours. Historically, Lauder has consistently put out and maintained a portfolio of no-nonsense fragrances made respectably for the mainstream market.

    Their backing of Tom Ford carries over to a great extent the same approach. Niche-lovers might find the Tom Ford fragrances heavy-handed, intellectually un-stimulating and too pricey for what they offer, but the rest of the market sees them as Luxurious with a capital L.

    I don’t know what prompted Malle to consider this, and I’m not quite interested in speculating, but Lauder’s position is quite clear: They want to reach upwards. Their acquisitions paint a neat picture: They are being careful of overlap here. Malle is not exactly in the same price range, and is intellectually a very different brand with a very different aesthetic and target audience. This is luxury fragrance diversification, in a way, seen from their viewpoint. I don’t doubt they will treat Malle with good business sense (a la Tom Ford and Lutens).

    The only thing that is a let down is simply the fact that Malle is now less a name less “pure”. I don’t expect his work output to change very much, short of perhaps more releases a la Dries Van Noten.

    • Hi Umer, welcome to the blog. 🙂 Your analysis and mine are very similar, but you raise a point that I hadn’t thought about concretely: overlap. Excellent, astute point about how careful Estee Lauder is being in avoiding too much brand similarity in their portfolio. You’re so right, particularly when one goes wider and views Le Labo, Rodin Olio Lusso, Jo Malone, etc. There is definitely no overlap in terms of aesthetic, target audience, vibe, style, or the sorts of products put out. At best, all one can say is that the various individual brands are tied together by the common, broad thread of “being expensive” or “Luxury with a capital L.”

      Honestly, one almost has to be in awe of the extent of Estee Lauder’s precision and savvy in how they’ve approached their portfolio. I certainly am. L’Oreal may be a far bigger congolomerate, but Estee Lauder really is damn astute. One can only admire someone with such laser-precision and such a perceptive sense of where the market is heading. That’s one of the several reasons why I agree with you that they will treat Malle carefully and not F*** it up.

      As for Malle being less “pure” now, I can completely understand why you might see it that way. It’s a very honest response. I share it, but only to a very, very small degree and more as a purely intellectual thing in terms of brand classification. I think, for me personally, the reason why I don’t feel “let down” is because Malle has never been one of “my” brands, so to speak. I’m not a real Malle admirer in terms of his perfumes, but only in terms of what he himself has achieved or does as a person. I think if I loved his actual fragrances above those of other brands, I’d probably be in your exact boat. 🙂

      That said, I share your (implied) issues regarding Dries Van Noten (ha!), though I think his Eau de Magnolia is actually worse and far more representative of a potential, future shift towards more commercial creations.

  9. I was waiting your take on the subject dear Kafka and I have to agree with you. Now, I have a couple of Le Labo, and several Malles. I own the reformulated Fleur de Cassie, and Malle’s work is good; the reforms are quite accurate to the original version so indeed he pays interest in achieving a good result. Now, as you’ve said Lauder is not L’Oreal (THANK GOD) so I trust that they’ll provide a wider network of distribution thus making them more easily attainable and therefore improve their sales. No doubt there will be a price increase. Reforms aside, they are bound to happen. Hopefully they won’t affect largely, since most of them have already been done, and Lauder actually keeps its classics like Youth Dew, Cinnabar, etc in a quite decent shape compared to others. I’m not so worried. As to the point brought out by others as to if niche is dead, frankly niche has been dead for quite a while. When something becomes mainstream in the sense that you can find it easily in department stores, it’s not niche anymore. If it sells, it’s bought and it becomes the opposite of niche. Thus, the likes of Mona, Vero Kern, Masque.. they are the new breed of niche. I’m supporting them. As to Black Opium you mentioned, it’s glorious isn’t it?

    • I don’t think “niche has been dead for quite a while,” but I do think that the label has broadened to encompass things that it probably and technically shouldn’t. That’s why there is the endless and ongoing argument about By Kilian, and whether it should be classified as “niche.” I firmly believe it is NOT. In fact, the more photos Kilian posts or emails regarding how his perfumes are now available in new airports or places, usually located RIGHT next to Guerlain and Tom Ford, the less I think he has any business classifying himself as “niche.”

      The spectrum now seems to have become something like this: quasi-niche wannabe (lines like Chanel’s Exclusifs, Dior’s Privee, Tom Ford’s Private Blends), pretend “niche” (Kilian), actual niche (Neela Vermeire, Andy Tauer, Vero Kern, Masque, Mona di Orio), niche-niche (or super-niche, like Bogue, O’Driu and Slumberhouse), and Indie Niche or Artisanal (DSH, Aftelier, etc.).

      PS — I’ve been laughing at a few comments throughout this thread that, like yours, have a “THANK GOD IT’S NOT L’OREAL!” response. 😀 😀 It warms the cockles of my L’Oreal hating heart. (You have no idea how many times I had to edit and re-edit the L’Oreal parts in my post in order to tone them down. The first draft had some statements that were quite… er… intense. *ahem*) The funny thing about people’s L’Oreal hostility is that it invariably comes from those who loved YSL perfumes. Almost always, Opium but also Kouros in some cases. But, yeah, it’s almost *ALWAYS* the issue of YSL that lies behind it. Bloody L’Oreal.

      Do you know, L’Oreal bought YSL Beauty for $1.8 BILLION dollars or €1.15 Billion Euros!! You’d think they would treat such an expensive acquisition a little better, but instead, they’ve handled ALL the YSL fragrances in such a way that you end up with Hedi Slimane’s public statement. If you read his actual words, they weren’t just about Black Opium, you know, but about ALLLLLLLLLLLLL YSL fragrance releases and “launches,” their ingredients, their aesthetic, and everything else about them.

      Re. Black Opium itself, my sample is on its way, though who knows when it will arrive here. I haven’t heard anything good about it from those who have tried it yet, though. You’re the first to imply it’s wonderful. I hope it is on my skin. I hope even more that L’Oreal hasn’t injected it with their usual overload of aromachemicals and cheap, jammy fruitchouli. I’m keeping my expectations low, but fingers crossed. 🙂

      • You know, about a year ago I read somewhere that L’Oreal was to sell its YSL beauty and fragrance division as of late 2013, and for a moment I saw King Kouros and Queen Opium rising in some glory, out of the hole they where in. It seems that they thought again and decided not to, unfortunately. As for Black Opium, well it was a joke I’m afraid. No quality to be found. Just a less sweet La vie est Belle, which I’m sure will be a top seller next month, spawning a flanker by spring. Sorry if I got your hopes high, but it’s a L’Oreal creation after all! The sample I’m waiting to arrive is MAAI by Bogue. I wonder who is going to have more fun with their sample 🙂

        • Urgh, for a moment, you almost made me think it wasn’t going to be so bad. That said, I’m glad you clarified because I really did a triple-take at your comment. I wasn’t even sure how to respond to it, in fact. 😀 I thought, “Okay, how do I be polite? Then again, if she loves it, maybe it really isn’t quite as bad as everyone has said it is??! Or maybe it was a fluke?! ” I was sure that you must have some magical skin indeed, since all the reports that I’ve heard have been truly terrible. Thank God, your taste, judgment and skin are all unimpaired. *grin*

          I cannot WAIT for you to get Maai and to hear what you think of it.

  10. I may be the lone wolf but here goes…..

    I really don’t understand why people see Malle or Le Labo as less artistic or pure. They have chosen to reap the benefits of their years of hard work and go under the wing of a company with larger pockets that is able to handle the increasingly complex realities of international business. And yes, Malle and Le Labo are a business, they want to make some money. They likely want to see their companies and products continue, maybe even expand.

    The reality of carrying on a legacy business is that change happens – doesn’t matter if it is perfume, dishes, bags, or cars. New models, new technology, new regulations, all require one to change the product. If one doesn’t, the company goes bankrupt or shuts down. Again, I only see Malle and Le Labo as protecting their legacy by finding a company with similar interests and that they feel will allow their product to continue being produced.

    Malle is right, reformulation is very expensive and it makes sense from a business perspective to do the rather formidable task of reformulation in partnership with a company with deeper pockets and that is already doing reformulation. Sort of hitching your wagon to the train so to speak and letting the big engine up front help you up the hill. Some might feel that the alternative is to stay the same but if one does that while everything around is changing, one is left behind and can’t sell or distribute product even if it is produced.

    Malle and Le Labo also likely want to see their legacy continue and the only way to do that is to sell because eventually the principles will get to the point where, like the rest of us, they want to scale back their working hours or even retire. They are, after all, only human and that means selling to someone else, be it family, another small company, or a larger company as Malle and Le Labo have done. It takes time to orient and establish within the new company and they are very forward thinking to be doing this now when it leaves them plenty of time to settle in and ensure continuity as well as work on new products and approaches. So I don’t see either Malle or Le Labo as selling out at all!! I see them as finding a partner they believe will respect their product, artistic integrity and legacy and allow their product to continue being produced. So I say bravo to them both for attempting to find a new home for their companies where hopefully their legacy can continue beyond their eventual retirements, both in terms of continuation of the products and in terms of ongoing artistic development.

    I think a company one starts is similar to what one does with children – you nurture them and help them and guide them but eventually, one day, you will no longer be around and you can only hope that you leave them in a situation that will allow them to continue to be well without you.

    Thank you for an insightful and highly informative article and, to quote you, thank you for bearing with me in my comment 😉

    • I can understand why people might see Malle or Le Labo as less “pure” now, just as I can understand your perspective. 🙂 And I think you make a number of good points about how this is only business, and how things change.

      Where I diverge from you is with regard to your argument that the sale happened in order to give Malle a rich partner to do the reformulations. That assumes facts not in evidence. We have no knowledge of any of the specific causes which motivated Frederic Malle but, to me personally, it seems less likely that reformulation was a driving force and that he sold his company to someone who had the pockets to handle the reformulations. Plus, Malle began reformulating AT LEAST 18 months ago, if not longer, judging by the timeline of his own statements. He’d probably started in 2012. Not all his fragrances contain ingredients targeted by IFRA for reduced ceiling rates or which may be banned completely (certain oakmoss or lily molecules). So, he’s probably finished reformulating by now.

      If he needed financial assistance to undergo the IFRA/EU reformulations, he would have sold earlier, not now. So I don’t think he “hitched his wagon” for that reason.

      That said, I do agree with you that it’s just business and that there is nothing wrong with reaping the rewards of years of hard work. Why is it for us to say that he can’t sell his business?! How presumptuous, rude, and narcissistic. Why shouldn’t he? Plus, as you said, people tire and may want to retire. Again, we can’t know for sure how he feels or his motives, but if he wants to make some money (okay, probably a LOT of money), then that’s his right. At least he chose a company like Estee Lauder who understands the benefit of keeping Les Editions des Parfums high-end and centered on luxury, and has a motive to nurture their new acquisition in the future.

      • I agree, who are we to say whether he can sell his business!! It is interesting that in the tech business, this kind of sale is hailed as wonderful and entirely the point of starting up a small company – sell your product and company to the big guys and reap the finanacial benefits!!

        I see your point about the reformulations with respect to the time involved and relative to the sale. But a sale like that also has a long time line, often at least a year so the timing isn’t totally out of synch. If it were me, I would want to thoroughly investigate the companies to which I was considering a sale of my company, especially the kind of independence the artist would have, and that can take a lot of time. Also, it is not uncommon for a sale to be agreed upon in principle but kept confidential until a mutually beneficial point in time.

        If it were me, I think the start of the work of reformulation would give me such a headache. I just can’t even imagine it!!

        There have been a few comments about wider distribution which I think is becoming increasingly irrelevant in the internet era. If one persists, one can almost get anything now via internet and willingness to pay postage for delivery from afar !! So I think of niche now not in terms of accessibility but rather innovation. So Bogue is definitely niche in that they are clearly experimental and innovative (Maai made me sigh in disbelief and pleasure). Yet Malle has been innovative in other ways (putting the perfumer’s name clearly on the product). So now you’ll have to do a post on just what makes niche….. 😉

        thanks again for a great post and a great blog. love the debate that goes on here 🙂

  11. Brilliant post! Informative, balanced (well ok, maybe a few well-deserved digs at Loreal :-)) and well researched. When I’d first heard the news about the buyout I was a bit saddened, and wasn’t quite sure why, I think it maybe for those of us who love perfume, it is on a very emotional level, and this was a big reminder that it is only, in the end, a business. So, in the way of getting teary-eyed over a sentimental tv commercial, I feel like a bit of a rube.

    • Heh, you should have seen my L’Oreal-related comments in the first and second drafts of the piece. They were quite… erm… intense. 😀 😉

      Please don’t call yourself a “rube” for your response to the news and how you were saddened. You are NOT a rube for caring! And there is absolutely nothing wrong in seeing it as loss because, yes, it *is* some sort of symbolic line in the sand or crossing of the Rubicon when Frederic Malle of all people sells to Estee Lauder. It marks a significant shift in the perfume industry, but it also carries some emotional weight for those who have been die-hard lovers of his fragrances. I understand all that, feel for you and those like you, but do NOT think you’re a “rube” for your feelings, okay? 🙂

      By the way, for what it’s worth, I get teary-eyed or sniffly over sentimental tv commercials too, like the Budweiser Super Bowl Clydesdale ad one year, but also over even smaller things. So what if you got emotional over the news of a business sale?! There is nothing wrong with that, my dear. But, fingers crossed, it won’t turn out to be as bad as it might have initially seemed. Always remember, Estee Lauder is not L’Oreal. Heh. 😉

  12. Thank you for compiling so much information and sharing it. My first reaction was also “Thank God it is not L’Oreal!” I think EL’s move is very interesting and for the moment I will remain optimistic about it! Happy Thanksgiving!

    • So funny how your first reaction was “Thank God it’s not L’Oreal!” 😀 I must say, I’ve loved the anti-L’Oreal reaction and comments by several of you, and it’s put such a grin on my face. I’m glad I’m not alone in my feelings about the company or what they’ve done to the perfumes under their control. Was it the destruction of one of their YSLs which was the final straw for you, or was it some other poor brand that got gutted?

  13. What a great post, Kafka. Although, if Frédéric Malle’s business is still located in France, I’m not sure taxes were lower than in the United States (Luxembourg and Ireland are more attractive for business in that respect, but not France). I have never tried a Frédéric Malle perfume, but I’ll try to. One thing I hope is that Estée Lauder does not try to make it younger and hipper (which it is currently trying to do with its makeup line, and very poorly so I might add). It’s the direction l’Oréal has been taking with its marketing of YSL perfume, in my opinion, the Black Opium thing being an example, and a very stupid one at that (in that respect, it would fit Hedi Slimane’s own doing at Saint-Laurent -yeah, I don’t quite like that man, that’s another question). I don’t know how Black Opium smells, I was just talking about its marketing, but I’m unimpressed by other YSL-under-l’Oréal offerings. I sadly have never experienced their former glory.
    Well, I’m rambling. At any rate, thank you for all the valuable information! I’d be curious to know what becomes of Frédéric Malle perfumes.

    • It would be interesting to find out where exactly Malle and Le Labo were legally incorporated due to the tax law issue. It is most likely France, but may not necessarily be. As for the trend towards younger and hipper, I fear it is indeed a worry — for both cosmetics and perfume. You’re right about how Estee Lauder is going in that direction for its makeup, but I don’t think they are for all of it. For example, I don’t think Tom Ford Beauty is skewing that way, so the more luxury-oriented lines may be protected from what MAC and others are going through. As you noted, though, L’Oreal is definitely fully focused on the youth market for all its products.

  14. Ha! I just saw the qualifier for replies 🙂

    I echo what many have said – this is a brilliant analysis! “Instead of Lions, and tigers, and bears. Oh my!”, Dorothy’s quote should have been “Data, and numbers, and graphs. Oh my!” 🙂

    We’ll probably never know the facts but I wonder if Estee went looking or if some of the acquired companies initiated discussions? Also, the best time to sell is while one is on the high end of the trajectory (which is where I think Frederic Malle and Le Labo are).

    I’m not concerned at all about all these acquisitions. No matter the brand, the owner and degree of independence, if it doesn’t work for me, then so be it. I do like the possibility of wider distribution and I for one won’t think that wider distribution will water down the prestige of these brands.

    You mentioned the well-known association of Uncle Serge with Shiseido. I think Shiseido will end up in a list of top companies for perfume sales in the near future. Beaute Prestige International, a subsidiary of Shiseido, also has a stable of higher end department store luxury / prestige / niche perfumes including Elie Saab, Narciso Rodriguez, Jean Paul Gaultier for which it appears that BPI has some say in perfume development AND a distribution arm for the likes of Hermes and Ferragamo.

    • LOL at the new Dorothy line. As for Beaute Prestige International, I was aware of them but I think I must have forgotten that they were affliated with Shiseido. Shiseido is definitely a world player already when it comes to beauty, but you’re right that they may grow more prominent in the fragrance world as a result of BPI.

      When you say “it appears that BPI has some say in perfume development,” do you have a report I could read that discusses that issue? I’d be interested to learn more about the matter, especially if there is any business source that says they tell brands what sorts of perfumes to actually develop.

  15. I am sad and disappointed about the disappearing of LEdPFM (and BTW I feel entitled to any emotion about products or brands I’ve liked and respected). I worked for both, niche companies and big market leaders of a certain industry and know the difference in their handling of products, people and decisions. I see niche companies as those bringing the more risky colors into whichever market. Honestly, I’m just fed up with the multis blurring those colours and painting everything in safe but boring pastels !

    • Nowhere in my piece did I say that people were not “entitled to any emotion about products or brands that [they] liked or respected.” I gave my opinion and thoughts. Thank you for sharing yours.

  16. Late to the party here but I really really enjoyed your research for this post. Interesting to read about the declining fortunes of Coty and Elisabeth Ardern. It’s possible that the lower end of the market has also been further undercut by supermarket perfumes and $2 store products and the like so Elisabeth Ardern’s portfolio is being attacked from all fronts. In France they sell perfume at Carrefour and Lidl and the testers are always nearly empty. Apparently there is a Lidl perfume that is proving popular as it’s quite a close dupe of Coco Madamoiselle.

    Estee Lauder seem to be really on to it business wise and hopefully they will treat the brands they acquire with some respect. Hope the prices don’t go up though – wishful thinking!

  17. Fascinating article, thanks for all that info! I was sad to hear about the sale but only for emotional reasons – they make sense business-wise I am sure. Do you know if Dans Tes Bras was affected by IFRA/EU reformulation requirements? That is my favorite one and I wonder if it is safe to repurchase.

    • I’m afraid I don’t know about Dans Tes Bras. Some of the ones that I’ve heard mention with quite a bit of conviction are Vetiver Extraordinaire, POAL, Bigarade Concentree, and one other that I’m blanking out on right now. I’ve also heard some mutterings (but much less certainty or conviction) about Fleur de Cassie and Musc Ravageur.

      • I had heard rumors about POAL, Noir Epices, Fleur de Cassie and Musc Ravageur… hopefully DTB is safe!

        • Yes, Noir Epices! That’s the other one, the one whose name I was blanking out on and which long-time Malle fans that I know are pretty certain has been reformulated. One person I know was aghast at the new version of the Vetiver Extraordinaire that he tried again last month, calling it “the furthest thing from extraordinary” but he was also pretty appalled at some of the other changes, too. Hopefully, you can get a back-up bottle of your favorite, DTB, before something happens to that one as well.

  18. I just read Puig acquired Penhaligon’s and L’ Artisan Parfumeur from Fox Paine & Company, LLC.

    • Yes, it seems to be a trend, probably for the business/industry reasons I described in this post. lol. Have a great Sunday, Don. 🙂

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