The U.S. Fragrance Industry: Sales Figures, Popular Fragrances & Market Changes

Posted on February 19, 2014 by Kafkaesque

Source: knozhawa.com

The numbers are in for the perfume industry’s sales in 2013 as a whole. I’m always interested in the financial side of the fragrance industry, especially how perfume is doing as compared to the overall beauty market. However, the most fascinating thing this time were changes that occurred in people’s perfume tastes, in the categories of perfumes that were purchased in the last year, and in who was doing the buying. I’m not hugely surprised by what men are doing in the U.S. and U.K., but I was a bit taken aback by a change in the American woman’s buying habits and tastes. I’ll cover all of that in this post, along with: the U.S. sales figures for market leaders like Estée Lauder, Elizabeth Arden, Coty, and Inter Parfums, along with what those figures tell us about the overall fragrance industry in America.

Another post will look at the broader picture by focusing on the global perfume market. The topics include: the most popular perfumes for women and men in different European countries; the role of Valentine’s Day in the UK; the 3 perfume houses that dominate the French market; a perfume Fatwa by a Grand Mufti in the Middle East (no, I’m not joking, but it was a positive edict); the industry’s astonishing projected growth; the degree of profits for L’Oreal, LVMH, IFF, and Givaudan; and the different international perfume markets in the UK, France, Italy, Germany, The Netherlands, Spain, India, and the Middle East. [Update: there are also posts on the Brazilian and Asian markets (China and Japan). In another 2014 post, the second half has newer figures for L’Oreal, Estée Lauder, Coty, and P&G.]

As always, I would like to emphasize that I am the furthest thing imaginable from a business expert. I often can’t make heads or tails of the specific fine point and details in financial reports. In fact, I intentionally went to law school to stay as far away as humanly possible from anything mathematical or financial in nature. Still, I hope you find some of the reports below interesting. Please note, however, that all of the articles focus on the more established and significantly larger commercial fragrance market, not the niche one.

Source: goodfon.com

U.S. BEAUTY & FRAGRANCE INDUSTRY:

I’d previously quoted and discussed the flat U.S. sales in the first part of 2013 in a post on the 2013 business reports for the perfume industry. To put the new figures into context, I want to start with the numbers for the beauty market as a whole. A MediaPost article quotes the NPD global market research group as saying, in part:

sales of prestige beauty products — those sold in department stores — gained 5% in 2013. But the lower-end brands sold in drugstores struggled, gaining just 1%.

Among the prestige labels, NPD reports that skincare and makeup was especially strong — both up 7% in dollar sales from the prior year — while fancy fragrances were flat. Direct-to-consumer sales grew 19%. But the more expensive products were, the better they sold. Fragrances priced $100 and higher jumped 30% in sales, and makeup priced at $60 and up climbed 28%.

Drugstore brands had a tougher go of it. […] Makeup gained 2%, while mass fragrance sales sank 6%. [Emphasis added by me.]

In short, prestige makes a difference to sales. I have to wonder how much of that was driven by niche perfumery or, to be more precise, the impact of niche perfumery on more mainstream brands (like Chanel, for example) raising their prices.

Source: marieclairvoyant.com

I found a CNBC article that added some interesting details. For one thing, it notes that Christmas is perhaps the biggest time for perfume sales. In fact, 45% of all such purchases usually occur between October and December. The article, which came out in November 2013, didn’t have such an optimistic view this time around. More interestingly, it quotes a Euromonitor expert on which specific perfumes were popular:

What used to be a go-to Christmas gift is no longer smelling quite as sweet.

After gaining back some of the ground lost after four years of negative sales during the economic downturn, fragrance sales are basically flat on the year, and experts predict they will continue their holding pattern during the holidays.

According to The NPD Group, 15 percent of shoppers will purchase a fragrance this holiday, which is unchanged from 2012; similarly, Euromonitor forecast that the category’s sales will tick higher by only 0.2 percent this year. […][¶]

Jo Malone fragrance via joyce.fr.

Most of the growth in the prestige fragrance category—sales logged primarily in department stores—has come from pricier, niche fragrances such as Demeter Fragrance Library’s Oud, and scents from Jo Malone and Tom Ford, [Virgina Lee of Euromonitor] said.

She pointed to Bond No. 9, Estée Lauder’s Modern Muse and Coty’s Marc Jacobs Honey as other fragrances she expects to perform well.

While celebrity perfumes continue to saturate the market—including scents from Rihanna, One Direction and Taylor Swift—the category’s real value growth is now being driven by an older, more sophisticated shopper who doesn’t care to smell like a pop star, Lee said. She also predicts prestige will continue to outperform mass offerings, as higher-income shoppers have the money to burn on a $250 fragrance, she said.

Bloomingdale’s, Sephora and Saks all listed fragrance as one of their top areas of focus for the season, with Bloomingdale’s calling out its Tory Burch fragrance exclusive; Sephora its multibranded fragrance samplers; and Saks its mini-fragrance collections and fragrance sets, including Carven and Viktor & Rolf’s Flowerbomb. [Emphasis to names added by me.]

SPECIFIC PERFUME COMPANIES:

So, what happened when Christmas ended, the sales were tallied up, and the reports were released? Well, as noted above, NPD says that 2013 perfume sales were flat for “prestige” (ie, department store) fragrances, while drug store ones sank by 6%.

Britney’s Curious perfume.

However, some specific companies really took a hit. Elizabeth Arden, a huge corporation which distributes everything from Brittany Spears‘ many lucrative fragrances to the super-popular ones from Justin Bieber and Elizabeth Taylor, fared poorly in its second-quarter, in part because of those flat U.S. perfume sales. According to Medill Reports:

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.”

It’s actually a pretty big deal if a company like Elizabeth Arden does poorly in the U.S., because it controls such a big portion of the market here. According to the Elizabeth Arden 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.

Photo: Bruce Weber for Bottega Veneta. Source: stylefrizz.com

Coty didn’t do enormously well in 2013, either. The company’s fragrances generally seem to average out to the mid-level range in terms of department store offerings, as its brands include: Bottega Veneta, Calvin Klein, Chopard, Cerrutti, Marc Jacobs, Chloé, Roberto Cavalli, Sarah Jessica Parker, Beyoncé, Lady Gaga, Madonna, Vivienne Westwood, Vera Wang, and Davidoff. Coty said its fiscal second-quarter earnings for 2013 dropped 33%, though much of that was from weak cosmetics sales. The fragrance sector reported a 2% loss in revenue, but the company’s revenue as a whole sank 4.1% to $1.32 billion.

For the Estée Lauder behemoth, fragrance is only a small portion of their sales. According to Trefis, 49.9% of their stock price comes from skin care, 39.5% from makeup, and only 7.5% from fragrance. The company continues to beat all quarterly estimates with a very strong performance. The full Trefis report states:

The contribution of fragrances to overall revenues has seen a consistent decline for the company, from 19% of total revenues in 2007 to 13% by 2012, driven by higher skin care product demand globally. During the same period, skin care revenue share increased from 37% to 44% by 2012. The skin care product market worldwide reached $100 billion in 2012, growing at an annualized rate of 4.1% between 2007 and 2012 while the worldwide fragrance market reached $37 billion.^[1]^[2] […]

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

Source: Fragrantica.br

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. Furthermore, the company launched various limited edition fragrance products exclusively for the holiday season which could boost revenues. We expect another quarter of strong performance from the company’s fragrance division. [Emphasis added by me.]

Another company with slightly more “prestige” fragrances also did well. Inter Parfums reported a 19% increase in fourth-quarter sales, according to a report in the Wall Street Journal. You may not know Inter Parfum’s name, but you certainly know the perfume brands it distributes: Lanvin, Van Cleef & Arpels, Balmain, Agent Provocateur, Boucheron, Jimmy Choo, Karl Lagerfeld, Montblanc, Paul Smith, S.T. Dupont, Repetto, Alfred Dunhill, Anna Sui, Shanghai Tang, Oscar de la Renta, Gap, Brooks Brothers, bebe, and Betsey Johnson.

There is clearly a vast divide in the fortunes of Elizabeth Arden and Coty, on the one side, and Estée Lauder and Inter Parfums, on the others. It comes down to the nature of the respective companies’ perfume brands, and underscores the conclusion of one market researcher: prestige sells, even in today’s economy. The NPD global research group states:

Value is important to consumers, but premium-priced offerings are thriving is US prestige beauty. Even though sales for the total prestige fragrance category were flat, fragrances priced $100 and over grew 30 percent in dollars, while face makeup priced at $60 and up increased 28 percent, and skincare for the face gained 15 percent in dollar sales (compared to 2012).

THE SHIFTING SCENT OF THE U.S. WOMAN:

Now that you have the context as a whole, I wanted to talk about one of the more interesting things I discovered. When the average American woman wants to buy a new perfume from a department store, they are increasingly choosing woody orientals! According to an NPD report entitled “The Shifting Scent of a Woman“:

While total industry dollar sales declined slightly to $2 billion in the 12 months ending December 2013, sales of woody oriental scents, the second largest fragrance family, and smaller segments grew during the same time period.

“Floral fragrances aren’t fading away, but less traditional scents are gaining more of the attention from female consumers than ever before,” said Karen Grant vice president and senior global industry analyst, The NPD Group, Inc. “Fragrance is a powerful tool that can exude an image and even empower an individual as an expression of personal preference. With the emergence of more artisanal scents on the market, women are welcoming the opportunity to experiment and explore different options.”

The standalone oriental, woods, citrus, and fruity fragrances are still a small portion of the market, at just 7 percent of women’s fragrance dollar sales, but they are growing at the expense of the larger segments, including the top selling fragrance family, floral. Woody oriental is the only one of the larger blended fragrance families to experience growth in 2013. Two of the top 5 women’s prestige fragrances sold in the US are part of the woody oriental fragrance family, while the other three in the top five are florals and a soft floral.

“The recognizable classics remain strong, but new players are important rising stars to watch,” said Grant. “Today, the opportunity for reinvention afforded by a novel scent coexists with the instant indulgence provided by the classics.”

In my admittedly biased opinion, I am going to credit niche perfumery as having some role in why less traditional categories of perfumery may be gaining ground with the average American women. Just as with fashion being influenced by trends that slowly trickle down from Haute Couture, so too must the more inventive fragrances put out by niche houses eventually trend the commercial perfume giants. You can see it with oud which started as a revolutionary failure with YSL’s M7 (under Tom Ford), but which has now trickled down into every conceivable type of perfume at every price point.

Source: blogs.nordstrom.com

WHAT MEN ARE UP TO:

It seems American and British gentlemen really, really love their fragrances. The Yanks in particular are spending a fortune, which is why I’m including this section here and not in Part II with the rest of the global analysis. An NPD report has the figures for men’s purchases between November 2012 and October 2013:

men’s fragrance juice sales drove positive dollar performance for the overall fragrance category in the US and UK[.] Total fragrance performance was soft elsewhere in Europe, with declines across men’s and women’s offerings, primarily in the EDT segment.

“While women’s individual juices continue to be the top selling fragrance segment across the US and Europe, new launch activity has been a boost for men’s sales across most countries,” said Karen Grant, vice president and senior global industry analyst, The NPD Group, Inc.

In addition to men’s juice sales, the other positive growth segments for both the US and UK prestige* fragrance industries in the 12 months ending October 2013 were women’s juices, and both men’s and women’s fragrance gift sets. With the exception of Spain, which had declines across fragrance segments, there were segments of flat to positive performance in other European countries. Men’s gift sets were the star in France during this time period. In Italy, men’s juice and women’s gift sets held steady.

ALL IN ALL:

Although there seems to be movement in specific areas, I think if you look at the picture as a whole, you will see that the perfume industry in the U.S. continues to struggles. Sales are generally soft, not dynamic and huge. The percentages reported are always very small, moving upwards by about 2% in a lot of cases, or else dropping by 6% to 7%. If you take a bird’s-eye view, make-up and skin care do gangbusters in the U.S., but not fragrances. Even the expensive ($100+) perfumes are only selling moderately if you look at picture as a whole, as opposed to taking a narrow view of “prestige” fragrances vs. drugstore ones.

And remember, the definition of “prestige” here revolves around department store perfumes, not niche. Given the nature of a niche or artisanal company, and the fact that it is privately owned with no need to report to shareholders, I think it would be virtually impossible to find data on how that sector of the industry is doing. The individual companies are certainly not going to report it. I also can’t see niche distributors like Luckyscent, Osswald, First in Fragrance, or Essenza Nobile releasing sales figures by perfume house.

Still, I think it’s always interesting to know how the industry as a whole is doing. To that end, Part II will focus on the global picture, from market titans like LVMH and Givaudan, to popular perfumes and sales in individual countries such as the U.K., France, Germany, The Netherlands, Italy, Spain, India, and the Middle East.

Cultural Differences in Perfume Tastes & the Revival of the Classics for Men

Posted on December 20, 2012 by Kafkaesque

I had a long conversation tonight with a fellow perfume blogger, Scent Bound, on the cultural differences between American and France, and each countries’ accompanying fragrance preferences. The issue was initially triggered by the comments on indolic scents like tuberose discussed in my Guerlain Mahora/Mayotte post. As a random observation, I told him that I think French women are much less terrified of certain kinds of categories of perfumes or scents than, say, the Americans.

Scent Bound noted: “I recall Chandler Burr made similar observation to yours regarding how North Americans and European see fragrance. North Americans wear a fragrance as if to say ‘don’t run away, I’m clean’ and Europeans wear a fragrance as if to say ‘come to me, I’m sexy’. It’s pretty hilarious but if you think about it, it’s sort of true.”

I think it’s both hilarious and true. I find it extremely interesting to note the differences in tastes as reflected by the list of top best-sellers for women in 2011 for the U.S. versus the best-seller list for France. Surrender to Chance has a sample pack of each country’s best-sellers with some amusing observations, but the main point are the perfumes on the list themselves:

In the US:

The list is in no particular order, Chanel Coco Mademoiselle came in Number 1.

Chanel Coco Mademoiselle – citrus adds a lightness to this gorgeous oriental
Dolce & Gabanna Light Blue – citrus, easy to wear, the quintessential “reach for it” perfume
Chanel No. 5 – No. 1 in France, a fragrance that has been around for decades and topping the best selling list wordlwide, this is The Iconic Classic perfume
Clinique Happy – fruity floral that complete reflects its name
Donna Karan Cashmere Mist – musk, woods, floral
Viktor & Rolf Flowerbomb – an exuberant floral with a rich base
Lancome Tresor – rose, violet, iris, peach, a perennial favorite
Christian Dior J’Adore – a now iconic fresh green floral that is at the top of the best-seller list in many countries
Ralph Lauren Romance – romantic floral with touches of musk and ginger
Burberry Body – floral oriental, easy to wear
Marc Jacobs Daisy – fun, easygoing, touch of caramel, and absolutely easy to wear
Chanel Chance – citrus floral that borrows from Angel and Coco Mademoiselle
Estee Lauder Sensuous – elegant woody floral
Estee Lauder Pleasures – green floral that can be smelled everywhere
Chanel Chance Eau Fraiche – a fresher version of Chance
Clinique Aromatics Elixir – Crossing international lines to appear on both French and American best-seller lists
Fendi Fan di Fendi – fruity floriental. Why won’t Fendi just start making Theorema again and stop with the stuff that’s not anywhere near its class?
Prada Candy – yeah, really, and there’s a reason for it. Addictive, classic and fun!

In contrast, the top best-sellers in France for the same year (2011) are:

Chanel No. 5 EDP – iconic decades-old perfume that has topped the best-seller list for most of those decades.
Dior J’Adore – now overtaking Chanel no. 5 worldwide, J’Adore is a fresh green floral that is wonderful to wear
Thierry Mugler Angel – Every street in Paris wafts this scent
Chanel Coco Mademoiselle – a rich oriental with amazing sillage
Kenzo Flower – a soft floral oriental
Guerlain Shalimar EDP – vanilla oriental from a rich and storied house
Lolita Lempicka – one of Angel’s softer, gentler children, a woody gourmand
Christian Dior Miss Dior Cherie – sophisticated, but slight gourmand leaning with popcorn and strawberry (in the older versions, not the newest version – this one is the older formulation)
Nina Ricci Nina – (the old one, the original, the best, not that new thing)
Yves Saint Laurent Paris – violet, rose, romantic
Yves Saint Laurent Opium – a spicy oriental that defines that classification
JPG Classique

Jean Paul Gaultier Classique – could be the bottle? Naw, this is a scent you don’t forget
Lancome Tresor EDP – peach, rose, iris and violet, a perennial favorite
Thierry Mugler Alien – Not loved so much in the U.S., but this odd Mugler fragrance is a big hit in France.
Nina Ricci L’air du Temps – a spicy floral that has endured a long test of time
Clinique Aromatics Elixir – a classic chypre that never goes out of style.
Lancome Cuir de Lancome – classic citrus and orange blossom fragrance with an amber base.

When I was growing up in France, the predominant trend was for chypres, then perhaps for orientals. Now, it seems that orientals have, for the most part, supplanted the classic. Scent Bound noted that, upon a trip to Paris last year, the majority of men seemed to be wearing sweeter, woody-oriental fragrances. I thought that was a definite change from the beloved classiques they used to wear and which were predominantly in the fougère or citrus aromatic categories. He noted that, in his country, the predominant perfume group is acquatics. (Remind me not to visit!)

Which turned the conversation around to what would be on the MEN’S list of best-sellers for 2011 or 2012? What do you think they would be and how would they differ from country to country? Scent Bound had these choices for his Top 3 in the US and in France:

North America Top Fragrance List:

1. Armani Acqua di Gio
2. Chanel Bleu de Chanel
3. D&G Light Blue Homme

France Top Fragrance List:

1. Dior Homme Intense
2. YSL Le Male
3. Terre D’Hermes

I completely agree with his list for the top North American best-sellers. However, I’m not so sure about his French list. For one thing, I think that Terre d’Hermès would be higher. Also, would the top YSL entry really be Le Male, as opposed to its L’Homme or La Nuit de L’Homme? More to the point, the list doesn’t include that infernal bête noire of mine, Acqua di Gio. That revolting thing is too much of a global best-seller not to be a serious contender for one of the top spots. (Even my best friend in Denmark wore it, much to my horror, until my pleas for a change finally took effect.)

Since Google is my friend, I decided to see if I could find the list — for 2011 or even this year to date — of most popular men’s fragrances in any country. Almost immediately, I came upon a fascinating New York Times article on the revival of the classics for men. (And, its main photo featured, in part, the Monsieur de Givenchy that I wrote about just the other day!)

Entitled “That Man Smells Familiar,” the article noted that “[i]n Europe, the classics still sell as if it’s 1969; last year Eau Sauvage was the third best-selling men’s fragrance in France, according to the NDP Group, a market research company that tracks sales in department stores.”

Is it the Mad Men effect, or are the fragrances simply benchmarks? The blogging world seems obsessed with the latest niche fragrances, and I sometimes get the impression that there is snobbish disdain for those who express interest in or write about the classics. It’s not hip, it’s not avant-garde or trendy, and it reeks of the old-fashioned (and possibly, in their mind, the insufficiently educated?). Whatever the reason, the experts don’t agree with that modern dismissal of the classic legends. Whether it’s Luca Turin or the founder of Basenotes, Grant Osborne, they both share a reverence for the old-timers. As the New York Times article put it:

Their names evoke two-button Botany 500 suits and martinis sipped in a 707’s front cabin: Eau Sauvage, Habit Rouge, Pour Monsieur. And although sales are a fraction of the overall market for fine men’s fragrances in the United States, experts in the field acknowledge their lasting relevance. “They’re like benchmarks — anything that comes after is almost always a direct descendant,” said Grant Osborne, founder and editor of Basenotes, a Web site for perfume enthusiasts.

Chanel Pour Monsieur, introduced in 1955, “should by all rights be sitting under a triple-glass bell jar next to the meter and kilogram at the Pavillon de Breteuil as the reference masculine fragrance,” wrote Luca Turin, the biophysicist and olfactory scholar and an author of“Perfumes: The Guide” (Viking, 2008). Christian Dior’s Eau Sauvage, introduced in 1966, revolutionized the men’s category as the first perfume to make heavy use ofhedione, a synthetic analog of jasmine; Guerlain Vetiver, based on the aromatic grass and introduced in 1961 after similar scents by Givenchy (1959) and Carven (1957), continues to beget modern iterations like Grey Vetiver, by Tom Ford. These classic men’s fragrances “left very long-lasting impacts on how people develop perfumes,” said Eddie Roschi, a founder of Le Labo artisanal perfumery in New York.

While Old Spice and Brut are still enormous (enormous!) sellers, the young aren’t buying the “Old is Good” line. Not one bit. “[F]or a generation raised on CK Be and body sprays like Axe, retro scents aren’t necessarily an easy sell.” (See, NYT article.) In fact, one Beverly Hills retailer of vintage fragrances flat out admitted that Chanel’s Pour Homme would not sell well among the young today: “If you introduced this today and it did not have the Chanel brand recognition, I don’t think it would do well.” Why? “You smell it and just know: this is an old fragrance.” (Id.)

The NY Times answered my question as to what was bound to be the top male fragrance in France. As I guessed when talking to Scent Bound, it is indeed that blasted, infernal pestilence known as Acqua di Gio. The article discussed the scent, but also provided some other very interesting tidbits about perfume trends, popular fragrance categories, and why the top sellers remain so constant year after year:

Epitomizing the new is Acqua di Gio, introduced by Giorgio Armani in 1996 and the No. 1-selling fine men’s fragrance for the past 10 years, according to the NDP Group. Acqua di Gio popularized the light, quiescent “aquatic” accord that dominates men’s fragrances today and has inspired countless imitators — “a slew of apologetic, bloodless, gray, whippetlike, shivering little things that are probably impossible, and certainly pointless, to tell apart,” Mr. Turin said.

Compared to the breezy aquatics, certainly, the classic ’60s scents — with their base notes of musk, oak moss, sandalwood and leather — can seem leaden, especially to younger noses. Nevertheless, sweet, unisex aquatics are ceding market share to scents redolent of woods and spices. Of the top four men’s fragrances introduced in 2010, “two were woods, one was a woody oriental and only one was a water,” said Karen Grant, a beauty industry analyst with the NDP Group.

The introduction last year of Bleu de Chanel, which despite its sport-aquatic-sounding name is considered a woody aromatic, was a sign that the pendulum is swinging toward earthier accords; it became the No. 3 best-selling men’s scent in the United States.

Men are far more brand-loyal than women when it comes to fragrance, Ms. Grant said, “which is why when something becomes a top scent it continues to be a top scent — it’s hard to break into that ranking.”

I’m not an expert in men’s fragrances, despite wearing them frequently, so I’m curious to know your thoughts. What do you think are the Top 10 or Top 5 lists for men, in your country, in US/North American, in France or elsewhere? What about for women?

I would love to learn about the best-sellers in all countries and for BOTH genders, so please don’t hesitate to chime in regardless of where you live.