The Global Fragrance Industry: World Markets, Popular Fragrances & Sales Figures

Source: style.uk.msn.com

The numbers are in for the perfume industry’s sales in 2013 as a whole. In Part I, I covered the U.S. market, but this time, I’m going to look at the global perfume industry, from sales in various countries, any trends that may crop up, and the astonishing financial forecast for 2018. I’ll also talk about the degree of profits in 2013 for L’Oreal, LVMH, Givaudan, and IFF. Then, I’ll look at the international picture: from a perfume Fatwa from a Grand Mufti in the Middle East (yes, I’m being serious), to Valentine’s day in the U.K.; from best-selling fragrances in France and the companies which dominate that sector, to those in Germany. I’ll also briefly examine the perfume industry in Italy, the Netherlands, Spain, and India.

As always, I would like to emphasize that I am the furthest thing imaginable from a financial expert. Also, please note, that all of the articles focus on the more established and significantly larger commercial fragrance market, not the niche one.

THE GLOBAL PERFUME INDUSTRY & ITS FUTURE VALUE:

Source: psdgraphics.com

The global perfume industry is generally valued at around $28 billion (based on a 2012 report) per year, and Elizabeth Arden’s Wiki-Invest page states that the industry has a market cap at $36.6 billion dollars. I believe that means that most people cap the perfume industry’s future worth at around $36 billion. And, in fact, that is the usual number that I’ve read when people are calculating how much the industry will be worth in 2017 or 2018.

A more recent report says it’s going to be far, far bigger than that. Perfumer & Flavorist cites a 2013 study by Global Industry Analysts which says the industry will “reach about $45.6 BILLION dollars in 2018,” a mere 4 years time! Unfortunately, the P&F article is not written in a very readable, straight forward manner, and, more importantly, they bury the lede, so I’ll turn your attention to a more useful source which makes it clear that it is (alas) celebrity fragrances that are really expected to drive the overall surge to a $45.6 billion dollar a year business.

Laurent Dumont’s “Cash Game, Homme.” Source: mimifroufrou.com

Companies and Markets states it boldly in its headline: “Global perfume market driven by the demand for celebrity inspired scents“:

The global perfume market has been forecast to reach a value of approximately US$45.6 billion by 2018, driven primarily by growth expected in the underpenetrated emerging markets and innovative product launches. [¶]

The market is set to benefit from the growing trend towards consumer urbanisation, higher spending propensity and the heightened importance on personal appearance and grooming. In addition, increased demand for youth-oriented, floral and exotic fragrances and celebrity perfumes will set the pace for rapid market expansion.

Perfumes today have evolved into a mainstream business in the cosmetics, and personal care industry. From being non-essential and frivolous, perfumes have emerged as essentials, owing to the increasing trend of appearance and personal care becoming part of pride, self reliance, and confidence.

Source: bloggers.com.br

No longer considered as an extravagant grooming accessory, perfumes have metamorphosed into a “feel good” factor, which complements the consumer’s need for expressing individuality, and personal style. The wide range of themes and choices enable consumers to choose fragrances that complement respective personal and characteristic traits.

Dictated by the fickle trends of haute fashion, the world of perfumes is beginning to witness the entry of new apparel designers, and pop, music, and movie superstars making a dent on the market. The demand for celebrity inspired scents shows no signs of abating, thanks to the increasing number of celebrity fragrances hovering in the market.

The perfume industry is primarily consumer driven. Consumers have a unique cultural attitude to “fragrance” and an uncritical concept of possessing a certain kind of identity through wearing fragrance.

Source: 123rf.com

Currently on the global radar are low penetration markets such as China, and Japan, where huge untapped opportunities are the focus of large international players. Fine perfumes are increasingly looking at the teenage segment as a potential growth market. Women’s fragrances continue to dominate the market, with a maximum number of product launches and innovations aimed at the fairer sex.

The scenario is however set to change with men’s fragrance segment beginning to witness strong growth patterns, as the importance of grooming tops the list of men’s priorities. Typically, the men’s market was confined to the after-shave fragrances, but today the cards are being turned and men’s fragrances for specific occasions are witnessing huge growth, holding the promise of emerging into a mainstay market.

L’OREAL & LVMH:

L’Oreal reported its earnings on February 10th, but, try as I might, I cannot find the fragrance figures in the tsunami of information for the beauty industry leader. For once, even I was overwhelmed by the details! If I spent a few days on the shareholder reports, I know I could find it, but I lack the motivation. Suffice it to say that the company posted record earnings as a whole for 2013 in almost all its global markets. The exceptions seemed to be Japan, China, and India where sales were less substantial, while the South Korean market was depressed. Either way, I suspect that fragrances constitute only a microscopic portion of their revenues, even if they do own YSL fragrances and Armani perfumes.

LV’s Paris Headquarters in animated art by Studio Cyrille Thomas. http://www.cyrillethomas.com/

According to a New York Times report, LVMH did not do so well in 2013, but, again, it is impossible to find specific details on perfume sales or revenue. In addition, LVMH doesn’t seem to release revenue figures for its individual companies, so it may not be possible to know how Guerlain and Dior fared last year. What the newspaper does report is LVMH’s bottom line:

its profit was almost flat last year amid flagging demand for some of its core fashion brands in key markets like China and the impact of weaker currencies in its main overseas markets. [¶] LVMH … recorded a net profit of 3.4 billion euros, or $4.6 billion, for the year to Dec. 31, up just 0.4 percent from 2012.

While this post is supposed to talk about the perfume industry, I have to partially digress for a moment to talk about LVMH’s luxury sales in general. The article has an utterly fascinating reference to what seems like a backlash against Louis Vuitton’s gaudy, overly loud new bags. (Okay, it only says — quite diplomatically — that they aren’t “subtle,” but I find them to be gaudy, not to mention cheap-looking. They weren’t always that way.) The NY Times also talks about how LVMH is trying to deal with some of its problems by appealing to the super-rich, but it’s not having a lot of luck in China where sales are flagging. Given the role of LVMH in the perfume industry through its ownership of Guerlain and Dior, I thought you might find it interesting to know how they are faring in general.

Some excerpts from the NY Times report:

Revenue grew 4 percent, to €29.1 billion, a sharp decline from the double-digit increases seen in previous years [due to unfavorable exchange rates and currency conversion charges]. […][¶]

Both Kering — the French company formerly known as PPR, whose brands include Gucci, Bottega Veneta and Yves Saint Laurent — and Prada of Italy also cited unfavorable exchange rates as contributing to weaker sales in the third quarter. [¶]

Limited Edition LV bag. Source: bocaratonpawn.com

Louis Vuitton, which accounts for more than two-thirds of [LVMH’s leather] division’s sales, has suffered recently as many high-end consumers have begun to shun its familiar logo-emblazoned handbags for subtler products. To compensate, LVMH has increased its investment in smaller brands like Fendi, Céline and Berluti.

Faced with a protracted economic downturn in Europe and slowing growth in important emerging markets like China, Louis Vuitton, like its rival, Gucci, has sought to jump-start sales by repositioning itself even further upmarket, pursuing superrich clients, rather than the merely rich. [¶]

Revenue at the perfumes and cosmetics business, which includes brands like Guerlain and Loewe, rose 3 percent to €3.7 billion. Watch and jewelry sales fell 2 percent to €2.8 billion, reflecting in a slowdown in China, where a government crackdown on giving lavish gifts has crimped sales.

Specialized retailing activities, including the Sephora cosmetics chain and Duty Free Shops, recorded strong growth, buoyed by a surge in tourism spending, particularly by Asian travelers. [Emphasis added by me.]

Source: perfumemaster.org

As a side note, I found nothing detailing Chanel‘s sales or revenues in 2013. The company is privately owned, so it has no need to release official figures. However, I did find Hermès 2013 annual report. The company’s core business of luxury goods is doing astonishingly well, particularly in Asia (in contrast to LVMH, it would seem). But Hermès also sells fragrances, and those were quite successful in 2013:

Perfumes (+15%) confirmed their momentum in 2013. The new fragrance for women Jour d’Hermès was warmly welcomed whilst Terre d’Hermès continued its growth and established its position as a classic male fragrance. [Emphasis to names added by me.]

GIVAUDAN:

Javanol via Givaudan.

While the EU moves slowly to restrict natural perfume ingredients to draconian levels, Givaudan — the maker of aromachemical synthetics and one of the big backers of IFRA — is raking it in.

For those of you unfamiliar with the name, Givaudan is a Swiss company founded in 1895. According to its Wikipedia page, it is reported to be the largest company in the world producing fragrance ingredients and flavours. It controls 25% of the market share, as “the company’s scents and flavors are developed most often for food and beverage makers, but they are also used frequently in household goods, as well as grooming and personal care products.” In 2011, Givaudan had sales of 3.9 billion Swiss Francs with an overall market share of 25%. “It is one of Switzerland’s 30 biggest listed companies in terms of market capitalization[.][…] The company has a leading presence in all major markets and operates through a network of more than 40 subsidiaries” in established and emerging markets.

Givaudan’s new 2013 Mumbai Flavour Innovation Centre. Source: article.wn.com/

And it had a great year in 2013. RTT News provides Givaudan’s full-year report, starting with the fact that its annual income climbed to “490 million Swiss francs ($546.6 million) from 410 francs in the prior year.” In addition:

• Gross margin increased to 44.7 percent from 42.4 percent.
• Fragrance Division sales rose 3 percent to 2.083 billion francs and increased 5.1 percent on a like-for-like basis. Fine Fragrance witnessed strong growth in Latin America, while Consumer Product saw strong performance in developing markets. 

INTERNATIONAL FLAVORS & FRAGRANCES (IFF):

ISO E Super. Source: Fragrantica

Givaudan may control 25% of the global fragrance and flavouring market, but IFF is definitely a powerful force in the field. And it, too, did well in 2013. According to Perfumer & Flavorist, IFF’s

• full-year 2013 local currency sales increased 5% to $3 billion, reflecting 10% growth in emerging markets and 2% growth in the developed markets. Reported net income for the full year totaled $353.5 million.
• Emerging markets grew 10% last year, accounting for 49% of sales.
• The fragrances business unit reported that revenue for the full year increased 6% to $1.5 billion. The fragrances segment contributed 52% of the company’s consolidated revenue in 2013, up from 51% in 2012. Local currency sales increased 6% for the full year, supported by double-digit growth in Greater Asia and Latin America and solid growth in EAME. [Me: I think “EAME” refers to the Middle East and East Asia.]

Source: FoxBusinessnews.com

For the 4th Quarter in specific, the article states that

• IFF fourth quarter 2013 revenue increased 7% to $725 million compared to the prior year. A full 50% of consolidated IFF sales were achieved in emerging markets, according to the company.
• The fragrance unit reported that revenue increased 8% to $382 million in the fourth quarter of 2013 compared with $354 million in the fourth quarter of 2012.
• Fine fragrance and beauty care achieved 9% local currency sales growth, due to strong growth in fine fragrance owing to strong new business wins in EAME.
• Fragrances gross margins improved over the prior year quarter primarily due to moderating input costs and other strategic initiatives including mix, innovation and cost reductions. Segment profit increased 16%, or $9 million, to $62 million in the fourth quarter of 2013 compared with $53 million in the fourth quarter of 2012.

In short, emerging markets and the Middle East are responsible for the surge in sales. I will jest, and say that IFF’s invention, ISO E Super, probably helped as well, judging by how many bloody fragrances contain the damn thing. (No, it’s not actually paranoia if they really are out to get you. 😉 But, in any event, I’m merely joking to alleviate any numbness you may feel at this point from all these details.)

THE U.K. FRAGRANCE MARKET:

Source: Maria Rogerson at ourtipsfor.com

Fragrance sales in the U.K. rose 9.3% in 2013, boosted by the fortnight before Valentine’s Day 2013 during which there were £32 million value sales and 1 million units sold. The numbers come from NPD, as quoted by Premium Beauty News. Apparently, the two weeks before Valentine’s Day are a huge deal in the UK, though not as much as in the U.S. where the day accounts for 4% of perfume sales.  The article reports:

“Valentine’s fortnight remains a key focus for prestige beauty products, with fragrance representing 2.7% of annual fragrance value sales and 3% of total beauty sales in the UK – beating both Father’s Day and Mother’s Day sales,” says The NPD Group.

The market research firm notes there is an opportunity for growth in the UK fragrance market when comparing sales in other key markets. “In France and the United States, 2013 Valentine’s fragrance sales represented 4% of annual fragrance value sales, generating just over £67 million and £81 million, respectively.” [¶]

Trend data reveals that while fragrance sales peak around Valentine’s Day, at 42% of prestige beauty products sold based on 2013 figures, sales are less concentrated at this time of year compared to Christmas.

Men were spending away as well:

“Men look set to be the winners in the fragrance stakes this year if the 2013 trend continues, with men’s fragrances for Valentine’s 2013 representing 35% of all fragrance value sales – up from 33% in 2012,” points out The NPD Group.

However, it seems that everyone was after less expensive fragrances for the most part:

Data from Valentine’s 2013 reveals that consumers may become more price conscious with their fragrance purchases. On average, both women’s and men’s fragrance sales were down £1-2 on the annual average price at £33 and £31, respectively. Leftover Christmas gift sets were also popular for Valentine’s 2013 in the UK.

Davidoff Cool Water ad, October 2000. Source: coloribus.com

In terms of the best-selling perfumes in the U.K, I found a list dating back to 2009. It comes from the Daily Mail which makes me cautious as to its accuracy, but there really isn’t else that I found on the subject. The newspaper states that it “asked Britain’s top department stores which scents fly off their shelves the fastest – the results were unanimous…”

1. Chanel No. 5
2. Calvin Klein Eternity
3. Prada Eau de Toilette
4. Davidoff Cool Water
5. Gucci Rush
6. Ralph Lauren Romance
7. Sarah Jessica Parker Lovely
8. Issey Miyake L’Eau d’Issey
9. Estée Lauder Beautiful
10. Tom Ford Black Orchid

THE FRENCH PERFUME MARKET:

Source: hdwallpapers.in

According to the Perfumer & Flavorist, “France’s fragrance market [is] the second most important sector in the country’s health and beauty industry.” The Euromonitor research group calls it is an extremely competitive market, and provides a fascinating breakdown of the market share of the three market leaders, Chanel, Dior, and Guerlain (in that order):

Source: entertainment.desktopnexus.com

Fragrances is fragmented, with more than 40 different players operating in the category. Amongst them, the leading companies are Chanel, Parfums Christian Dior and Guerlain, with 12%, 11% and 8% value shares respectively in 2012. These three operators offer several well-recognised premium fragrances for women and men, which are well-positioned in the market. Chanel N° 5 from Chanel and J’adore from Parfums Christian Dior, for example, were the leading brands in premium women’s fragrances in 2012. These two popular fragrances are constantly promoted on television. Over the years, these three players have been able to maintain their leading positions thanks to important investment in advertising, but also due to some product and packaging innovation. [Emphasis to names added by me.]

Paco Rabanne 2013 Invictus Ad.

Even if the Big Three control the greatest portion of the market, they don’t necessarily have the best-selling perfumes in France. In fact, Chanel No. 5 isn’t even on French Sephora’s 2014 list of top sellers, a list which obviously has to be based in large part on prior sales in 2013. That list, as provided by the French-based blog The Scented Salamander, is as follows:

Sephora
1 – Invictus by Paco Rabanne
2 – La Petite Robe Noire EDP by Guerlain
3 – La Vie est Belle EDP by Lancôme
4 – J’Adore EDP by Dior
5 – Shalimar by Guerlain – (boosted by sales price)
6 – 1 Million EDT for men by Paco Rabanne
7 – Flowerbomb EDP by Viktor & Rolf
8 – Si by Giorgio Armani
9 – Le Mâle EDT by Jean Paul Gaultier
10 – Boss Bottled EDT by Hugo Boss

Invictus for men and Si for women, a fruity chypre, are two 2013 entries and have already reached the top.

Source: LOreal.com

For the beauty chain, Marionnaud, which features a more “mature” clientele and an “atypical” dated lineup, their list of best sellers for 2014 is even more different. The Scented Salamander reports:

Marionnaud
1 – Boucheron Femme EDP by Boucheron
2 – Flowerbomb EDP by Viktor & Rolf
3 – Alien EDT by Thierry Mugler
4 – Féminité du Bois by Serge Lutens
5 – Eau Sauvage EDT by Dior
6 – Magie Noire EDT by Lancôme
7 – Chloé EDP by Chloé
8 – 1 Million EDT for men by Paco Rabanne
9 – Only the Brave EDT by Diesel
10 – 0 de Lancôme EDT by Lancôme

Coco Mademoiselle.

The lists are interesting, especially when you compare to what was selling back in prior years. Surrender to Chance lists what it says were the best-sellers in France for 2011:

1. Chanel No. 5 EDP – “iconic decades-old perfume that has topped the best-seller list for most of those decades.”
2. Dior J’Adore – “now overtaking Chanel no. 5 worldwide[.]”
3. Thierry Mugler Angel
4. Chanel Coco Mademoiselle
5. Kenzo Flower
6. Guerlain Shalimar EDP
7. Lolita Lempicka
8. Christian Dior Miss Dior Cherie
9. Nina Ricci Nina
10. Yves Saint Laurent Paris
11. Yves Saint Laurent Opium
12. Jean Paul Gaultier Classique
13. Lancome Tresor EDP
14. Nina Ricci L’air du Temps
15. Clinique Aromatics Elixir
16. Lancome Cuir de Lancome.

Naomi Watts in Thierry Mugler’s Angel campaign ad. Source: Basenotes.com

Going back further, Marie-Claire magazine has a listing of the most successful fragrances in 2008 in France, as compared to the U.S. and China at roughly the same time:

FRANCE
1. Chanel No. 5
2. Thierry Mugler Angel
3. Dior J’adore
4. Kenzo Flower
5. Lolita Lempicka 1er Parfum

UNITED STATES (2006)

1. Estee Lauder Beautiful
2. Chanel No. 5
3. Donna Karan Cashmere Mist
4. Estee Lauder Pleasures
5. Calvin Klein Euphoria

CHINA (FIRST HALF OF 2007)
1. Chanel No. 5
2. Dior J’adore
3. Lancôme Miracle
4. Chanel Chance
5. Dior Addict 2

I don’t think you can look at the 2014 Sephora and Marionnaud lists as being completely representative of French sales as a whole. There are a variety of reasons. First, Sephora’s clientele generally skews younger and towards a certain financial bracket, while Marionnaud’s doesn’t seem representative for other reasons. (I’ve been in their stores, and The Scented Salamander is correct in saying that they skew extremely old and their merchandise really is dated.) Plus, how can you take figures from 2 chains to be representative of the country as a whole? At best, their lists may demonstrate a gradual shift amongst certain groups away from the classics and the market leaders. Moreover, I find it difficult to believe that Chanel No. 5 and Dior’s J’Adore would lose their many years-long death grip if you looked at numbers from all vendors and across all segments of the population.

Regardless of what fragrances are the most popular, French consumers are buying less of them and reducing their spending in an effort to save more money. The Perfumer & Flavorist has the details of market research by a company called Canadean, but there is a lot of gobbledygook about Compound Annual Growth Rate (CAGR) which hurt my head, so I’ll just give you the summation as I understood it:

• France’s perfume market showed only the seventh fastest growth rate out of the nine health and beauty markets that Canadean follows. The reason is the very high personal saving levels in France at 15.5%, as compared to the average 2.5% rate in the United States.
• French fragrance is forecasted to show much slower growth until 2017. Women’s perfumes dominate the sector with a value share of 62.8% and volume share of 65%. It is expected to show the strongest growth in the upcoming years, especially as compared to men’s fragrances.
• “Men’s fragrances made up less than half the volume of the market in 2012, at 31.7% volume and a slightly higher value of 33.8%. In growth terms, 2012–2017 is projected to see volume and value for men’s fragrances significantly lower than both sector levels and female fragrances[.]”
• The third category, unisex fragrances, recorded just over 3% of the sector for both value and volume of sales in 2012, and its growth is projected to be even lower than that of men’s fragrances at 0.2% in the upcoming years.

In other words, the main buyers of perfume in France now and for the next 4 years are women. Yet, even they are buying less these days, and they’re certainly not buying unisex fragrances in large quantities or buying enough to drag France’s perfume industry out of 7th place from the 9 big markets that the research group follows.

ITALY & THE NETHERLANDS:

Supermodel David Gandy for D&G Light Blue. Source: Pinterest.

Italy doesn’t have a booming perfume market right now, and won’t for the ostensible future. According to Canadean as reported by Perfumer & Flavorist, the sharp drop in Italy’s GDP since 2007 means their perfume sector won’t see growth rates above 2% growth until 2017. Women’s fragrances take up 60% of the market in terms of sales, but they are forecasted to have the slowest growth. Men’s fragrances are expected to perform slightly better but the real surprise pertains to unisex fragrances. They are expected to do the best in the upcoming years, even though they have a much lower market share, with 1.5% for both value and volume in 2012.

The Netherlands may be a small country, but they have a great economy on average. According to Digital Journal, back in 2008, the Netherlands had the 16th largest economy in the world, and ranked 10th in GDP per capita. It reported that fragrance sales were booming in the “600-million Dutch perfume market” which was dominated first by the Douglas chain of shops, then by those of Ici Paris XL perfumeries. If you fast forward to 2013, a report by the Euromonitor states that Dutch perfume sales continued to increase, despite a difficult economy, but the research group saw only modest growth lying ahead. It adds:

L’Oréal (NBO: Prestige & Collections Nederland) is the leader in fragrances with a 12% value share in 2012, with some of its popular brands including Trésor, Acqua di Giò, Ralph Lauren and Emporio Armani. In 2012 the company registered a very small decline in terms of value sales, but overall it had a stable market share. [Emphasis in bolding added by me.]

Source: myfdb.com

As noted above, one of the top beauty chains in the Netherlands is Ici Paris XL, and they have a list of their Top 10 Bestsellers amongst female fragrances. The same caveats that I raised for the French Sephora list applies here, too, but it’s still interesting to see what is selling in each country. So, here are their top-sellers:

1. Lancome La Vie est Belle
2. Chanel Coco Mademoiselle
3. Dior J’Adore
4. Paco Rabanne Lady Million
5. Chanel No. 5
6. Thierry Mugler Alien
7. YSL Manifesto
8. Jil Sander Sun
9. D&G The One
10. Cacharel Noa

Their list of Top 10 Men’s Fragrance Bestsellers is:

1. Paco Rabanne One Million EDT
2. Chanel Allure Sport EDT
3. Jean-Paul Gaultier Le Male
4. Chanel Bleu de Chanel
5. Giorgio Armani Acqua di Gio
6. Hugo Boss’ Boss
7. Dior’s Dior Homme EDT
8. YSL l’Homme
9. D&G The One
10. Davidoff Cool Water

GERMANY & SPAIN:

Germany has a large fragrance market, and it did well in 2012. According to a September 2013 report by the Euromonitor,

• Fragrances in Germany experienced a positive performance in 2012, with retail current value growth of 2%, reaching €2.0 billion. Volume growth of fragrances in Germany only increased by 1%, which was lower compared with 2011. This was due to the poor volume performance of unisex fragrances in both the mass and premium segments.
• Procter & Gamble Prestige Beauté was the leading player in fragrances in 2012, with a 17% value share. The company is strong in both mass and premium fragrances. In the mass segment Procter & Gamble Prestige Beauté markets a broad range of established brands, such as Mexx Woman. In premium fragrances it has a significant presence with popular brands such as Gucci Guilty Pour Homme and Boss Woman. The company managed to maintain its strong position thanks to well-supported new product launches in 2012. 
• Fragrances in Germany is expected to see a rather negligible growth to reach €2.1 billion in 2017. It is expected that the living standards of German consumers will start to slowly decrease in response to the economic crisis, which will limit the growth rate of fragrances to a certain extent in constant value terms. [Emphasis added by me.]

Lacoste Pour Femme. Source: shop-cosmetice.ro

One of the biggest perfume chains in Germany is Parfumerie Douglas or Douglas. According to a Basenotes discussion, in 2004, Douglas announced that its top-selling women’s fragrances were:

1. D&G Light Blue
2. Pure by Jil Sander
3. Lacoste pour Femme by Lacoste
4. Chance by Chanel
5. Touch of Pink by Lacoste
6. Jean Paul Gaultier by Jean Paul Gaultier
7. Pure Poison by Dior
8. Chanel No 5 by Chanel
9. Hugo Deep Red by Hugo Boss
10. L’Eau d’Issey by Issey Miyake

Exactly 10 years later, now, in 2014, only two of those scents remain on Douglas’ new list of its top-selling women’s fragrances. They are Lacoste and Chanel No. 5:

1. Thierry Mugler Alien
2. Chanel Coco Mademoiselle
3. Lancome La Vie est Belle
4. Chanel No. 5
5. Paco Rabanne Lady Million
6. Toni Gard Honey
7. Lacoste Lacoste Pour Femme
8. Escada Born in Paradise
9. Giorgio Armani Si
10. Dior J’adore

Alien ad, via sandiinthecity.onsugar.com

Douglas’ list of its current best-sellers for men is:

1. Hugo Boss’ Boss
2. Paco Rabanne One Million
3. Jean-Paul Gaultier Le Male
4. Davidoff Cool Water
5. Paco Rabanne Invictus
6. Chanel Allure Homme Sport
7. Giorgio Armani Code Homme
8. Hermès Terre d’Hermès
9. Chanel Bleu de Chanel
10. Hugo Boss Hugo

Finally, a brief look at Spain. It may be one of the countries most affected by the Eurozone crisis, but the Perfumer & Flavorist reports that Spanish consumers, particularly men, like to treat themselves to fragrance. The market is “set to be one of the five fastest growing health and beauty sectors in Spain to 2017.” Men’s fragrances will display the highest volume growth through 2017. “As the women’s fragrances category matures, women’s fragrance is predicted to become the slowest growing category of the sector over the next five years[.]” Unisex perfumes, in contrast, will do the best over the next five years, even though they have the smallest market share at this moment.

THE MIDDLE EASTERN MARKET:

The Grand Mufti of Dubai. Source: emirates247.com.

A Fatwa was issued by a Grand Mufti in the Middle East on the issue of perfumery, and no, I’m not being facetious. It was actually a positive edict, according to the Euromonitor. Its October 2013 summary report states that:

A Fatwa was issued in June 2012 by  Dr Ali Ahmed Mashael, Grand Mufti at the Department of Islamic Affairs and Charitable Activities in Dubai. This stated that Muslims can use alcohol-based fragrances, due to the proportion of alcohol in fragrances being low. While the Fatwa stated that cautious Muslims could use oil-based fragrances that are alcohol-free, it also stated that the use of alcohol-based fragrances would not affect the purity of a Muslim’s prayers. This Fatwa thus encouraged many Saudi consumers to expand their purchase of fragrances to include alcohol-based fragrances from prestigious global brands such as Estée Lauder’s Tom Ford or DKNY. [Emphasis to names added by me.]

I really hope the Euromonitor is the one providing those brand examples, and that the Grand Mufti did not personally mention DKNY! I can’t read the full report unless I pay $725 — which I most certainly do not want to do — so we shall just have to rely on the Euromonitor’s synopsis.

They also mention Arabian Oud, writing “Arabian Oud defines traditional Saudi fragrances for many consumers and was the clear leader in fragrances throughout the review period. The company accounted for 34% share in 2012. This company benefits from its history and its strong premium image.”

Arabian Oud via their website.

Arabian Oud also comes up in the Euromonitor’s report on the fragrance market in the United Arab Emirates, and I found the mention of private agarwood plantations to be fascinating:

• There is a strong tradition for fragrances in the United Arab Emirates, with local men and women using perfumes on a daily basis. The country is particularly known for its oud-based fragrances and benefits from the strong presence of premium oud specialists such as Arabian Oud Co and Ajmal International Trading Co LLC. While oud is expensive and rare, being more expensive than gold, these players have their own agar plantations, enabling them to offer premium quality products at a profit. […]

COMPETITIVE LANDSCAPE

Source: unperfume.es

• The leading players in fragrances perfectly represent the dual nature of this category. Traditional oud specialist Arabian Oud Co remained the leading player, accounting for a 14% value share thanks to a wide range of both oriental and Western-style fragrances and opulent outlets in Dubai. Global giant Estée Lauder Cos Inc ranked second with a 13% value share, benefiting from a fashionable global image for brands such as Estée Lauder, DKNY, Clinique Happy and tommy. Both players maintained their value share from the previous year. [Emphasis to names added by me.]

The fragrance brands mentioned as market leaders in that October 2013 report seem to have changed from a 2011 Euromonitor PDF report that I sampled. It states:

Fragrances remain largely fragmented amidst continuous launches, with fragrances leader L’Oreal Middle East holding a retail value share of only 6% in 2010[.][…] Emporio Armani continued to be the best-selling premium brand for both men and women with over 5% of value sales of premium fragrances overall.

The report makes, clear, however, that the only thing which really sells in the UAE is premium. Premium anything. None of this celebrity stuff is going to pass muster with the largely unimpressed population soaking in Petrodollars. Furthermore, the UAE citizens regard perfume as an essential part of every part of their life and culture. A few other tidbits gleaned from the PDF:

• The UAE posted one of the highest per capita expenditures on perfumery in 2010, and despite some small economic slowdown that year very few people “traded down” to cheaper, mass fragrances. 
• Premium fragrances accounted for 73% of perfume sales in the UAE in 2010.
• “Beauty specialist retailers” like the niche-selling Paris Gallery account for 42% of sales, while (very high-end) department stores like Harvey Nicks and Debenhams only account for 19%. Clearly, niche and uber-luxury fragrances sell! And the main category or genre of perfume that sells is… well, obviously, Orientals.
• All socio-economic groups in the UAE buy perfume which they see as “essential.” They are “part of the basic attire and are consumed throughout the day and during any occasion or outing.”
•  The “global trend towards attaching celebrity names to fragrances works less well in the Emirates due to the diverse population – many celebrities are simply not known by Western, Emirati and Asian parts of the population.”

One of the most fascinating parts of the PDF sample file was something buried far at the end and in the back. The leading UAE perfume manufacturer, the Adjmal International Group mentioned earlier, buys some of its stuff from Givaudan, IFF, Firmenich, Symrise and the rest of the big Western ingredient and aromachemical companies. The PDF sample report states:

In addition to the company’s own agarwood plantations in Assam, India, which account for around 40% of the required raw materials, Ajmal sources the balance from the Far East[.] Raw materials are sourced from world-renowned suppliers like Symrise, IFF, Firmenich, Givaudan, Drom and V. Mane Fils.

Apparently, there is no getting around Givaudan and its brethren’s tentacles. So, the next time you smell something very synthetic in your supposedly purely Middle Eastern, “local,” oud fragrance, you may want to blame the big guys in Switzerland and Europe.

Asghar Ali Perfume Company, Bahrain. Source: YouTube.com

As a small side note, the UAE is not the only part of the region that is experiencing a healthy perfume market. In the Gulf coast kingdom of Bahrain, the fragrance and beauty industry is on the verge of a massive shift upwards. An article in Gulf News Daily discusses the findings of the Euromonitor research group which found that, sales “are expected to hit $29.9 million by the end of the current year amidst positive growth trends in other parts of the GCC.” One Middle Eastern perfume executive is quoted as saying that the amount of money spent in the Gulf as a whole is “relatively higher… than in other parts of the world as fragrances and perfumes are an important part of the Gulf lifestyle coupled with a high disposable income[.]”

INDIA:

Aishwarya Rai. Source: ibnlive.in.com

I was surprised to find details on the Indian perfume market. I actually tried once before for an earlier article, but gave up in frustration. This time around, I’ve had better luck. I’ll start with the brief synopsis from April 2013 from Market Research. In a nutshell, it states that the current Indian perfume market had revenues of $227 million in 2012, and that the figure is expected to go up to $510 million by the end of 2017:

• The Indian fragrances market had total revenues of $227.4 million in 2012, representing a CAGR of 19.4% between 2008 and 2012.
• Market consumption volumes increased with a CAGR of 14.9% between 2008-2012, to reach a total of 18.7 million units in 2012.
• The performance of the market is forecast to decelerate, with an anticipated CAGR of 17.6% for the five-year period 2012 – 2017, which is expected to drive the market to a value of $510.6 million by the end of 2017.

Source: National Geographic

A report by Canadean (which costs over $1,300 to read in full) states that young people (up to the age of 30) are driving demand, and that age dynamics are key to the market. It also adds:

In 2012, 20.7% of Fragrance use among Indian consumers was motivated by the desire to seek better quality products. Apart from the attraction of the newness factor, quality is also being sought after, from the product ingredients to packaging.

India saw minimal impact from the global economic slowdown and the market displayed a positive trend during 2007–2012, growing at a CAGR of 16.0% during this period in local currency terms. The upbeat mood of the economy and its increasing integration with globalized lifestyles and consumption patterns will drive the growth.

Analysis of India’s Fragrances sector between 2007 and 2017 highlights a number of clear winners and losers. Large categories posting moderate growth such as Female and Male Fragrances will gain a larger market share than smaller categories such as Unisex Fragrance, indicating consumers’ preference for gender specific Fragrances.

Source: Askmen.com

The Economic Times of India has an interesting article from 2012 which talks about consumer tastes. It spends a large amount of time talking about deodorants, which it classifies as part of the “fragrance industry,” so please keep that fact in mind when you read the quotes:

Nearly 60 per cent of the whole fragrance market is dominated by the men’s category which is also highly fragmented and keeps evolving with change in attitudes and lifestyle. Besides, high-end perfumes in the male category are also doing a brisk business courtesy the growing urge among urbane Indian males to stay well-groomed.

Though there are limited options for women but the segment is likely to see an upsurge with various existing brands and new entrants resorting to sustained media campaigns to cash in on the untapped category with enormous growth potential.

Model Simon Nessman for CK One, Winter 2010-2011. Source: MaleModelSceneNet

Teenagers are a significant segment in both male and female categories as an average teenager at an urban centre tends to spend anywhere between Rs 500 and Rs 2,000 only on fragrance including – deodorants, roll-ons and perfumes. [¶]

Armani, Azzaro, Burberry, Chanel, CK 1, Dior, Escada, Estee Lauder, Ferrari, Hugo Boss, Lacoste, Nina Ricci, Polo, Shiseido etc. are certain most sold leading perfume brands in India. Amid the deodorant category Axe, Park Avenue, Nivea, Set Wet, Wild Stone, Garnier, Yardley etc. are leading. [Emphasis to names added by me.]

ALL IN ALL:

It is clear that the fragrance industry is booming. Sales may be soft in the U.S., but they aren’t overseas. And there is so much money involved! An estimated $46 BILLION a year by 2017 or 2018, which isn’t all that far off.

Source: timeoutbahrain.com

Companies are trying to tap into this lucrative market by issuing more and more new fragrances each year. Just 21 years ago, there were only 132 new perfume releases. Now, there are a thousand more. Jordan River of The Fragrant Man, has a post on Michael Edwards‘ new book, Fragrances of the World, which details the rise in the number of perfumes released each year. Jordan writes:

In 1993 there were 132 new perfume releases, by 2003 the number had grown to 581. As noted above, 2012 saw 1330 releases and in 2013 retail shelves made room for a further 1492 new perfumes.

If you’re exhausted from all these numbers, I don’t blame you. What you should take away from all this is the same thing that I repeat in all my posts on the perfume industry’s growth and sales: the future lies in new emerging markets. 

Justin Bieber’s Girlfriend perfume. Source: getitwrighthere.com

I think the Western markets are starting to be over-saturated, something that is certainly true of the Celebrity Perfume Industry which drove a lot of U.S. sales for a while. My post on that issue covers the astronomical, utterly mind-blowing numbers, especially from Britney Spears! Whether it’s a billion bottles or over a billion dollars, she’s raked it in for Elizabeth Arden, while Justin Bieber drove the entire U.S. market in terms of sales for 2012. Yet, as the 2013 sales figures for Elizabeth Arden discussed in Part I demonstrate, things may have changed a little in the short-term. The market has probably over-flooded — One Direction‘s massive success in the U.K. notwithstanding. Companies like Elizabeth Arden who are so centered and focused on the American sector are going to have problems in the future, I think.

The companies that will succeed are the ones who are targeting the markets of the future. Europe seems dead, with the unique exception of Russia and its oligarchs. However, the future is bright in India, not to mention Latin America (Brazil is frequently mentioned), and it’s raining down gold in the Middle East with their long tradition of perfumery and enormous disposable income.

Asia is less certain for the near future, in my opinion and for the reasons outlined in my earlier post on the 2013 Global Perfume Industry. I can’t see a dramatic change by 2017, the date selected by many of these research reports for their analysis of the growth curve. However, companies like Estée Lauder, LVMH, Kilian, Tom Ford and others are clearly trying to lay the foundation for future growth there. I have no doubt they will succeed to a small extent in capitalizing on social aspirations and the hunger for luxury products with their Asian exclusives and targeted marketing. However, I personally believe it will be years and years before cultural issues in perfume usage will be overcome to the point that Asia will join North America and Europe as market leaders.     

Source: Hongkiat Lim at hongkiat.com

In the more immediate future, I see a small silver lining in all this news, even if it is a rather philosophical one: the love of perfume is slowly turning both global and wider in scope. Not only is perfume interest spreading out to new parts of the world, but even those who already loved perfumery are broadening their horizons. Things are changing to become more universalist: women seeking out woody orientals; Middle Eastern ouds have filtered out to the West, while, over there, Grand Muftis are issuing Fatwas to wear alcohol-based perfumes; unisex fragrances on the rise in various European markets; and men are poised to compete with women in terms of perfume addiction. (I think any perfume blogger or member of a perfume group could have told NPD that last fact!)

Unfortunately, the cynic in me is whispering that none of this really matters, because the Golden Age of Perfumery is at an end. There are a lot of reasons why I’m dubious of the quality of what may lie ahead of us: the EU restrictions on rich natural ingredients; the impact that draconian regulations on everything from testing to packaging will have on small, truly niche, independent perfumers; the growing conglomerization of the industry through takeovers by wealthy multi-national corporations like Estée Lauder or L’Oreal; the way many of these entities are in bed with the corporate ingredient (and aromachemical) giants who provide both their materials and their stable of “noses”; the important role of cheap celebrity perfumes in driving sales; and the increasingly generic profile of fragrances put out under increasingly tight schedules to meet the publicly held companies’ quarterly-earnings report and shareholder expectations. (That explains Tom Ford’s numerous releases each year, with each collection having at least three fragrances in it. And, based on what I’ve tested thus far, they are almost invariably created by a Givaudan perfumer with Givaudan ingredients.)

Still, notwithstanding my personal pessimism, it’s good news to know that our love of perfumery is spreading out to more parts of the world than ever before. And I think we can all agree that an industry whose future may be valued at almost $46 billion in annual sales is an industry that matters.

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

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, Part II, 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.

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.

The EU Proposes to Act on Perfume

Well, it’s slowly happening. The EU finally seems poised to act, according to a new report by Reuters. The article is entitled “EU Commission proposes tighter regulation of perfume ingredients” and was written by Astrid Wendlandt and Pascale Denis. To be clear, nothing in the article involves anything new. All that is happening now are the first, slow, official steps on events set into motion back in 2012.

In a nutshell, the situation is analogous to a Senate Sub-Committee advisory report going to the Senate who took their time to study it and, finally, after a while, decided it may be time to act on it with actual legislation. Those future legislative enactments have not been passed into law — yet — but things are much closer to that point than they were before. So many people blame IFRA, but the real source of perfume regulation is the EU. Yes, IFRA began all this years and years ago with minor restrictions, but none of them were actual law or quite as wide-sweeping in nature. It has taken the EU to act and make them legal mandates, binding on all who want to sell within their territory.

Dried oakmoss or tree moss.

A few years ago, the EU asked its advisory, scientific body to look into things further. It commissioned the Scientific Committee on Consumer Safety (SCCS) to come up with a report on allergens from perfumery, and that report was published in July 2012. You can read more about the group’s findings and recommendations in my post, 2013, the EU, Reformulations & Perfume Makers’ Secrets. As the new Reuters article summarizes, the SCCS advisory committee made several findings and suggested proposals:

The report called for drastically reducing the use of many natural ingredients found in perfumes, on the basis that 1 to 3 percent of the EU population may be allergic or may become allergic to them.

The recommendations of the report, if adopted by the Commission, threaten to seriously damage the fragrance industry.

The report recommended restricting the concentration of 12 substances – including citral, found in lemon and tangerine oils; coumarin, found in tropical tonka beans; and eugenol, found in rose oil – to 0.01 percent of the finished product.

It also proposed an outright ban on tree moss and oak moss, which provides distinctive woody base notes in Chanel’s No.5 and Dior’s Miss Dior.

Muguet, or Lily of the Valley.

So, what is happening now? Well, the EU Commission is taking its first steps in acting on those suggestions. In essence, “the executive body” (as the Reuters article calls it) is giving its judicial response on the consultants’ 2012 findings. They are planning to follow the 2012 suggestions by proposing specific, upcoming action in a few areas:

1. a ban of atranaol and chloroatranol, molecules found in oak moss and tree moss, two of the most commonly used raw materials because of their rich, earthy aroma and ability to ‘fix’ a perfume to make it last longer.
2. ban HICC, a synthetic molecule which replicates the lily of the valley aroma and which has also been widely used by perfume makers.
3. It is also proposing to significantly lengthen the list of molecules and ingredients perfume makers have to label on the packaging of their products to warn potentially sensitive users.

In short, the EU Commission appears to have flat-out accepted the proposed SCCS suggestion of banning oakmoss, but it is being more cautious with regard to its other suggestion of severely restricting 12 (or more) ingredients. What it is doing instead is what all legislative bodies do when confronted with more inclusive, drastic action: it is going to delay things further by asking for additional reports and investigation. The EU executive Commission has demanded

further research to determine what level of concentration should be used for those 12 ingredients and for another eight. These ingredients represent the spine of about 90 percent of fine fragrances, according to experts.

One reason for the hesitation to take immediate action is the wide-ranging impact that the SCCS’s recommendation would have. IFRA has stated that toying with those 12 ingredients would result in the formulas for over 9,000 perfumes being changed.

Stephen Weller, IFRA photo, via The Scented Salamander.

Speaking of IFRA, in the past, the organisation has pretended that it is the champion of perfumers, and it is only thanks to their actions that oakmoss has not been banned completely. In my piece on Viktoria Minya, the world of a “nose,” and what it’s like to be a perfumer in today’s current EU/IFRA regulated world, I discussed claims made by Stephen Weller, IFRA’s Director of Communications. According to the European blog, The Scented Salamander, Mr. Weller has given a few interviews in France defending his organisation as the supposed savior of certain key ingredients. The Scented Salamander states that Mr. Weller:

makes the particularly salient point in this exchange that without IFRA, a number of perfumery ingredients would have altogether disappeared from the palette of the perfumer as they have come under attack from the European Union and before that pressure groups voicing their concerns…

Weller explains in this new interview with Premium Beauty News how his organism permits a more nuanced approach to the dermatological and allergic risks presented by aromatic materials.

Mr. Weller would have you believe that IFRA is firmly on the perfumers’ side, acting as the sole barrier between the lobbyists who he argues are really at fault, and the total eradication of oakmoss in perfumery. I give my responses to that utterly ridiculous contention in the Viktoria Minya piece, but if anything should show IFRA’s true nature, it’s their reaction to these new 2014 EU developments.

Pierre Sivac, President of IFRA. Source: Cosmeticsbusiness.com

In my favorite part of the recent Reuters article quoted up above, the writers give a very astute, subtle dig at IFRA by first providing their enthusiastic response to the EU executive body, and then, in the next paragraph, explaining who really backs IFRA. Take a look at their exact phrasing:

“We broadly welcome the proposed measures,” said Pierre Sivac, president if the International Fragrance Association, the perfume industry’s self-regulatory body.

Since its creation in 1973, IFRA, which is financed by scent makers such as Givaudan, New York-listed International Flavors & Fragrances and Germany’s Symrise, has restricted natural ingredients for a range of health reasons, from worries about allergies to cancer concerns. [Emphasis added by me.]

Yes, I’m quite sure that Givaudan would welcome the banning of certain natural ingredients and the severe restrictions of 12 others which form the body of 90% of perfumes. I’m quite sure they would….

[UPDATE 2/21/14 — I would like to draw your attention to something that is critical in all this, which is the scientific basis for the regulations in the first place. I’m wholly unable to speak to this with any clear knowledge, but Mark Behnke is most certainly qualified, thanks to an advanced degree in chemistry. He is the former Managing Editor of CaFleureBon who now has his own new site called Colognoisseur, which is where he recently posted an editorial on this issue. There, he writes:

The data used to determine the allergen potential of these molecules is scientifically and statistically unsound. […] The studies these bans and restrictions have been based on were performed one time at one concentration on 25 patients with no controls, positive or negative! This is what makes me shake my head as this is not good scientific practice and the conclusions made are very preliminary and possibly incorrect.

An even bigger flaw is the idea that it’s really only 23 molecules, so what? If these single molecules are restricted and banned it will have a ripple effect throughout many more raw materials. A natural oil is not a single molecule it is a combination of as many as hundreds of individual molecules. Any one of which could be identified as one of the “bad 23” which would then make that natural oil unusable as well. […]

I urge you to read his piece in full.

On the medical front, there is also the information provided in the comments from “Colin,” one of my readers who I believe is a doctor. He talks about the unsoundness of the conclusions in terms of actual medical impact of these allergens, writing

Most people who may be allergic to perfumes or specific scent chemicals have a skin reaction which is not dangerous or life-threatening in any way. A brief review of medical literature reveals only two, yes that is TWO, reported cases of anaphylaxis, which is the severe, life-threatening kind of allergic reaction. One occurred in a health care worker when a patient sprayed her directly in the face with 3 sprays of perfume (I’m completely serious, look it up–Lessenger JE. Occupational acute anaphylactic reaction to assault by perfume spray in the face. J Am Board Fam Pract. 2001;14:137-40). The other occurred when a mother sprayed her 2-month infant in the face with cologne. Neither of these would be considered by anyone to be a customary use of fragrance. Incidentally, in the case of the infant, the cologne contained menthol which was the ingredient the authors suspected to have been the main factor in triggering this response. Is menthol even on the list of ingredients of concern? Should any chemical be regulated if, in the recorded history of humanity, there have been but 2 cases recorded of any anaphylactic reaction and in both cases the perfume was being misused? 3 percent of a population is not a trivial number and would be potentially worthy of public health initiatives if that population were at risk. 2 cases out of the billions and billions of people in the world? Seriously? What a ridiculous waste of time and effort. This is why no reputable major health organizations are militating for any of these regulations. Banning a chemical because some people in the vicinity might get a migraine or the person applying it might get a rash makes little sense.

In short, on both the scientific and medical fronts, the empirical reasons for these regulations are faulty to begin with, never mind where the whole thing may go once the EU actually passes the complete 2014 laws.]

There is a charade playing out in all this, a charade in which we — perfume lovers — are the only losers. Only 1% to 3% of the entire EU suffers from perfume allergies, most of which are quite minor in nature. The European Commission claims that it truly cares about that tiny fraction of its citizenry, but it also firmly insists that it wants to avoid hurting the perfume industry.

“We have to find a way of ensuring security of consumers but also avoid causing damage to the industry,” said a spokesman for Neven Mimica, European Commissioner for Consumer Safety. [Emphasis added by me.]

Avoiding damage to the industry? Forgive me while I snort. In Grasse, the true home of perfumery with its vast fields of natural resources, the producers are so desperate over the SCCS proposal and the effect of any action by the EU that they turned for help to UNESCO. Yes, EU business concerns are turning to help to the bloody UN and to its UNESCO branch, a group better known for assisting Third World countries in dealing with poverty (!!!) or protecting historical treasures.

Source: Palmbeachdailynews.com

You think I’m joking, or that is hyperbole? Consider an article in Euronews from June 2013 discussing the panic amongst the producers of the natural ingredients of perfumery:

There are 2,500 lavender producers in France, covering 20,000 hectars. Grasse is considered by many to be the “capital of perfumes”. It is close to the lavender flower growing regions and home to Robertet, a world leader in natural fragrance production and perfume design. Their 22 branches worldwide turnover 400 million euros a year.

Robertet workers were shocked at the SCCS report with its long list of allergenic substances to declare, limit or ban. To adapt, the French perfume industry would need to pay up to 100 million euros, according to one of the directors. The cost to Robertet would be approximately five million euros.

Francis Thibaudeau, Deputy Manager Fragrance Division, Robertet told euronews: “Allergenic substances are part of perfume products. All the major perfumes would disappear if the SCCS proposals are implemented. Entire branches of perfume-making would be doomed. It would be the death of the industry… we could no longer use jasmine, ylang ylang sandalwood, or bergamotte. Those ingredients and essential natural products would no longer be used…”   […][¶] 

Meanwhile the tiny village of Montségur-sur-Lauzon is at the very heart of French lavender flower production. The summer air smells different. Fragrant. Here, Kriss, a young distillery manager, and a tractor driver nicknamed Mirabelle share the same fears: the thunderstorm forecast for later today, and the storm brewing over the European Commission’s apparent attempt to limit the use of coumarine, an allergenic substance naturally present in lavender flowers…

Kriss told euronews: “This European law on allergenic substances under discussion would be a catastrophe for all professions dealing with natural raw materials. Such a law would limit the use of those substances on a very low level. 90 percent of existing natural raw materials from plants could not be used any longer. The perfumers would have to change all their formulas…it would be like the debate to ban peanuts in Europe all over again. It’s just stupid.”

Meanwhile, the city of Grasse wants UNESCO to designate its local perfume tradition as World Heritage status. Lavender producers have the same idea: UNESCO should protect them against the ‘bad boys’ of Brussels.  [Emphasis added by me.]

Yes, an entire city in the European Union is turning to a UN charitable organisation for help. I think that rather destroys the EU’s pretense of caring so much about the business industry.

Source: Brandsoftheworld.com

That said, if there is a business that the EU wants to help, I’m not sure who it is. It’s too easy to claim that they are in the pocket of Big Business, but such conspiracy theories don’t hold up to a closer examination of the facts. LVMH is practically losing its mind over all this, and it’s certainly bigger, more powerful, and wealthier than either IFF or Symrise, two of the main manufacturers of aromachemicals and fragrance ingredients. The multi-billion dollar, privately owned Chanel corporation also has its panties in a twist, though as my earlier piece on the EU makes clear, L’Oreal (whose fragrances contain a lot of cheap crap) is quietly saying nothing. (No, L’Oreal, I will never, ever forgive you for what you’ve done to YSL fragrances.) Neither is Coty, apparently. (As a side note, IFRA President, Pierre Sivac, was formerly a powerful Coty executive. He also worked at Unilever, another big, beauty industry player that is not exactly known for its prestige fragrances.)

In my earlier piece on the EU, I quoted a discussion on the big split in the perfumery industry:

The proposals have also revealed schisms in the perfume industry – a lack of unity that makes it harder to lobby with one voice.

Brand owners such as Chanel and LVMH and scent-makers such as Coty, L’Oreal, Procter & Gamble, Givaudan and Symrise all have different goals.

LVMH, which owns Dior and Guerlain, and Chanel are lobbying Brussels to protect their perfumes, many of which were created decades ago.

“It is essential to preserve Europe’s olfactory cultural heritage,” LVMH told Reuters in an emailed statement.

So, again, if one has conspiracy theories about the EU being in the pocket of Big Business, then who is the business group who would actually be helped? Not the Europeans themselves, perhaps. In the opinion of one of the people quoted in the June 2013 Euronews article on Grasse, EU restrictions “would open up the doors of the European market for Indians and Chinese who would profit from European over-regulation and conquer our market shares…”  I’m not quite sure how that would happen in Europe, given that anyone buying from the alleged Indian and Chinese profiteers would still have to abide by EU perfume laws, but it would certainly benefit producers and perfume manufacturers in the growing markets outside of Europe.

All these contradictions and competing interests really makes one wonder, yet again, why is all this happening? I honestly don’t know. To me, it simply isn’t logical. As I wrote in the Viktoria Minya piece, I don’t see the EU or manufacturing associations putting restrictions on factories who produce food items or on chefs in restaurants simply because there are some pressure groups who complain about nut allergies. Some of the early EU advisory suggestions (like the ludicrous idea of possibly banning Chanel No. 5 that I’ve talked about in another IFRA/EU post) are akin to shutting down the Eiffel Tower simply because 1%-3% of the EU’s 503.5 million population may have vertigo. (It’s been estimated that “1 to 3 percent of the EU population… are allergic or potentially allergic to natural ingredients contained in fine perfumes, according to a report published in July by the Scientific Committee on Consumer Safety (SCCS), an advisory body for the European Commission.” [Emphasis added.])

If the real concern is truly allergic reactions and not Big Business, then why aren’t warning labels enough? They put such warnings on cigarettes, and on pre-packaged food items that may have been prepared in a factory that had some nuts in it. Are perfumes actually more dangerous to people’s health than cigarettes??! Also, why are perfumes to be regulated with such ingredients as the amount of lavender or citrus oils, but massage oils are left alone? Presumably, that minuscule percentage of EU citizens who have allergic reactions — or just the mere potential thereof — might possibly decide to have a massage one day. Why are those oils fine, but the ones in perfumery — which allergic people can simply avoid using — subject to increasingly Orwellian, draconian measures?

Again, I have to emphasize that the new Reuters article is merely outlining the EU executive body’s first official, judicial response to earlier proposals. It is just like the Senate finally acting on a sub-committee advisory report from a few years before. With the exception of the Lily of the Valley proposal which I hadn’t heard of before or, more likely, had merely forgotten about, all of this has been on the table since 2012. However, now, the EU is finally taking the first slow steps to actually do something about it.

It is only a matter of time. Or perhaps it has already started. As the article notes, “industry sources say major perfume makers have already started modifying their formulas accordingly.”

Celebrities, Best-Selling Fragrances, Sales Figures & The Perfume Industry

A few days ago, I read an article on Stylecaster pertaining to the celebrity perfume industry, and the money that is involved. I always knew there was a lot of money involved, but that article inspired me to really explore further and to research in greater detail the issue of celebrity fragrances and the sector’s profitability.

Sarah Jessica Parker for “Covet.” Source: Fragrantica

What I learnt… well, I can’t even begin to process some of the details. In fact, the numbers for Britney Spears alone left me with my jaw rather agape. It’s simply too much for my tiny, little mind. She’s not alone, however, in experiencing fragrance success. Beyoncé, Paris Hilton, the boy band, One Direction, the American baseball player, Derek Jeter, Sarah Jessica Parker, and the original celebrity perfume endorser, perhaps the mother of this whole trend, Elizabeth Taylor, they’ve all done well. Some of them (i.e., Britney) have made an absolute killing! As The Hollywood Reporter wrote in an article earlier this year, “[o]f the top-selling 100 fragrances, 31 are tied to celebrities, all of them hoping to become the next Elizabeth Taylor.

Perfume has become such a profitable business that, as you will see at the end of this article, even universities are trying to get in on the game, having their own perfumes to encapsulate their college ethos and campus feel. From the University of Florida to Penn State, and many more, everyone is trying to get a piece of the profits. Not even the fabulously wealthy, legendary baseball team, the New York Yankees, is immune to the lure.

Before getting to the Stylecaster article which triggered all this, I thought it would be helpful to first have some basic, background figures to put things into an overall context. The global fragrance industry is valued at over $25 billion a year, with the Wiki-Invest entry for Elizabeth Arden putting the number closer at $36.6B! Nonetheless, in the U.S., the perfume sales figures have recently slowed. (You can read all the financial numbers for 2013 perfume sales, as well as other statistics and reports on the global perfume industry in general in my prior piece, 2013 Fragrance Sales Figures, Revenue & Emerging Markets.)

THE U.S. PERFUME MARKET & JUSTIN BIEBER:

Source: musicactivation.com

One reason for the dip in U.S. fragrance sales is, in part, the absence of any major celebrity perfume blockbuster hits. According to a report from the Euromonitor International analysis group, Justin Bieber’s fragrance (“Someday”) alone, by itself, contributed enormously to U.S. market sales in the previous year! 

After growing by 9% in 2011, sales of fragrances grew by just 3% in 2012. It appears that an improving economy in 2011 combined with pent-up demand and extensive product innovation led to strong growth in 2011, but this was not able to be repeated in 2012. Fragrance sales in 2011 had benefited from higher-income shoppers who felt more comfortable spending on others and themselves as the economy improved. The 2011 blockbuster launch of Justin Bieber also contributed to strong growth in 2011 as teenagers and young girls pestered their parents to buy them the pop singer’s fragrance. In 2012, there was no must-have celebrity fragrance to entice consumers.

Justin Bieber may have had one of the most successful perfume launches in history. According to Women’s Wear Daily, his Someday fragrance “shattered” sales records, netted more than $3 million in retail sales at Macy’s in less than three weeks. The $35-$45 fragrance was priced right and, let’s face it, Justin Bieber’s fans are very… enthusiastic, to put it politely.

There may not have been any Bieber-like monster successes recently, but it’s not for the lack of trying by other celebrities. There are the Olsen Twins with their upcoming, new and very first fragrance, Nirvana Black, which Womens Wear Daily says will be a $55-$75 woody scent that is exclusive to Sephora upon its official January launch and which is accompanied by a second fragrance, a musky floral called Nirvana White. From the young fashionistas’ fragrance debut, to Jay-Z, Rihanna, and Maroon 5‘s Adam Levine, the celebrities are all trying desperately hard, putting out new fragrances to appeal to their fans. They don’t all succeed, but when they do, the profits are astonishing.

THE STYLECASTER ARTICLE:

This is where we come to the Stylecaster report by Leah Bourne, entitled “Celebrity Fragrances: Why Stars Do Them, and How Much Do They Really Make.” For someone like myself who covers almost exclusively the high-end or luxury niche perfume market, the well-written piece was mesmerizing, fascinating, revolting, and depressing in equal measure. My stomach sank from the very opening paragraph:

Jay Z & his Gold. Source: Eonline.com

Jay-Z’s latest big-budget project isn’t an album, a tour, or even a clothing line: It’s a fragrance he’s dubbed “Gold Jay Z.” The rapper reportedly picked the name after combing through hundreds of options, eventually striking inspiration when he said, “This is the shit; it’s gold.” If Gold—which hits stores on Black Friday and ranges from $39 to $70—mimics the success of other celebrity fragrances, that’ll be a pretty fair assessment.

I sighed, then sighed even more at reading about his wife, Beyoncé. Her perfume, Heat, was released in 2010. Some factoids according to Stylecaster:

• 72,000 bottles were sold in the first hour of its release at Macy’s department store in NYC as she was signing autographs;
• Macy’s sold $3 million worth in the first month;
• Fast forward to August 2013, and the “Heat Collection” (which I’m assuming now involves flankers as well) was allegedly “named the current best-selling celebrity fragrance brand worldwide, with $400 million earned at retail globally so far.”

Other depressing facts from the Stylecaster article:

• In 2012, there were 85 celebrity perfume launches, compared to only 10 a decade earlier.
• Celebrity fragrance sales are now pulling in over $1.3 billion a year—a huge chunk of the total $5.2 billion fragrance industry in the US.
• Paris Hilton’s perfume line is valued at $1.5 billion.
• Britney Spears has sold over a billion bottles of perfume in the last five years, with global sales of over $1 billion. “You better believe that a huge chunk of Spears’ estimated $220 million net-worth stems from her various perfumes.”

These are cumulative sales figures, of course, but the numbers add up. Take, for example, the year 2011 which Forbes Magazine breaks down by best-selling perfumes in the U.S. market. A few tidbits from that report, with some supplemental research tossed in as well:

• “Topping our list this year is White Diamonds by Elizabeth Taylor. Elizabeth Arden sold $54 million worth of the scent in the U.S. last year.”

Derek Jeter’s ad for his fragrance, Driven, released by Avon.

• The American baseball star, Derek Jeter, had $27 million in sales in 2011 for his perfume, Driven. Forbes quotes the Euromonitor research group which states that “scents for men are bought by women for their boyfriends and husbands. So the appeal of Driven probably has more to do with Jeter’s persona than with his baseball skills.” In fact, the The Hollywood Reporter article from this spring quotes Euromonitor as saying that Driven “is the second-biggest celebrity fragrance, with more than $20 million in annual sales.”
• Forbes’ “third place” listing for 2011 takes us back to Heat by Beyoncé. It says her perfume “did well right out of the gate with $21 million in sales. It doesn’t hurt that Beyoncé promoted the fragrance with a steamy commercial deemed too hot for daytime TV in the U.K.” The Hollywood Reporter, however, says the numbers are much higher, saying that her perfumes earned $38 million in sales in 2011.

The people who I actually thought would lead the list came in fourth! The celebrities I know best for selling fragrances are people like Sarah Jessica Parker, Jessica Simpson, P. Diddy/Puff Daddy, and Britney Spears. Sarah Jessica Parker’s fragrances are the rare, few celebu-scents that often get decent praise on their own merits from perfume experts, so I certainly didn’t expect her to be far below someone like Derek Jeter! The fourth place 2011 numbers (which Forbes erroneously states as yet another “third place”) are:

Four scents tie for third place, each with $18 million in sales: Unforgivable by P. Diddy’s Sean John brand, NYC by Sarah Jessica Parker, Fancy by Jessica Simpson and Harajuku Lovers by Gwen Stefani. [Emphasis to names added by me.] [¶] NYC is an impressive newcomer. Parker has several other scents, including Lovely, Dawn and Endless, but NYC, which launched in 2009, is her bestseller.

BRITNEY SPEARS:

Source: paroutudo.com

One of the most successful celebrities in the perfume world on a long-term, cumulative basis may be Britney Spears. Amusingly, while her music isn’t always a big hit, her perfumes seem to be. Even when she was having her very public meltdown and her music career was stalling, Stylecaster says that she was still raking in the money — and it was primarily from her fragrances. It is nothing but ironic that Britney’s latest music single is called, of all things, “Perfume,” and seems to have bombed, when she has jaw-dropping success with actual fragrance.

Here are some numbers from her Wikipedia entry (with footnote links kept in if you want to double-check, as we all know Wikipedia can sometimes be dodgy):

• Spears endorsed her first Elizabeth Arden fragrance “Curious” in 2004, and earned $100 million in sales in just five weeks.^[3] .
• To date (2012), Curious has sold over 500 million bottles worldwide[.]^[5]
• On May 21, 2009, it is posted on her official website that Spears has the number one selling celebrity fragrance line on the market. Her Elizabeth Arden scents make up 34% of all fragrance sales.^[6]
• “Britney competed against other celebrities such as Céline Dion and Jennifer Lopez to succeed in becoming the number one celebrity perfume endorser of all time with global perfume sales of over one billion.”
• “To date, Spears has grossed an estimated $10 billion from perfume sales across the globe, with sales of more than a billion.”

Honestly, I am highly skeptical about that figure of a $10 billion gross, and suspect that it is some Britney fanboy is exaggerating. I also can’t find numbers for to support that claim, though I’ll be honest and say I didn’t do extensive, exhaustive digging.

One thing needs to be noted, Britney Spears herself is not getting either $1 billion or $10 billion, no matter how many bottles of perfumes she sells. She receives only a small percentage. (More on celebrity percentages later, down below.) What she has is an exclusive multi-year trademark and licensing deal with Elizabeth Arden which is set to expire next year in 2014. I hope Ms. Spears has a good lawyer who is is negotiating a hefty increase in her cut of the profits, because she’s certainly helped Elizabeth Arden’s sales.

Plus, Elizabeth Arden can afford it, thanks to their share of the perfume market. 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.

If Britney Spear’s perfumes make up 34% of that Elizabeth Arden’s sales, and if the company’s market share is 15% of an allegedly $36.6 billion dollar-per-year industry, well, then, she clearly makes a lot. However, we don’t know what her percentage agreements are with Elizabeth Arden, and how much she herself gets back from the gross profits. The bottom line is that Britney Spears probably has probably brought in well over a $1 billion in perfume sales for Elizabeth Arden by now, but I simply refuse to believe it’s anywhere close to $10 billion, and Britney herself is not making anywhere close to those figures.

The Hollywood Reporter seems to agree, with a considerably more conservative assessment of Britney’s success. Their March 2013 article on celebrity fragrance states:

Spears, after launching Curious, which has sold more than 500 million bottles since 2004, released 10 more fragrances. Collectively, Spears’ scents take in $30 million a year.

Whichever report you believe, one thing is clear: Britney’s fragrances are doing a lot better than Perfume, her song.

THE ORIGINAL PERFUME CELEBRITY: ELIZABETH TAYLOR

Elizabeth Taylor & White Diamonds.

What would be interesting to me is to know how Britney Spears compares with the great Elizabeth Taylor who, arguably, really set off this whole celebrity perfume mania to begin with. Stylecaster disagrees, saying that there were celebrity fragrances far before La Grand Liz, but conceding that she made it the thing that it is today:

The history of celebrity fragrances dates back almost 100 years, when Elsa Schiaparelli designed a curvy perfume bottle in the 1930s modeled after actress Mae West. In the 1950s, Givenchy sold a scent created for Audrey Hepburn. However, the business of celebrity fragrances really kicked into overdrive when Elizabeth Taylor launched White Diamonds in 1991, in collaboration with Elizabeth Arden. That perfume has since grossed more than $1 billion and counting—in fact, Taylor made more money from her fragrances than all of her film roles combined.

Elizabeth Taylor poses with a $100,000 special edition bottle of her “White Diamonds” fragrance in New York in 1991. Photo: AP via Chicago Sun Times.

Think of that for a second: Elizabeth Taylor made more money from her perfumes than she did in ALL her films, combined. It’s an astonishing thought at first, but perhaps completely logical when you consider what star salaries were back then.

Yet, even after her death, her fragrances sell. And sell big. White Diamonds sold more than $54 million worth in 2010, according to Forbes magazine. According to the Chicago Sun-Times, sales of all of her perfumes totaled $76.9 million in just one year. However, Elizabeth Taylor had a small hit from the very start, with her first fragrance in 1987 called Passion. The official Dame Elizabeth Taylor website states: “By 1991, sales of Passion reached an estimated $100 million dollars giving it a coveted spot on the list of top ten selling fragrances of all time.”

In short, Britney may be selling more now, but La Liz had decades of a head-start, and I would be fascinated to compare their overall sales and gross profit figures. Unfortunately, I haven’t been able to find how much Elizabeth Taylor or her estate have made from the sales of her perfumes since she began in 1987, but it has to be quite a lot. All I know is that Elizabeth Arden — Britney’s company — is the one who licenses Taylor’s perfumes, a fact which further explains the company’s large market share. (As a side note, Elizabeth Arden’s celebrity and designer stable also includes Usher, Mariah Carey, Hilary Duff, Kate Spade, Juicy Couture, Liz Claiborne, and Badgley Mischka.)

THE CELEBRITY CUT & PERCENTAGE:

As noted above, there is a big difference between the overall bottle sales, and the amount that the star receives his or her self. The Stylecaster article had an interesting tidbit on the issue of how much celebrities really make:

Celebrities tend to make between 5 and 10 percent of sales for licensing their name to a scent on top of an upfront payment of $3 million plus. With sales in the hundreds of millions for some of these fragrances—you do the math. Bottles of perfume and cologne typically sell for between $60 and $100, and the cost of making them is usually about 25 percent of retail—so the return is enormous.

It’s a siren’s lure for a variety of reasons, as Stylecaster explains:

‘Celebrities see it as a revenue stream without a lot of responsibility, and the manufacturers see it as a revenue stream to help their bottom line,’ said Rochelle Bloom, president of the Fragrance Foundation. […]

And with traditional streams of revenue for stars drying up (album sales, back-end movie deals) the lure of fragrance money is stronger than ever. It’s also a possible revenue stream, should the fragrance be a hit, for stars to continue making money after their heyday has passed.

Other sources add to the picture. While The Hollywood Reporter agrees that ancillary revenue streams as fragrances and clothing lines are becoming more important to a star’s overall financial well-being, it quotes slightly different figures:

A top celebrity — one who appeals to the young women powering the market — now can demand $3 million to $5 million as an upfront payment, plus a 6 percent or 7 percent royalty on sales, say insiders.

The article notes that celebrity endorsements are low-risk for the star, and well worth it for the perfume company as a way to distinguish the new brand. If the cost of making a fragrance is only a fraction of the retail cost (and I’ve actually read the number is far, far lower than the 25% stated in these pieces), then the extra payout to the celebrity can be a good investment.

The problem with this seemingly win-win situation is that it has completely over-saturated the perfume market. The Hollywood Reporter states that, nowadays:

big profits hardly are guaranteed. “The domination of the celebrities is diluting the magic of the fragrance business,” says Sue Phillips of tracking website Scenterprises.com, adding that a star like J.Lo will issue less expensive “flanker” scents such as Miami Glow, Love at First Glow, Glowing, etc., after an initial hit like Glow, thus crowding out upstarts. […]

Faced with increased competition, fragrance-makers must prove their products quickly lest they be yanked from Nordstrom or Sephora. A perfume used to have three years to turn a profit. Now? “It’s exactly like the movie business,” says Isaac Lekach at ID Perfumes, which helped launch fragrances for Perry, Selena Gomez and Paris Hilton and is working on a new scent for Adam Levine. “If you don’t have a strong opening weekend, good luck relying on word-of-mouth.”

WHAT LEADS TO SUCCESS:

Snooki perfume ad. Source: Fragrantica.

If not everyone makes it, then what are the factors for success? It seems to depend often on both the celebrity’s popularity, fan access to test the fragrance, price points, actual smell, and, most importantly of all, the degree of the celebrity’s involvement in promotion. Perfumes from Nicole “Snooki” Polizzi, Kate Walsh, and Denise Richards were quick failures. (In my opinion, it helps if the celebrity’s image isn’t an embarrassing one, à la Snooki.)

Stylecaster says that success depends on a “perfect storm of celebrity involvement, celebrity fan base, and lastly, whether the perfume actually has an appealing smell.”

Why has Knowles’ Heat been such a huge hit? The singer allowed her fans to sample Heat at all of her North American shows during her The Mrs. Carter Show World Tour earlier this year. “We always talk about bringing entertainment to retail,” said Marsha Brooks, Vice President of Global Marketing, Fragrances, for Coty Beauty. “With this scent, we brought retail to entertainment.” Simply put, selling perfume at a massive concert tour isn’t a retail channel open to the Chanels and Thierry Muglers of the world, but it is open to Beyoncé.

Paris Hilton perfume ad for her second fragrance, Fairy Dust. Source: http://frillr.com/?q=node/9796

Paris Hilton’s line of fragrances has had unexpected longevity, despite Hilton’s increasingly low-profile, because Hilton has proved to be a tireless promoter of her line which is valued at $1.5 billion. She released her first fragrance in 2004 and is still tweeting about it to her over 12 million Twitter followers.

In contrast, the article implies that Jennifer Aniston barely bothered with her perfume, and the lack of promotion led to unimpressive sales.

THE TEEN FACTOR IN CELEBRITY SALES:

What I’m surprised that the Stylecaster article doesn’t mention is what can only be called The Teen/Tween Factor. Justin Bieber’s sales are uniformly attributed to the shrieking hordes of his teen and pre-teen fans. Youth trumps, and Jennifer Aniston, Kate Walsh, and women of a certain age simply aren’t going to have quite the same allure to susceptible 13-year-old girls who will pester their parents for their idol’s scent. Jennifer Aniston could have promoted that fragrance as much as she’d wanted, but I doubt she’d have the One Direction effect.

Source: Daily Mail.

The boy band just came out with their first fragrance in August called, quite simply, One Moment. When it launched at Harrods, 3,000 bottles sold in just two days. The entertainment site, Eonline, says that “the boys were set to earn $561,312 (or 360,000 pounds) in its first week on sale in the U.K.” According to the Daily Mail (I know, I know!!), that the figure was calculated from preorder sales plus the more than-3,000 bottles that have been sold in just two days at the Harrods in London. Each boy will “personally earn around £2 for every 30ml Eau de Parfum bottle sold, which means the group is due to bank £360,000 in 7 days.” Further numbers and figures:

Escentual.com CEO Rakesh Aggarwal said: ‘Our Moment is predicted to sell around 180,000 units in the first week alone, making it one of the fastest selling fragrances of all time.

‘It’s certainly looking like it’s going to be the most successful celebrity perfume launch of the year and sales in America are expected to be bigger still,’ says Aggarwal.

On the basis of 180,000 sales of the most popular 30ml Eau de Parfum, which retails at £19.99, the turnover for the first week will come in at nearly £3.6m.

Furthermore, the Christmas shopping period accounts for about 70% of annual perfume sales, a figure I’ve seen a lot lately. With the manufacturers adding special holiday gift sets and other products to go with the One Direction fragrance, the Escentual’s CEO estimates that those teenage boys may make £2m over the holidays from an estimated overall turnover of £10m for the range over Christmas.

THE MADNESS SPILLS OVER:

The crazy profits in the perfume world have not gone unnoticed by other groups. There was Pizza Hut‘s limited-edition fragrance which The Huffington Post insists smells nothing like actual pizza and everything like cinnamon rolls or dough. (I’ll take their word for it.) But something with much less of a novelty, amusement factor caught my eye recently: university perfumes.

Source: Wall St. Journal

American educational institutions have apparently noticed everyone else was making a huge profit, and decided, “Why not us?” The goal seems to be to bottle the school’s aromatic feel or the symbolic olfactory representation of four years of the college experience, and making a profit. I’m feeling extremely sardonic and irritable at this point, so I’ll let a November 12th article by the Cleveland Plain Dealer newspaper speak instead:

What scent comes to mind when you think of your college? [¶] Is it aromatic, from the blossoming trees on the college quad? [¶] Or a stale beer smell from your favorite bar?

Each campus has its own fragrance identity, according to a New York company that is developing perfumes and colognes for colleges inspired by elements such as the school colors, campus style, flowers, traditions and location.

Masik Collegiate Fragrances has introduced what it calls “The Scent of School Spirit” at 17 large universities, most in the south and southeast.  […][¶]

[For Texas A&M university] Masik Fragrances developed something … aromatic. The men’s scent “captures the pride and meaning of being an Aggie,” its website says. “Refreshing top notes of Italian Lemon, Bergamot and Iced Pineapple opens in to a body of vivid florals, raw Nutmeg and Cinnamon. Robust base notes of rich Amber, silver Moss and aged woods are deeply rooted embodying the strength of the Century Tree.”

I have actually visited the Texas A&M campus, as it has one of the top veterinary centers in the entire country, and, yet, I find myself startled at the olfactory notes listed in the description. In all fairness, however, I simply cannot wrap my head around this entire concept to begin with! I know it shouldn’t be so odd, given that perfumes all have a back story; and, really, how is this really so different than trying to capture the scent of India or the Villa d’Este in a bottle? Regardless, when I read Masik’s list of notes for, to give just one example, Penn State University Men’s and Women’s fragrances, I just wanted to snort. I think it’s the obviously mercenary angle behind it all, behind an academic institution’s attempts to venture into the perfume field.

The assessment for the University of Georgia’s scent. Source: Masik via the Wall St. Journal.

In all fairness, however, the schools seem to be making mere peanuts, at least by the standards of we’ve talked about here. According to that Cleveland article:

To translate a school’s essence into a scent, Masik relies on Fragrance Resources, an international fragrance company with a lab in New York, the Wall Street Journal reported. […][¶] Several options are created and presented to a panel of students and administrators.

Colleges, which license a litany of products, get royalty payments from sales of the fragrances, which cost about $40 for a 1.7-ounce bottle. The fragrances are sold at campus bookstores, boutiques and some department stores.

At Louisiana State University, that revenue has amounted to just $5,500 over the past four years, said Brian Hommel, director of trademark licensing at LSU, in the article. But he says there is a benefit to having the school’s brand associated with a chic product.

The university’s tiny profit over four years is significantly smaller than I had expected, given their enormous alumni base and the role played by nostalgia. Louisiana State University made a little under $1,600 a year, a figure which stands in sharp contrast to the millions made by the next institution who decided to enter the perfume world.

Source: Yankees website.

According to the Wall St. Journal, the powerful, venerable baseball team, the New York Yankees, had a perfume made for them by a group called Cloudbreak that “the company says garnered nearly $10 million in retail sales in 2012.” Even if the Yankees got a mere 5% of those sales, it’s still a rather decent amount for something that required very little in actual sweat or effort on their part. That problably explains why, in looking at the Yankees’ website, they seem to have fallen headlong into perfumed products, with men and womens’ lines, bath items, and special limited-edition scents. Their marketing machine has even come up with a $5 “Fragranced Bracelet” in simple black rubber, though no actual scent notes are listed. If that thing is properly perfumed instead of being a Pinocchio-worthy case of false pretenses, I promise I’ll stop rolling my eyes.

FINALLY:

It seems very, very easy to put out ridiculous or novelty perfumes, let alone celebrity fragrances, but none of these figures should make you forget the simple bottom line: you still need backers with very deep pockets to succeed. As the university example demonstrates, not even institutions with a big support base in the form of alumni can profit easily in this game. Those who do, have not only millions behind them, but also a wide network of distributors and the power of multi-national conglomerates. Justin Bieber and Derek Jeter have Avon, while Britney Spears and Liz Taylor have Elizabeth Arden. At the higher end of the scale, Tom Ford succeeds, in part, because of the sheer might of the Estée Lauder behemoth.

The most famous perfume houses now have to pay a pretty penny to stand out and make a splash in the highly saturated perfume market. Take Chanel, for example. According to Adage, the fashion house owned by the Wertheimer brothers (whose grandfather helped co-found Chanel Parfums) spent “$139 million on measured media in the U.S. in 2012, with magazines accounting for $78.3 million. In 2011, it spent $130 million on total U.S. measured media.” In 2004, Chanel reportedly paid Nicole Kidman $4 million to be the face of Chanel No. 5, and spent £18 million on a 2-minute ad by Baz Luhrmann that was later cut down to 30-seconds. Last year, it was $7 million to Brad Pitt, with a video that was widely mocked. The rising costs of marketing and publicity may explain why, this year, Chanel is going with a dead celebrity, Marilyn Monroe, for their latest Chanel No. 5 campaign.

Less wealthy perfume houses don’t have the same resources, so they are looking to technology and futuristic inventions for help instead. According to The Hollywood Reporter article, there are efforts to integrate scents with digital devices to bring fragrance into a more multi-dimensional, lifestyle experience:

Jean-Paul Gaultier and Azzaro quietly are working on next-generation celebrity-scent convergence. Soon digitally powered fragrances could be incorporated into computer ports and cable TV boxes so that when consumers play songs or watch shows, they will be hit with a multisensory experience. If that happens, fragrances could end up marketing celebrities instead of the other way around.

Celebrities, however, don’t have to bother with any of that, at least not for now. Their efforts can be much simpler, and yield much more immediate results. When Rihanna launched her perfume, she tweeted to her millions of followers about it. As the Stylecaster article noted, Beyoncé gave samples of her fragrance away at her concerts, and watched the profits subsequently pour in from full-bottle purchases. Chanel paid Brad Pitt $7 million for the much ridiculed Chanel ad last year; Justin Bieber simply has to show up and point at his gaudy, plastic flower-topped perfume bottle for his crazed fan to go completely insane. Britney Spears has an epic meltdown, and her perfumes still rake in the cash.

We live in a celebrity driven world, and the perfume industry is no exception. With the money that is involved, none of that is going to change any time soon. So, get use to Britney Spears laughing all the way to the bank, as she exceeds that reported $1 billion dollars in sales. To use the very famous, very vulgar quote, “It’s Britney, b****.”

Viktoria Minya & The World of A “Nose”

A grey afternoon in Paris unexpectedly turned into one of the most fascinating, educational perfume experiences I’ve had in a long, long time. It’s all thanks to Viktoria Minya. She gave me the chance to peek behind the curtain, and to glimpse a small portion of the life of a “nose.” We talked about everything from IFRA/EU restrictions on perfumes, how she studied to become a “nose,” some of the surprising things she deals with in perfume creation, and the very elementary basics of the raw materials that noses use to create fragrances. I hope you enjoy the glimpse behind the perfumed curtain.

Viktoria Minya. Source: Fragrantica.

Hedonist. Source: Parfums Viktoria Minya on Facebook.

Viktoria Minya is a perfume creator who founded Parfums Viktoria Minya, but also an actual, genuine, trained “nose.” Her debut perfume, Hedonist, is a gorgeous, luxurious, elegant, airy, honeyed-floral affair that I really loved. But I also enjoyed the little bit that I got to know of Ms. Minya herself in our email correspondence at the time. Then, a few weeks ago, close to the time of my departure to Paris, and by a complete fluke involving something else, we had a few email exchanges where I happened to mention that I would be in her city. Unfortunately, both our schedules seemed extremely complicated, and it seemed unlikely that we’d be able to meet.

Then, while roaming the streets of Paris one afternoon, and with some incredibly lucky timing that happened out of the blue, everything seemed to fall into place. I somehow found myself in her perfume studio, sitting across from an absolutely beautiful woman with the most unbelievably stunning eyes, and the warmest smile. (Not a single photo that I’ve seen of Ms. Minya actually does her — and her eyes — justice.) Ms. Minya had prepared a lovely selection of things for me to nibble on while we talked and before we went into her actual work area where she has her perfume “organ.” (See photo below.) As I ate some French cheese (yes, I said cheese! And she didn’t even know of my obsession with it!), I tried to focus on the conversation but those absolutely mesmerizing eyes made it a little hard at times. Plus, as usual for this entire trip, I was somewhat in a daze from sleep-deprivation.

As a result, I fear I don’t remember all the details of the technical stuff I learnt, but I thought I would share some aspects that I found really fascinating, from the issue of IFRA (the “International Fragrance Association”), to her studies as a nose, the black market for ingredients, and more. Then, later, I’ll share what it was like in her perfume studio with all the raw materials and the perfume oils. The photos I took suffered from the problem that I mentioned earlier in another post: my camera is dying, so some of the images are blurred and the writing on the bottles isn’t always completely clear. Hopefully, though, it will give you an idea of the sorts of things a “nose” may have in her arsenal, and the feel of that day.

Ms. Minya’s perfume “organ.” Photo: my own.

In terms of general discussion, one of the things that came up a few times was the impact of the IFRA and EU restrictions. You and I — consumers and buyers of perfume products — usually think about the impact in terms of its effect on us. We moan about chypres and oakmoss, we talk about reformulations, and we gripe about the sorts of perfumes available to us or the massive changes to perfumery in just the last five years alone. We almost never think of what it must be like for a “nose.” It’s not surprising, after all, because their world is so far away from ours. But it’s not for Ms. Minya.

As an actual, working nose, the IFRA/EU restrictions create a whole different set of problems for Ms. Minya than they do for us. For one thing, I get the impression that she finds that they stifle creativity. (She was too polite to say so, but that was my impression.) For another, the restrictions have an impact on a nose’s actual business dealings with clients. Ms. Minya may have her own brand and perfume line, but she also works as a nose for clients to create scents in accordance with their particular wishes. She gave me one example of a situation where a client requested that she make a perfume with certain ingredients at a certain level. Again and again, she had to say something to the effect of: “No, it’s not possible to that extent,” or “No, that is illegal in the EU.”

Chris Bartlett of Pell Wall Perfumes Blog is a perfumer and consultant who has an absolutely wonderful, useful, eye-opening and completely depressing listing of all the IFRA/EU ingredient limits for Category 4 (fine perfumes in an alcohol-based solution). Though his list is not yet updated to include all the changes from the 47th Amendment of June 2013 (yes, I realise how ludicrous and Kafkaesque that sounds), I still look at it from time to time, usually resulting in complete irritation and annoyance at the EU. I looked again at the listing upon my return from Paris and in light of my meeting with Viktoria Minya — and I saw it in a whole new light from the perspective of a “nose.”

Let me give you some examples from Mr. Bartlett’s list of IFRA’s standards and limitations as of June and before the 47th Amendment took place. Some of the terms may seem like gobbledygook to you, but just pay attention to the percentage numbers at the end of each line (or whether the ingredient is permitted at all in perfume creation), and things will eventually become clearer:

Cumin oil 0.4%

Eugenol* [clove oil] 0.5%

Farnesol* 1.2%
Fig leaf absolute Prohibited
Galbanum ketone (various trade names; 1-(5,5-Dimethyl-1-cyclohexen-1-yl)pent-4-en-1-one) 1.13%
Geraniol* 5.3%  […]

Iso E Super 21.4%  [ME: GOOD GOD!!!!!!!!!!!!!]

Jasmine Absolute 0.7%

Jasmine Sambac Absolute 4%
Lemon (expressed) 2%
Lime (expressed) 0.7%

Musk ambrette Prohibited

Oakmoss Absolute 0.1%

Opoponax 0.4%

Peru balsam (crude) Prohibited

Quinoline Prohibited
Rose Ketones 0.02%
Santolina oil Prohibited
Safranal (2,6,6-Trimethylcyclohexa-1,3-dienyl methanal) 0.005%
Safrole, Isosafrole, Dihydrosafrole~ Prohibited (EOs containing these permitted if total below 0.01%)
Savin oil from Juniperus sabina Prohibited
Styrax (from Liquidambar styraciflua macrophyla or Liquidambar orientalis only) 0.6%
Styrax (all other species) Prohibited

Ylang ylang extracts 0.8%

* – the main sources of these chemicals is in natural materials and you need to work out how much is in all the oils that contain them and keep the total in your product below the levels quoted here. These are some of the most complex standards to ensure compliance with.

NB- The limits for Oakmoss and Tree Moss are cumulative (so the combination of both must be below 0.1%)

I tried to include in that list a good number of things with which we common lay-people are familiar, but, also, a portion of the many things marked with a red “Prohibited” notice (even if I have no idea what some of them are). The fact that things like ylang-ylang is limited to 0.8%, lime to 0.7%, and oakmoss at 0.1%, while that bloody, godawful “ISO E Supercrappy” (™ Sultan Pasha) can be as high as 21.4% suddenly clarifies things a bit more to me. It’s not just that some perfumers love that ghastly, cheap, synthetic crap; it’s that they are running out of ingredients to use at any substantial, rich or useful levels! I mean, seriously, some poor flower is at less than 1%, while the laboratory-created, aromatic equivalent of a hospital morgue’s antiseptic is at 21.4%??! Plus, a portion of the ingredients on the list are completely illegal to use?! To me, and from my layman perspective, that doesn’t seem to leave perfume noses with a huge amount of original options or alternatives.

Source: CaFleureBon

Which brings us back to Viktoria Minya and her world. She went to school in Grasse, perhaps the heart and soul of the perfume creating world, and attended the Grasse Institute of Perfumery. I asked her about the program which is one-year long, and followed by internships within the perfume world. Within the program, the students take a variety of courses on such subjects as: natural and synthetic raw materials; fine fragrance formulation; legislation courses; evaluation courses; and even functional perfumery courses (how to create fragrances for soaps, shampoos, candles, shower gels, etc).

There was much more, too, but, again, the haze of a particularly grueling travelling schedule means I’ve forgotten some of the details. So, I did some research, and stumbled across a 2009 article called “Smelling like roses… or not” which actually quotes Ms. Minya as a student and which also talks about the way “noses” are trained:

In class, the students flared their nostrils against white tester strips dipped in scented, mostly clear liquid. The exercise tested their olfactory memories as they built on the more than 300 natural and synthetic odors they had memorized since the course began in late January. The task included identifying the scents’ compounds and family. […]

By the end of the yearlong course, which includes a mandatory internship at a fragrance company lasting several months, students will have acquired a lexicon of at least 500 raw materials; the rest of their creative arsenal, which eventually could include thousands of ingredients, will be developed in the field.

As for Viktoria, as that old article makes clear, lessons in building an olfactory memory bank sensitize the nose:

On a recent visit to a horse stable, Viktoria Minya had to hold her breath until she could step outside. And at home recently, the 27-year-old perfumery student has found she needs to take out the trash as often as three times per day. It’s a side effect of her developing olfactory organs: “I smell too much.”

The article also mentioned a few other interesting things:

“A perfume hides a story,” said Laurence Fauvel, a perfumer and one of the teachers at the school, which opened in February 2002. “To create something really new is very difficult.”  […][¶]

An official at the school estimated that about [only] 20 star “noses” exist worldwide.

Mr. Fauvel’s comment reminds me of the common line in many writing classes about how every plot or novel has essentially been written before. It’s true, and I’m sure the same theme applies, broadly speaking, to perfumery as well. But, to bring things full circle to perfume notes, it certainly can’t help when IFRA and the bloody EU restrict your options even further in terms of quantity and type of ingredients. As Ms. Minya told me, there are no longer quite as many avenues for self-expression and artistic creativity.

Vincent Van Gogh, “Irises” (1889). Source: hdwallshub.com

She compared the situation to a painter being told that he cannot use certain paint colours on his canvas, while other colours are limited in amount. So, perhaps it’s more apt to talk about “vibrancy” instead of the broader terms of “originality” and “creativity.” If a painter is forbidden from using brown paint, if he can only use blue if it’s 0.7% of his overall creation, and if green is limited to no more than 0.1%, then how do you end up with Van Gogh’s Irises? You can’t. You get a watered down, diluted, much less vibrant composition that may be good — perhaps even very good, in some cases — but it won’t be the masterpiece that is the Irises.

Stephen Weller, IFRA photo, via The Scented Salamander.

In the faintest fig leaf to appearing fair, I suppose I should mention IFRA’s side of things. Stephen Weller, IFRA’s Director of Communication, has given a few interviews in France defending his organisation as the supposed savior of certain key ingredients. The blog, The Scented Salamander, states that Mr. Weller:

makes the particularly salient point in this exchange that without IFRA, a number of perfumery ingredients would have altogether disappeared from the palette of the perfumer as they have come under attack from the European Union and before that pressure groups voicing their concerns…

Weller explains in this new interview with Premium Beauty News how his organism permits a more nuanced approach to the dermatological and allergic risks presented by aromatic materials.

You can read more about his claims at the Scented Salamander, but they essentially include the argument that you should thank IFRA for saving oakmoss and other ingredients from complete eradication in perfumery. I can see his point in theory, but I have great difficulties with his attempts to portray IFRA as the purely protective, angelic and benevolent savior of perfumedom! And don’t get me started on the oakmoss. Yes, the EU is driving most of this, now, but, correct me if I’m wrong, I believe early IFRA regulations started all this.

More to the point, and to use a parallel, I don’t see manufacturing associations putting restrictions on factories who produce food items or on chefs in restaurants simply because there are some pressure groups who complain about nut allergies. Some of the EU proposals (like the ludicrous idea of possibly banning Chanel No. 5 that I’ve talked about in another IFRA/EU post) are akin to shutting down the Eiffel Tower simply because 1%-3% of the EU’s 503.5 million population may have vertigo. (It’s been estimated that “1 to 3 percent of the EU population… are allergic or potentially allergic to natural ingredients contained in fine perfumes, according to a report published in July by the Scientific Committee on Consumer Safety (SCCS), an advisory body for the European Commission.” [Emphasis added.])

And IFRA’s substantive actions don’t seem like true championship or defense of the perfume industry to me. For example, why aren’t warning labels enough? They put such warnings on cigarettes, and on pre-packaged food items that may have been prepared in a factory that had some nuts in it. Are perfumes actually more dangerous to people’s health than cigarettes??! Also, why are perfumes to be regulated with such ingredients as the amount of lavender or citrus oils, but massage oils are left alone? Presumably, that minuscule percentage of EU citizens who have allergic reactions — or just the mere potential thereof — might possibly decide to have a massage one day. Why are those oils fine, but the ones in perfumery — which allergic people can simply avoid using — subject to increasingly Orwellian, draconian measures?

I’m sorry, I got sidetracked and derailed in rather irrational rage, so let’s leave the issue of IFRA and get back to the realities of creating a perfume. There, even apart from ingredient limitations, there are other hurdles to originality, too. This time, however, they pertain more to the business tail-end of things for one who is a brand’s creator or founder. Take, for example, the simple, seemingly prosaic issue of a perfume’s name. Now, obviously, you don’t want to use another brand’s exact name for your new creation, but I wasn’t aware of just how tricky the issue might be for French perfumers. According to Ms. Minya, back in the 1980s, many French companies bought up the legal rights to a whole host of names — lots of them being common adjectives or phrases — for future use. Now, when you try to launch your new perfume, there is a good chance that they might sue you for using one of their vast stable of trademarked names.

Hedonist. Source: Parfums Viktoria Minya on Facebook.

I remember hearing this, blinking and having a light bulb moment when she explained that this old 1980s situation is the reason why so many French perfumes have some generic variation of “Rose de ___” or “Vanille de ____”  as their name. To quote Ms. Minya: “This is why we have more and more names with numbers, botanical or common names of ingredients ( like “orange” ) and geographical names – because these cannot be trademarked by anybody.” I suspect this may be the reason why Neela Vermeire might have had to recently change the name of her upcoming Mohur “Esprit” to just plain “Mohur Extrait,” though I am just guessing. (I have not asked Ms. Vermeire, and I certainly don’t know for sure.)

While trademark concerns are hardly unique to France, the situation there seems a little more complicated for perfumers than for artisans or artists in other fields. Even if you can get the money to make a perfume, even if you survive the draconian IFRA/EU’s restrictions to make something good, even if you spend all the money for the further compliance minutiae, you still aren’t home scot-free. Now, you can’t even choose your perfume name without the risk of a lawsuit.

Yet, the real issue that I see is something much broader in reach: you need very big pockets to engage in the perfume game, and to survive. I’d like one day to explore the issue of perfume creation primarily from a perfume creator’s perspective, but it’s clear even now that the real bottom line is money and how hard it is for truly “niche” perfumers to flourish in light of so many minefields. Someone like Tom Ford — who is backed and owned by the Estée Lauder multi-national conglomerate — or Kilian Hennessey is obviously going to have a very different time of things than someone like Viktoria Minya, Andy Tauer, or Neela Vermeire.

To me, as a layman and outsider, each of the things discussed here seems to represent a noose tightening around the neck of a truly vibrant, creative, non-homogenous, flourishing perfume world where small voices have as much chance in the marketplace as the big behemoths. It’s a sad parallel to the overall conglomeratization of the world in general, from the media and entertainment industries to banking and the airlines. But the last time I checked, neither the banking nor airline worlds depended on creativity and the freedom of imagination, so it’s substantially worse when artistry is stifled in an industry like perfumery.

Size makes itself an issue for noses like Ms. Minya in some ways that surprised me. As promised, I’m going to spend a bit of time talking about the raw materials used in the perfume process. When I went into Ms. Minya’s actual perfume studio with its vast, impressive “organ,” I gasped. As far as the eye could see, there were bottles of ingredients. Everywhere! Not just the organ, but filling whole bookcases and even in a fridge. As I was exclaiming about the endless varieties of orange blossom, iris, or rose accords, Ms. Minya mentioned how obtaining some of the ingredients wasn’t easy. Apparently, some companies are extremely unwilling to sell in the sort of small order sizes appropriate to a small, individual perfumer or nose. I didn’t ask if the companies countered things by charging much more for orders that aren’t in bulk, because I never like to talk about money or intrude into someone’s financial matters, but I assume that it’s a frustrating hassle and obstacle at the very least.

So, let’s drop money, and move onto the actual ingredients in question. First, we should probably begin with the basic difference between a perfume oil and an essential oil. Now Smell This has an easy explanation that puts it much more succinctly than I could ever manage:

Essential oils are volatile, fragrant liquids extracted from plant leaves, bark, wood, stems, flowers, seeds, buds, roots, resins and petals, usually through steam distillation. In other words, they are raw materials that can be used to create perfumes. They are highly concentrated […].

Perfume oils are fragrance components, natural or synthetic, in an oily base rather than an alcohol base, and can be used directly on the skin.

Now, here’s a glimpse of some of the things in Ms. Minya’s arsenal:

Perfume oils distilled in 10% alcohol. You can see various types of orange-related oils on the top shelf, rose on the middle, and things like vetiver on the bottom. Remember, this curves all the way around.

A fridge filled with fragile perfume oils, or oils of the weakest strength and diluted in 1% alcohol.

As you can see from these photos (which you can click to expand even more), there are two separate categories of ingredients. One are the oils on her curving, circular “organ” which are ingredients diluted in a 10% alcohol base. The other photo shows bottles in a fridge, and that’s where my memory failed me. All I could really remember is that the latter are very expensive and have a very fragile shelf-life, so they are usually kept in a fridge to ensure that they last longer. So I wrote to Ms. Minya to ask for help in clarifying the differences between the various bottles, and this was her response:

what perfumers are working with are what we call “raw materials”, some of them are liquid ( like most essential oils ), some are powders ( like vanillin – molecule present in vanilla, I am using the very expensive Natural version of it), some are resins ( like peru balsam or mimosa absolute). Every perfumer has their different habits, but I like to work with them in a 10% solution form, they are called 10% solution or 10% solution of … ( any given raw materials ). This helps me to directly smell the “end product” after formulation.

Oils like grapefruit and guaiac wood on the top row; magnolia and mandarin on the bottom.

Oils distilled in 10% alcohol. Here, orange bigarade and what Ms. Minya tells me is a “different origins orange oil.”

The raw materials in the fridge are simply weaker, more diluted solutions of some raw materials ( so like 1% or 0.1% solutions ) OR fragile raw materials, like rose oil, the citrus oils like bergamot, mandarine, orange, lemon and lime, or spices like nutmeg and safran, etc. [Emphasis added.]

More of the almost diluted 1% oils in the fridge such as Ylang-Ylang, Osmanthus and some sort of Sandalwood.

More of some of the delicate but weakest “finishing” ingredients. You can see Narcissus Absolute is one of the ones in the first row to the left.

[As a whole and generally,] the raw materials comes from the producers in “pure”. Then we dilute it with alcohol. 10% solution means 1 GR of rose oil -let’s say- and 9 GR of alcohol in a 10 ml bottle ( the ones you saw on my perfume organ ). 1% solution means 0,1GR of rose oil and 9,9GR of alcohol in a 10 ml bottle. The 1% solutions are for “fine-tuning”, sometimes it is to give a small aspect of a certain material, other times the given raw materials are very strong and we like to give just a tiny amount into the creation.

Just like the perfume you get from a boutique is a concentrate of pure mixture of raw materials which then is diluted with alcohol.

So, to simplify things if you’re a dodo like me, a 10% solution in Ms. Minya’s case has really just 1 gram of actual perfume oil, while a 1% solution has a mere 0.1 gram of the raw material.

Speaking of materials, Ms. Minya mentioned something just in passing that made me almost fall off my chair: there is apparently a whole, lurking black market for some ingredients! Guess in what context this issue arose? The thing about which I’m the greatest snob: sandalwood. It seems that my beloved Mysore sandalwood is so rare that some people — not all, but a tiny, unethical few, and primarily in the Far East or the Middle East — resort to the black market to obtain it. I imagine that this is an issue which applies more to some small-time or experimental perfumers who may not have the access to the very few places which still hoard have small quantities of Mysore sandalwood to sell at outrageous prices. It certainly seems related to the issue of how some companies selling raw ingredients are unwilling to fulfill small orders. Again, however, I do not like to discuss money, so I did not ask follow-up questions, but it is certainly something that gives one pause. A black market? Seriously? Who knew that perfumery could involve secret cloak-and-dagger skullduggery of the highest order?!

While I was absorbing this tidbit, Ms. Minya quietly assembled a little surprise for me: a blind testing of some of the concentrated perfume oils. She had actually just returned from Hungary where she’d given a lecture on the issue of perfumery, and had a lot of bottles previously prepared for a similar sort of demonstration. I can’t recall the precise percentage of what she made me sniff on strip after strip of the paper mouiellettes, but I believe it was the 10% stuff.

And it was quite an experience…. A number of notes that I’m very familiar with in actual perfume were wholly unrecognizable to me in essential form. Granted, I’ve never been particularly good at detecting the nuances of things from a mere paper strip and it’s a whole other matter on skin, but still! In a number of cases, I could detect the notes after the paper strips had time to breathe and develop, or, perhaps, to decrease from their concentrated opening moments. In other cases, however, the usually familiar notes smelled quite alien to my nose. Aldehydes? I wouldn’t or couldn’t have guessed correctly if you’d put a gun to my head. (In fact, I’m still finding it hard to believe that that odor was aldehydes!) Incense, one of my favorite notes? Forget it. I was absolutely convinced it was some type of wood, if my hazy memory serves me correctly. (Ms. Minya now tells me it was myrrh, but all it smelled like to me was dry wood.)

To my relief, and to avoid the complete destruction of my ego, some of my guesses at least hit upon the adjacent characteristics of a note. One of the first ingredients that Ms. Minya made me try smelled to me of smoke, amber, leather and wood. Well, all those things are either used with the ingredient, or are subset nuances of the note — which turned out to be….. patchouli. After she told me, it seemed somewhat obvious, but I have to emphasize the “somewhat” part of that statement. In reality, for me, the essence of one of my favorite ingredients really did NOT have the exact same smell as it did when mixed in with other stuff in an actual perfume. And this was the case quite often. (The one exception was the synthetic, Safranal, which smelled precisely as it did in some saffron-oud perfumes, was so strong that a mere drop on a mouiellette completely overwhelmed all the other paper strips, and thereby explained a whole host of overly intense, hotly buttered saffron perfumes that I’ve wondered about….)

On another test, Ms. Minya let me smell a concentrated perfume oil that I thought was a spicy geranium. It turned out a type of rose oil. Well, geranium in essential oil concentration has an odor that is rose-like, so… I was close?? Still, I can’t get over the aldehydes and incense myrrh being completely unrecognizable. (Have I mentioned that none of this was particularly great for the ego?!)

Joking aside, I truly loved every minute of it, and it was pretty hard to drag me away from the lure of those bottles. Each one seemed to contain a whole new world of smells that was different from what I had previously experienced. I’ve had a few cheap oils that I’ve used to add to scented heaters, candles and the like, but nothing quite like the hardcore oils I smelled in her studio! If I lived in Paris, I would definitely avail myself of the opportunity to take one of the classes or workshops that Ms. Minya offers.

Actually, at the time of my visit, I didn’t know that Ms. Minya actually teaches this stuff to dolts like myself! The other day, while doing my research preparation for this post, I noticed a section of the Parfums Minya website listing the services she offers as a nose. For example:

courses range from beginner level to levels tailored to the talents of more advanced candidates. The most popular themes are as follows:

• Main Olfactory Families
• Exclusive Natural Raw Materials
• Basic Formulation / Accords
• Perfume Creation

All course can be easily adapted according to clients’ specific needs. [¶] Price: Starting at 220 EUR ( five session course )

She also offers a cheaper workshop that let’s you create your own perfumed product, be it a fragrance, a candle, or a body product:

For those clients who would like to experience the joyful moment of perfume creation without going through the advanced studies of raw materials and ingredient classification, we propose a facilitated perfume creation workshop where clients will be manipulating fine essential oils and fragrance accords to go home with their own crafts.

The most popular themes are as follows:

• Perfume Creation Workshop
• Scented Candle Creation
• Scented Personal Care Creation (lotions, bath balls, etc. )

Price: 90 EUR for individuals. Starting price for groups: 50 EUR / person.

Hedonist in its handmade wooden box that is “fashioned to capture the sleek look and feel of snakeskin leather.”

Despite some of the issues mentioned up above, things are hardly doom and gloom for Ms. Minya. Her debut perfume creation, Hedonist, sold out in just a few months, and there is already a long list of pre-orders. Apparently, that does not happen very often, especially for one’s first fragrance. In the meantime, Ms. Minya is being kept busy as a nose for clients, but also in travelling to give lectures on perfumery-related issue.

The future looks bright too, with two new perfumes being slated for release in 2014. While they are works in progress and the details were kept secret, they are apparently going to be in the style as Hedonist with the same sort of philosophy of using “the most noble raw materials and giving them an indulging edge.” When pressed for a little hint or two, Ms. Minya merely smiled and said that the perfumes are centered around “the two most expensive flower essences existing in perfumery.”  Aha! Iris! One of them has to be an iris scent! 

Photo: my own. It does her beauty absolutely no justice at all!

I have to thank Ms. Minya for many things. One is for being a lovely hostess, but, more importantly for really taking the time to explain the technical and basic details of what is involved in perfume creation. More importantly, however, I want to thank her for pulling aside the curtain and giving us all a peek into a world that is often shrouded in some mystery. You and I, we buy perfumes; few of us know anything about the process of actually making them. Things like the building block steps, the basic procedural tasks of how to dilute the pure oils and in what amounts — those are a foreign world for the vast majority of us. Ms. Minya took the time to explain it to me not only in her studio where she welcomed me with warmth, but also in subsequent follow-up emails where she patiently answered my bewildered questions on what must be the equivalent of the “A, B, C” for her.

Just as importantly, she was open and candid throughout. As she wrote to me, “I think some brands are totally mystifying perfumers on purpose for the public. They say the magic goes away if people find out about the small details of our work, I disagree, I think the magic starts whenever they are let to have a look behind the curtains!!!”

I really hope you saw some magic today. I certainly did when I was in her studio. And, it turns out that the Wizard of Oz actually and truly is a bit of a magician. A very beautiful, incredibly sweet magician with gorgeous eyes and the warmest smile.

Note: Photos of Ms. Minya’s studio are all my own. Other photo credits or sources are as noted within the individual captions.

FURTHER DETAILS:

For additional information on Ms. Minya or Hedonist, you can check out her website, Parfums Viktoria Minya. If you’re curious about Hedonist and how it smells, you can read my extremely positive review here. Hedonist retails for $195 or €130 for 45 ml of eau de parfum. Hedonist can be pre-ordered directly from Viktoria Minya with shipment going out in November. (I assume that means that the new stock will arrive then, and so pre-orders will not be necessary for anyone who reads this post much later in time.) In the U.S., however, the perfume is currently stocked and available for purchase at Luckyscent. Samples are available from Luckyscent or from Surrender to Chance, which sells vials starting at $6.49 for a 1/2 ml vial. I think Ms. Minya has always offered a much better deal on samples, in terms of a cost per size basis: it’s €5 for what is almost 2 ml, if memory serves me correctly and I think there is free shipping.

Perfume News: 2013 Fragrance Sales Figures, Revenue & Fragrance Markets

I’m always interested in the financial side of the fragrance industry, even though I sometimes can’t make heads or tails of the specific fine point and details. I recently found some numbers for a few of the corporate giants like Givaudan whose ingredients are often the building blocks for the perfumes we wear and whose perfumers create some of the many fine fragrances released each year. The numbers demonstrate something we already knew: traditional Western fragrance markets are weakening, and the future for many perfume companies lies in emerging markets. [Update: 2/25/14 — Last week, I took a more in-depth look at a number of Western perfume markets, from Germany to the Netherlands, France, Italy and the UK, but also examined the Indian perfume industry and the Middle Eastern one. There is also a look at the full 2013 revenue figures for various industry leaders like LVMH, Givaudan, and IFF. You can read all that at: The Global Fragrance Industry.]

What’s interesting is that Latin America is one of those emerging markets, but the Asian one isn’t quite as strong as everyone may think. In fact, analytical reports from the Euromonitor indicate both the Chinese and Japanese perfume sectors are impacted by socio-cultural issues regarding fragrance use. Still, some of the numbers involved in terms of overall, global perfume sales and revenues are astronomical. Please note, however, that almost all of the articles below focus on the more established and significantly larger commercial fragrance market, not the niche one.

U.S. SALES FIGURES:

According to a report from the Cosmetics Design group, U.S. fragrance sales slowed in 2012:

The US fragrance market has taken a hit as sales dry up due to low demand, and figures just simply can’t meet those driven by the exceptional growth seen in the previous year.

Having charted a solid performance in 2011, growth dropped off in 2012, as the market could not meet the high levels of demand and extensive product innovation that led to a good performance the previous year.

Fragrance sales the previous year had benefited from higher-income shoppers who felt more comfortable spending on others and themselves as the economy improved, but with no celebrity must-have perfumes on the market in 2012, it suffered.

As you will note, the report implies that it is celebrity perfumes that drive sales, a fact that underscores why industry-supportive groups like the Fragrance Foundation have such a focus on fragrances like that of Justin Bieber. It’s a symbiotic relationship that is necessary to sustain both groups, much like whales and barnacles. Oddly enough, after writing this paragraph, I subsequently came across a report from the Euromonitor International analysis group that specifically mentioned Justin Bieber’s fragrance as contributing enormously to U.S. market sales in the previous year! In fact, it’s the Euromonitor’s financial breakdown that is the basis for the Cosmetic Group’s report:

After growing by 9% in 2011, sales of fragrances grew by just 3% in 2012. It appears that an improving economy in 2011 combined with pent-up demand and extensive product innovation led to strong growth in 2011, but this was not able to be repeated in 2012. Fragrance sales in 2011 had benefited from higher-income shoppers who felt more comfortable spending on others and themselves as the economy improved. The 2011 blockbuster launch of Justin Bieber also contributed to strong growth in 2011 as teenagers and young girls pestered their parents to buy them the pop singer’s fragrance. In 2012, there was no must-have celebrity fragrance to entice consumers.

[UPDATE -11/18/13 — For an in-depth analysis and report on the money, astonishing sales figures, and profit leaders in the celebrity perfume industry, you can read my new article Celebrities, Best-Selling Fragrances, Sales Figures & The Perfume Industry.]

The Cosmetic Group report and the Euromonitor also add a few other details that are interesting and which I’ve summarized as follows:

• The Fragrance sector is expected to have the slowest growth out of the US Health & Beauty sectors in the upcoming years.
• Female fragrance remains the largest sector of the market, but male fragrances are expected to post better growth and numbers this year.
• Like last year, L’Oreal USA is the market leader. Its strength seems to lie in the mens market, thanks to the number one selling fragrance, Acqua di Gio, as well as Drakkar Noir and Ralph Lauren Polo For Men.
• In Premium Women’s Fragrance, it has strong sales from Lancome’s Tresor and Miracle, Viktor & Rolf’s Flowerbomb, and Ralph Lauren’s Romance.

On a positive note, the report states that niche perfumes are offering a glimmer of hope for a market heavily impacted by the recession. Unfortunately, it offers no numbers or details on the niche sector. The Euromonitor analysis report warns that fragrance companies need to do something to deal with over-saturation:

With the appeal of niche fragrances in the premium segment, affluent consumers appear to have regained their interest in fragrances. Premium niche fragrances that are sold in limited distribution channels allow affluent consumers to feel that they have made a discovery. At the same time, manufacturers of fragrances will need to address consumer apathy and confusion. There has been an explosion in the use of scents beyond fine fragrances, with everything from hand dishwashing soap to fabric softeners to women’s razor handles now infused with scents. As a result, fragrances have lost their mystique and become less “special” and commoditised. With more than 100 new launches of fragrances a year, the glut of fragrances in the marketplace has also created consumer confusion. The saturated environment in fragrances has arguably contributed to consumer confusion and apathy, making it very difficult to make a brand stand out.

IFF:

According to the Cosmetics Design group, the fragrance and flavouring giant, IFF, is doing well with second-quarter sales up 5% to $757.6 million compared to $721.3m for the corresponding period in 2012.

IFF has reported strong growth for its second quarter, driven mainly by an exceptional performance in the fragrance division, together with gains in all geographical regions including Europe.

A Market Watch article has more specific quarterly numbers:

— Reported sales increased 7% to $383.6 million, compared with $359.9 million in the second quarter of 2012. Excluding the impact of foreign currency, local currency sales increased 8%.

— Fragrance Compounds achieved local currency sales growth of 10% in the second quarter, more than offsetting a 1% decline in Fragrance Ingredients this quarter.

— Within Fragrance Compounds, our Fine and Beauty Care category had local currency sales growth of 13%, driven by double-digit growth in Latin America, North America and EAME. Functional Fragrances had local currency sales growth of 7%, led by double-digit growth in Latin America and Greater Asia and solid growth in EAME. This marks the 20th consecutive quarter of growth in Functional Fragrances, due to a strong level of new wins as a result of our three-pillar strategy.

— The emerging markets represented 52% of Fragrances Compounds sales this quarter. Within Fragrance Compounds, the emerging markets grew double digits in the second quarter over the prior year quarter, reflecting broad-based geographic and category growth. The developed markets, which represented 48% of Fragrances Compounds sales, also had strong growth.

— Fragrances segment profit increased 13% to $71.9 million in the second quarter of 2013, up from $63.6 million in the second quarter of 2012. 

The interesting bottom-line conclusion from all that is that emerging markets were the real source of revenue. While all markets reported a double-digit growth, the Cosmetics Design group emphasizes that “52% of the fragrance compound sales came from emerging markets.” Furthermore, fragrance compounds grew by 10%, while the sale of actual perfume ingredients dropped by 1%. A perfume guide I found on eBay explains “a fragrance compound” as follows:

All perfumes are composed of both a base and a fragrance compound. The perfume compound will account for 20 to 50 percent of the fragrance and is made from essential oils and synthetic fragrances. Perfume bases, which account for 50 to 80 percent of a fragrance, are generally made from liquids such as alcohol and water. They also include a variety of stabilizers, which are used to fix a perfume’s scent and ensure that ingredients do not separate. 

In short, it seems that IFF’s main source of revenue was a pre-existing compound base for a fragrance, as opposed to a more specific ingredient such as, say, lavender oil or jasmine oil.

GIVAUDAN:

According to a report by the Cosmetics Design group, Givaudan controls 25% of the global fragrance and flavouring market. And, in 2013, a good portion of its revenues came from the Latin American sector. The report states:

• International fragrance, consumer products and flavor giant Givaudan reported a 5.7 percent growth in sales for the first half of 2013, with a solid performance bolstered by high growth in Latin America and other emerging markets.
• In particular, the company’s fine fragrance unit, which had declined 5.5% in the first quarter, recorded growth of 2.5% in 2013 due to new wins and volume growth in Latin America.
• The company pointed to Brazil as a particularly strong area for fragrance sales growth, with overall fine fragrance sales in the region described as “double digit.”
• Givaudan’s overall fragrance sales increased by 5.5%, to CHF [Swiss Franc] 1,047 million.  [My note: a Google currency conversion shows that “1047 Swiss Franc equals 1135.70 US Dollar.]

GLOBAL FRAGRANCE MARKETS:

A long time ago, I posted an article on Cultural Differences in Perfume Tastes between the U.S. and European markets. One of the issues that article addressed was the question of the hottest or biggest perfumes in each market for a specific year. In a discussion that ensued in the comment section, I referenced some U.S. market statistics that I had found for the fragrance sector from the Statistic Brain. I think it would be useful to repeat it again here. Relying on numbers from “NPD”, the 2012 numbers for the fragrance industry break down to:

Perfume Industry Statistics	Data
Annual global perfume industry sales revenue	$27.5 billion
Annual US perfume industry sales revenue	$5.2 billion
Percent of American women who don’t use perfume	17 %
Number of perfume brands carried by US department stores in 2002	756
Number of perfume brands carried by US department stores in 2010	1,160
Percent of fragrance market held by Coty Inc	13 %
Percent of designer perfume brands priced at over $75	46 %
Percent of celebrity perfume brands priced at over $75	1 %

The Cosmetic Group has some global numbers for the fragrance market, though they’re from 2009:

Table 1: Fragrance market sizes by region, 2009 (US$m)
	2009	±%
World	36629.5	3.8
Asia Pacific	2468.9	3.8
Australasia	486.3	1.9
Eastern Europe	3536.8	3.3
Latin America	8531.2	15.8
Middle East & Africa	2652.3	13.8
North America	5866.4	-5.9
Western Europe	13087.5	-0.1
Source: Euromonitor International

Table 2: Fragrance market sizes by country, 2009 (US$m)
	2009	±%
Russia	1790.9	4.9
Brazil	4812.5	16.7
China	511.3	9.2
India	117.5	16.5
US	5294.7	-6.5
France	2504.7	-1.4
Germany	2531.7	0.8
Italy	1406.9	-1.2
Spain	1780.8	-3.5
UK	1492.6	3.2
Source: Euromonitor International

Table 3: Premium global fragrance market vs mass global fragrance market
	% breakdown
Premium	55.4
Mass	44.6
Source: Euromonitor International

Table 4: Leading fragrance brands, 2009
Brand	Company
Avon	Avon Products Inc
Natura	Natura Cosméticos SA
Chanel	Chanel SA
Calvin Klein	Coty Inc
Christian Dior	LVMH
Giorgio Armani	L’Oréal Groupe
Estée Lauder	Estée Lauder Cos
Hugo Boss	Procter & Gamble Cos
O Boticário	Botica Comercial Farmacêutica Ltda
Yves Saint Laurent	L’Oréal Groupe
Source: Euromonitor International

THE JAPANESE & CHINESE PERFUME MARKETS:

Finally, I found a Cosmetic Design article from 2010 discussing the Asian fragrance market:

According to Euromonitor International, the fragrance market in Asia Pacific grew 5% in 2010, reaching US$2.7bn and the outlook shows a similar level of confidence for the next few years. Despite its economic woes Japan remained the largest consumer market ($585.9m, -2.6%) but the devastating tsunami that hit the country in March this year will undoubtedly have caused additional problems spanning raw material supply, logistics and retail.

China’s burgeoning consumerism looks set to help the country take the number one spot very soon however; it posted a 7.8% sales increase to reach $553.3m in 2010. Strong growth was also recorded in Vietnam (+21.2%, $21.5m), India (+20.2%, $139.8m) and Indonesia (+15.6%, $146.1m).

In a separate report from May 2013, the Euromonitor has some interesting assessments about the Japanese fragrance market. Given how some niche perfume houses like By Kilian and Tom Ford seem to be targeting the Asian luxury market with releases like Flower of Immortality and the Atelier d’Orient collection, the numbers for Japan don’t seem to bode well:

• Current value sales of fragrances declined by 7% in 2012. Although Japan has the second biggest market for beauty and personal care, and carries one of the most developed and mature cosmetics markets around the world, Japan’s fragrances is still in its infancy, totalling mere a ¥42 billion in 2012. Japan ranks 45th for per capita consumption of perfume and this demonstrates low penetration of fragrance use among local consumers.
• Competitive Landscape:
  • Fragrances is fragmented in Japan. ‘Various distributors’ parallel import foreign fragrances with 83% value share being sold through store-based retailing in 2012. ‘Various distributors’ accounted for 24% value share in 2012, with the leading distributor, Bluebell Japan, leading the field. Bluebell Japan has been operating in Japanese fragrances since 1954 and the company distributes 25 international fragrance brands, including Bvlgari and Gucci.
• Fragrances is anticipated to decline by a constant value CAGR of 5% over the forecast period. Lack of experience in using or even seeing fragrances during childhood is one of the biggest reasons for a continuous contraction of fragrances in Japan. Although consumers are demonstrating growing awareness towards smell in general, much attention has been paid to deodorants and other scented products such as laundry detergent among consumers. As Japanese consumers have a core value to prioritise group needs and pursue harmony, troubling others should be avoided by any means. Such traditional values shared among the Japanese might have discouraged the regular use of fragrances because the majority of consumers prefer a light scent and one could offend another by wearing a different or stronger fragrance. In addition to unfamiliarity to fragrances, Japan’s traditional culture may continue to hamper sales of fragrances over the forecast period.

The perfume market isn’t huge in China, either. In April 2013, Euromonitor‘s breakdown for the Chinese fragrance market was as follows:

• Given the value sales of RMB4.6 billion in 2012, fragrances in China remained a relatively small category; around one 18th of skin care in value terms. The year-on-year current value growth was 9% in 2012, compared with 12% in 2011, mainly due to the negative impact of the economic downturn. Apart from economic reasons, the lack of new launches in 2012 also explains the relatively lacklustre performance of the category. As a whole, product penetration is quite low in even top-tier markets, and fragrances are just seen as unnecessary products by most consumers. No remarkable changes have been seen in consumers’ acceptance of fragrances – the Chinese account for 20% of the world’s population, but only contribute 1% to value sales of fragrances. The average Chinese person is not used to wearing perfume, unless they are extremely particular about their image, usually those who work for international companies or as high-ranking executives.
• Despite the large number of brands present in the market, fragrances in China continued to be dominated by international companies in 2012 in value terms. Chanel accounted for a 12% share of value sales in fragrances, followed by Parfums Christian Dior with 8%. Calvin Klein Cosmetics, Hugo Boss and L’Oréal China were in third, fourth and fifth place respectively. These world-famous companies have established high brand awareness amongst Chinese consumers, as they have in international markets, mainly thanks to continued investment in advertisements on television and in fashion magazines. A report on Chanel N°5 about its allergy-inducing ingredient triggered a possible sales ban from the European-based Scientific Committee on Consumer Safety in late 2012. Therefore, more fragrance enthusiasts may become cautious about choosing products, yet the impact on Chanel’s sales in China would be minor in 2012, given the fact that the incident occurred in November in the year of 2012.
• Fragrances is expected to witness stable growth in China over the forecast period, with a CAGR of 8% in constant value terms. Considering the currently low penetration, as consumption is still at the preliminary stages, fragrances is expected to have huge potential in the forecast period. Increasing incomes and the rising attention paid to personal image will lead to higher acceptance of the use of fragrances in China. However, most consumers consider that fragrances are not a daily necessity. Therefore, direct selling companies may have more advantages in engaging beauty advisors to influence customers, by convincing customers how important it is to wear fragrances to boost one’s image.

ALL IN ALL:

I don’t like to inundate people with numbers, but I think the breakdowns listed above are interesting for a few reasons.

First, it seems that the fragrance giants who create the ingredients and building blocks for perfumery are doing very well, but the market as a whole has softened. Over-saturation is an obvious problem; Forbes magazine listed over 600 new fragrances just for women alone in 2012. If one assumes that the men’s division gets even half of that number, that would be over 900 fragrances released in a single market year. And who did the best in 2011? It might be Justin Bieber, horrifying and repugnant as that thought may be, and the company which produces his creations (Elizabeth Arden).

Second, the Asian luxury market may not prove to be the financial savior that some perfume houses expect. If the European or Western markets are suffering due to recessionary (or other) concerns, the Asian ones have other problems. General stereotypes about different cultural perspectives in the East may be backed by the financial numbers of perfume use or sales in such markets as China and Japan. The niche and commercial fragrance houses who hope to shore up soft Western sales will have to deal with such socio-cultural issues as consumers unused to fragrance from childhood (“Lack of experience in using or even seeing fragrances during childhood,” as the Euromonitor put it), or the thought that fragrance isn’t a daily necessity. In some ways, therefore, you might see the current generation as the foundation for future sales growth. Results down the road will yield a benefit, but how much will they increase revenues in the immediate future?

Lastly, when you take all the various issues and compile them together, the main question for me personally is this: how can the market sustain the increased prices that we’re seeing every year? Chanel just raised its prices for Les Exclusifs: a 2.5 oz bottle of Coromandel that was just $130 a few months ago is now $160. Dior’s Privée Line went up from $155 for the smallest size (4.25 oz) to $170. Tom Ford’s smallest size of 1.7 oz increased from $205 to $210. Niche perfumery may be a “glimmer of hope” for some fragrance groups, but, given the prices in question, how can the overall consumer market handle things in the long-run?

On a parallel tangent, when the more established, big houses like Chanel increase prices to such an extent, what does it mean for truly niche perfumery? One doesn’t see parallel sort of price jumps in houses like, say, Neela Vermeire Créations, Andy Tauer, Parfums d’Empire, or Vero Profumo. Yet, those brands hardly have the same financial backing as a LVMH brand like Dior, or the deep-pockets of Kilian Hennessey. The smaller, truly niche houses don’t have the same sort of retail exposure or high-profile, even though they are increasingly better value for the money and quality in question.

And how does the whole IFRA/EU situation impact their chances to compete? This summer, in June, Andy Tauer’s personal blog talked about how it was becoming increasingly hard for artisanal perfumers to function within the EU. He linked to a 2009 EU regulation, No. 1223/2009, on cosmetics which detailed everything from packaging to the ingredients therein. It’s enormous and, even as a lawyer myself, it was a chore to glance through it. As Mr. Tauer noted, “Please have a look at the pdf file and imagine what it must feel like, for a young entrepreneur, somewhere in one of the EU countries, who wants to start a perfume = cosmetics business. […] Basically, you cannot do artisanal perfumery in the EU.”

When I was younger and learning Latin, I learnt “Fortune favours the brave” (or the bold). The famous phrase “Fortuna audaces iuvat” (variously attributed to Virgil, the playwright Terence, or Pliny the Elder) always seemed a little glib to me. There is more than boldness, bravery, or good luck that is required to succeed in life, though they certainly help. Actual money drives things, too. As globalisation continues full-force and conglomerates expand their reach, consuming many smaller companies within their path, truly niche perfumers will have a harder time of things by virtue of comparatively reduced resources and opportunities. Yet, obviously, it’s these niche artists who are the true engines of innovation, change, progress, and quality, not the Estée Lauder or Elizabeth Arden creations that are the primary focus of groups like the Fragrance Foundation with its FiFis.

Clearly, I’ve strayed from my main point about the state of the mass, commercial, perfume market in 2012 and 2013. And the state of the union is extremely strong, thanks to perfume addicts like you and me. Together, we have contributed to global sales figures in excess of $27 billion — BILLION — in 2012. One can only imagine how those numbers will increase in the years to come.

Perfume News: 2013 U.S. FiFi Awards – Fragrance Foundation Winners

Tonight, at New York’s Lincoln Center, the Fragrance Foundation issued its 2013 awards for mainstream, commercial fragrances. This is the U.S. arm of the foundation, as the UK and French FiFi awards were awarded earlier this year. Winners were announced via the Fragrance Foundation’s Twitter page, but, for ease of reading, I’ll just rely on CaFleureBon‘s announcement post:

Master Perfumer Alberto Morillas of Firmenich is the first recipient of a new category, Perfumer of the Year, Lifetime Achievement Award.

Perfumer Extraordinaire of the Year: Robertet

Fragrance of the Year: Women’s Luxury Florabotanica by Balenciaga Paris (Coty Prestige) Perfumers Olivier Polge and Jean-Christophe Herault

Fragrance of the Year: Women’s Prestige
DOT Marc Jacobs (Coty Prestige) Perfumer Annie Buzantian

Fragrance of the Year: Women’s Popular
Justin Bieber’s Girlfriend (Elizabeth Arden)

Fragrance of the Year: Men’s Luxury
Colonia Intensa Oud by Acqua Di Parma

Fragrance of the Year: Men’s Prestige
Tom Ford Noir (Tom Ford Beauty) Perfumer Olivier Gillotin

Fragrance of the Year: Men’s Popular
James Bond 007 (P&G Prestige Products)

Best Packaging of the Year: Women’s
Florabotanica by Balenciaga Paris (Coty Prestige)

Best Packaging of the Year: Men’s
Montblanc Legend (Interparfums Luxury Brands)

Media Campaign of the Year: Women’s

Dolce & Gabbana Pour Femme (P&G Prestige Products)

Media Campaign of the Year: Men’s
Dolce & Gabbana The One for Men Sport (P&G Prestige Products)

Retail Innovator of the Year: QVC

Consumer’s Choice Award-Men’s:

Acqua di Giò Essenza by Giorgio Armani Perfumer Alberto Morillas

Consumer’s Choice Award-Women’s: 

Justin Bieber’s Girlfriend (Elizabeth Arden)

Fragrance Celebrity of the Year: Taylor Swift

Fragrance Hall of Fame:
Red Door by Elizabeth Arden

Again, these FiFi awards are only awarded to mainstream, commercial scents. The Niche category has its own separate section and awards, though it is relegated to the sidelines and (sadly and pathetically) lumps in all sorts of perfumers from artisanal to some extremely high-end luxury lines. You can see the full list of the finalists who were going up for the prize in my post on the nominees here. If you want to read more about the Fragrance Foundation and past winners, you can turn to the organisation’s website here. I have no commentary on the choice of Taylor Swift, let alone the double win for Justin Beiber’s fragrance. I shall only say that I think Alberto Morillas is a great perfumer, and a hearty congratulations to him on receiving the very first ever Fifi Lifetime Achievement Award.