Celebrity perfumes and big brands losing share to the artisans and specialists

Cosmetics giants such as Estée Lauder and L’Oréal are acquiring smaller fragrance houses as sales of celebrity scents shrink, although some companies are looking to a more nuanced kind of celebrity creation to drive sales

PUBLISHED : Sunday, 05 February, 2017, 10:00am
UPDATED : Tuesday, 07 February, 2017, 8:50pm

With Valentine’s Day fast approaching, fragrance makers will be hoping for bumper sales on one of the big buying occasions for cosmetics and beauty products. If trends in the market continue, perfume sales this Valentine’s Day will once again see fragrance specialists grab an increasing share of the market over designer and celebrity fragrances, as consumers look to the likes of Byredo over Burberry and Bieber.

The global perfume market was worth US$39.67 billion in 2016, according to market research company Future Market Insights (FMI), but one of the fastest-growing segments has been niche and prestige scents, by which is meant fragrance specialists, which are expected to grow 6 per cent year on year over the next 10 years according to FMI.

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The shift to fragrance specialists is playing out on a corporate scale too, with a rush of tit-for-tat deals made by the world’s cosmetics giants. Estée Lauder’s purchase of fragrance specialists Le Labo, Frédéric Malle and By Kilian since 2014 was met with L’Oréal’s purchase, reportedly for US$16 million, of Atelier Cologne last year.

Atelier Cologne’s sale was significant for industry watchers as L’Oréal, for the first time, had its own fragrance specialist; L’Oréal had up until then focused on fashion brand licences for its perfume division. “We chose L’Oréal,” says Atelier Cologne co-founder Sylvie Ganter, adding that a number of big groups approached them.

“People see it as us selling our baby, but we see it as marrying our daughter and choosing the husband,” she says of a deal that gave her company potential for global scale by tapping into L’Oréal’s network. The rapid growth of Atelier Cologne, which was founded in 2009 and opened its second Hong Kong boutique late last year, has surprised both Ganter and her co-founder husband Christophe Cervasel.

They believe increasing consumer education, word of mouth and a more personalised approach has helped them more than traditional forms of promotion such as ads in glossy magazines or celebrity endorsements, neither of which the company indulges in. Taking inspiration from cosmetics retail, Ganter says, “We’ve followed much of what they do in the world of skincare, where you go into a boutique, sit down with knowledgeable staff and really understand what works for you and what doesn’t.” Ganteradds that consumers are increasingly studying factors like ingredients and concentrations online.

The changes in the fragrance market have been dynamic and dramatic in recent years, with consumers turning away from celebrity fragrances most markedly. Celebrity fragrances were a boom segment as recently as five years ago, when fragrance companies fell over themselves to sign up the world’s biggest stars.

Fragrance makers were attracted to these collaborations as they were cheap to make and could be delivered in bulk. The audience also tended to be younger and less sophisticated when it came to scents and they were ready and willing to buy in on launch. Justin Bieber, Taylor Swift, Mariah Carey and Nikki Minaj were the big names signed up by American cosmetics giant Elizabeth Arden. Despite initial success, 2015 saw Elizabeth Arden’s sales for celebrity fragrances fall 17 per cent, with further falls last year.

However, some fragrance companies are still betting on celebrities, but in a more nuanced way, co-opting some of the tactics and production approach of fragrance specialists to reach discerning consumers. Starck Paris, the first fragrance from famed French industrial designer Philippe Starck, created in collaboration with Perfumes y Diseño, launched last year to much fanfare.

Speaking to the Post in November, Starck, whose mother owned a parfumerie, said he had been approached to make a fragrance several times over the years but had never felt comfortable until now and this first collection was four years in the making. Describing his perfume as a “personal passion”, Starck said he hoped to reach people who understood ingredients and he deliberately gave prominence to the perfume masters on the packaging and the advertising, emphasising the craft element of the product.

The waning of celebrity fragrances has coincided with a slowdown in designer fragrances, which still, by revenue, dominate the market but have lost their lustre somewhat. Designer fragrances have pulled back a little from expensive, season-led launches designed to appeal to as many people as possible, and have focused more on small runs at targeted consumers such as Armani Privé’s Pivoine Suzhou and Lancôme’s Miracle, which are aimed exclusively at the Chinese market.

Louis Vuitton releasing fragrances by master perfumer Jacques Cavallier-Belletrud

The true test of the resilience of designer fragrances will be the success of Louis Vuitton’s first foray into perfumes in over 70 years. Though late to the market, Louis Vuitton has spent tens of millions of euros on formulating its collection, on the bottle design by Marc Newson and on a global advertising campaign. Cervasel remains unconvinced: “People are moving towards pure players, whether it’s watches, shoes or whatever. Look at Moncler or Ray-Ban – people go to them when they want a specialist. Louis Vuitton fragrances might be a success in the short term but in 10 or 20 years’ time people will be looking at specialists.”