Fine Fragrance Category Finishes on a High Note

Call it a comeback story, if you will. Fragrance, which took a major hit early in the pandemic, was the rock star of the US prestige beauty industry last year. Its revenue growth outperformed all other categories in this dynamic $22 billion marketplace.

According to The NPD Group, Port Washington, NY, the US prestige beauty industry reported a 30% increase in dollar sales compared 2020, with fragrance sales (including home scent products) rising 49%, year-over-year. Sales of perfumes, colognes and other fragrance juices increased by 61%, year over year. What’s more, for the first time ever, fragrance sales reached parity with skin care, said NPD.

Fragrance kicked into high gear at the end of the year. According to NPD, Q4 accounted for 45% of fragrance category sales revenue in 2021, growing 35% during the critical holiday selling season.

Now, another big gifting holiday looms—Mother’s Day is just weeks away—and marketers and retailers alike are keeping their eyes on consumer spending to see if scents have staying power in 2022.

EDP over EDT

Consumers spent money on fragrance in 2021, and they were buying more expensive, versions specifically.

The NPD Group’s retail sales data in the US showed the average retail price for fragrances rose 15% in 2021 versus 2020, after averaging a 5% increase during the two years prior. Both men’s and women’s fragrances added nearly $10 more per product, on average, in 2021. The higher prices came from a shift in the formats among consumers. Consumers purchased eau de parfums (EDPs) and parfums, opting for products with greater staying power than cologne, eau de toilette (EDT) and other mixes with lower concentrations of fragrance oils.

Premium luxury brands and private designer collections also command higher price-points and experienced market share gains in 2021. Fragrance juices priced over $175 more than doubled in unit sales for the year, noted NPD.

“By purchasing fragrances, consumers can find a pocket of luxury that brings them joy and is a welcome addition to their wellness rituals,” noted Larissa Jensen, beauty industry advisor at NPD. “Given their willingness to trade up to more premium fragrances, consumers are exhibiting the high value they place on this olfactive category.”

Sales of perfumes and colognes in mass fared well, too. Although the overall women’s fragrance category (which includes gift sets) was down, sales of women’s perfumes and colognes/body powder rose 6.2%, according to IRI data for US multi outlets (grocery, drug, mass market, military and select club and dollar retailers) for the 52 weeks ended Feb. 20, 2022. Men’s shaving lotion/cologne/talc sales recorded a gain as well; sales rose 7.3%. (For details on mass market fragrance performance, see chart here).


Supply Chain, Sustainability

Whether prestige or mass, the fragrance sector, just like every other consumer goods category, faced supply chain challenges during the past few years, according to industry stakeholders like the Fragrance Creators Association.

During the pandemic in 2020, Fragrance Creators’ members advised the Association of the potential impact of supply chain issues and the Association said it immediately developed and deployed an “aggressive and multi-prong advocacy push involving key Administration officials, members of Congress, industry partners and international sources to help improve our supply chain operability.”

According to Fragrance Creators, many of the same issues from 2020 and 2021 have carried over to this year—think infrastructure capacity concerns, workforce shortages and more. Add to that increasing challenges related to unprecedented world events, the latest of which is Russia’s invasion of Ukraine, which was three-weeks old as this issue of Happi went to press. 

Taking a longer view, stakeholders recognize that the success of the fragrance industry is dependent on a healthy planet. Fragrance Creators told Happi that its members are committed to sustainable sourcing and never lose sight of the need to preserve native ecosystems.

To that end, Fragrance Creators joined the newly launched EcoBeautyScore Consortium, a group of 36 cosmetics and personal care product companies and trade associations that are focused on enabling more sustainable consumer choices. 

Beauty giant Coty is part of the consortium, too. The company, which has a large roster of well-known fragrances sold in prestige and mass markets, reached a milestone on its sustainability journey. Coty has started production of what it contends are the world’s first globally distributed fragrances made using carbon-captured ethanol. Ethanol is Coty’s top fragrance ingredient by volume.

Production at Coty’s Granollers, Spain site began in mid-January. Coty expects the fragrances made using the new ethanol to reach stores in the coming months. In fact, the company says it is ahead of schedule on its goal to integrate sustainable ethanol into a majority of its fragrance portfolio by 2023.

Meeting that 2023 goal early will put the company “on the leading edge of sustainable fragrance innovation,” insisted Dr. Shimei Fan, who joined Coty as chief scientific officer in January 2022.

Coty’s fragrance will use CarbonSmart ethanol produced by LanzaTech. The sustainable ingredients supplier manufactures ethanol by capturing and fermenting carbon emitted by industrial activity. Carbon-captured ethanol involves nearly zero water consumption and reduces the need for agricultural land, in turn limiting Coty’s impact on biodiversity and lowering the company’s carbon emissions related to fragrance production. Coty’s scientists worked with LanzaTech and production partners over two years to develop a high-purity sustainable ethanol suitable for use in fragrances, where there are strict specifications.

Novel Fragrances for 2022
Coty’s fragrance business, which includes iconic fashion houses such as Burberry, Escada, Gucci, Marc Jacobs and Calvin Klein, is rolling out a variety of scents for the season. New to the Burberry roster is Burberry Her eau de toilette, which blends green pear, honeysuckle and rose, softened by a woody base. New scents in the Gucci range include Gucci Bloom eau de toilette, Gucci Guilty Intense eau de parfum pour femme (an ambery floral woody fragrance that opens with a blend of mandora, lychee and violet) and Gucci Guilty Parfum pour homme, which opens with “lighter, milder, and more modernized aromatic hook” of French lavandin abrialis and lemon sfumatrice intensified with juniper.

Escada Cherry in Japan is a new eau de toilette that opens with a sparkling cherry accord, leading into a floral heart with a warm tonka base. Coty says 86% of the ingredients in the Escada Cherry in Japan scent come from natural origin.

The Marc Jacobs franchise keeps growing, too. The latest come under the Daisy Marc Jacobs Skies limited edition banner. Billed as modern, seasonal twists on the classic Daisy fragrances, new iterations include Daisy Marc Jacobs Eau So Fresh, Daisy Love Marc Jacobs and Daisy Marc Jacobs. Each features a calming blue note and a vibrant yellow note to evoke the peaceful feeling of the warm sun illuminating the open sky, according to the brand.

Last month, Coty unveiled new Summer Daze variants of Eternity Calvin Klein for men and women and CK One.

Calvin Klein Women Summer Daze has a top note of iced red berries granita and a heart of rose water and jasmine in a vegan formula. Eternity Calvin Klein For Men Summer Daze opens with a mandarin top note, a heart of lavender and a minty wood base. CK One Summer Daze (also a vegan formula) has a zesty, citrusy top of kumquat with iced mint tea note at the heart and musk and vetiver at the base. All contain naturally derived alcohol and a high number of ingredients from natural origin—88% for Calvin Klein Women Summer Daze, 87% for Eternity Calvin Klein For Men Summer Daze and 89% for CK One Summer Daze. All three juices are housed in packaging derived from recycled materials.


The Business of Fragrance

Coty’s prestige segment recorded 12% reported and like-for-like (LFL) growth in Q2, and 21% in the first half of FY2022. Prestige fragrance sales grew at a double-digit pace in Q2, with nearly all brands contributing. Successful launches included Gucci Flora Gorgeous Gardenia and Burberry Hero among the top launches in the US market and in China, including on Tmall. Coty’s consumer beauty unit—which includes makeup brands like Rimmel as well as fragrances from Nautica, Katy Perry and Vera Wang—saw revenues rise 11% as reported and 12% LFL in Q2.

Estée Lauder Companies (ELC) also reported strong performance.  For the second quarter ended December 31, 2021, total revenues rose 14%, according to the company. Looking at fragrance specifically, net sales on a reported basis rose 29% (30% in constant currency). ELC said net sales grew in every region and across virtually all brands that sell fragrances, driven by continued resilience in luxury fragrance, the opening of brick-and-mortar retail and the beginning of travel recovery in western markets.

Lauder said Jo Malone London’s net sales grew double digits primarily driven by strength in colognes, particularly in the hero franchise English Pear & Freesia, and holiday collections. Tom Ford Beauty grew strong double-digits, reflecting strength in its Oud Wood, Rose Prick and Black Orchid fragrances. The Ombre Leather Parfum also contributed to growth and helped drive demand in that franchise. Net sales from Le Labo rose by high double digits, with growth coming from hero fragrances like Santal 33. Net sales for Kilian Paris increased strong double-digits, driven by retail reopening and demand for hero products like Good Girl Gone Bad by Kilian and Love, Don’t be Shy, as well as new launches such as Apple Brandy on The Rocks.

Lauder has made changes in its fragrance business of late. In September 2021, it announced plans to end select fragrances operations. Impacted fragrance brands have been finding new homes. Michael Kors quickly announced a new deal with EuroItalia, and more recently, Tommy Hilfiger announced a new accord with Give Back Beauty (GBB), a privately-owned beauty group. Likewise, the Donna Karan and DKNY fragrance license is headed to Inter Parfums—another major fragrance house that closed out 2021 on a high note.

“2021 was the best year in our history,” noted Jean Madar, chairman and CEO of Inter Parfums, when the company announced its most recent financials.

For the three months ended December 31, 2021, Inter Parfums’ net sales rose to a record $210.8 million, a 15% increase from the fourth quarter of 2020, and 19% ahead of the fourth quarter of 2019. At comparable foreign currency exchange rates, consolidated fourth quarter net sales increased 15% from the fourth quarter of 2020 and 14% compared to the fourth quarter of 2019.

Inter Parfums said its Guess brand has become the fourth brand in its stable with sales in excess of $100 million (the others are Montblanc, Jimmy Choo and Coach). Comparing performance to 2019, Inter Parfums said Montblanc’s 2021 sales grew by 7%, Jimmy Choo by 34%, and both Coach and Guess by 41%. There were also significant gains made by its mid-sized brands, namely Abercrombie & Fitch, Hollister, Oscar de la Renta, Van Cleef & Arpels and Karl Lagerfeld.

Inter Parfums is busy this year, too, with plans to launch a men’s collection for Guess this spring along with Montblanc Legend, Jimmy Choo Man and Jimmy Choo’s I Want Choo, which will debut in the first, second and third quarters, respectively. Later in 2022, expect new men’s lines for Coach and Boucheron. Further, brand extensions and flankers are reportedly underway for MCM, Abercrombie & Fitch, Hollister and Anna Sui. Last month, Oscar de la Renta Alibi eau de toilette hit the market.

In addition to the Donna Karan and DKNY fragrance brands that will be added into Inter Parfum’s mix, the company’s Italian subsidiary entered into a 10-year exclusive global licensing agreement with Emanuel Ungaro for the creation, development and distribution of fragrances and fragrance-related products. The International Class 3 agreement went into effect on Jan. 1, 2022.

“In sum, 2022 has all the earmarks of another superb year as the growth catalysts currently far outweigh the headwinds, most notably limited travel retail business and supply chain disruptions,” said Madar.


More New Launches

Looking ahead into 2022, there’s more to come—from luxury brands making larger forays into the US, such as Amouage, to one-time industry disruptors taking a new tack, like Phlur.

Amouage, a family-owned luxury fragrance house based in Oman, is setting its sights on US market expansion. Currently available in 72 countries, 950 points of sale worldwide and through 16 standalone boutiques, Amouage has also opened a new office in New York to lead expansion of its retail business. Its scents are already stocked at Bergdorf Goodman, Neiman Marcus, Nordstrom and Bloomingdales. The company’s stable includes high-end fragrance Interlude Man, Honour Woman and Reflection Man, among others. Reflection Man has top notes of rosemary, red pepper berries and bitter orange leaves; a heart with neroli, orris, jasmine and ylang-ylang; and base notes of vetiver, patchouli, sandalwood and cedarwood. A 3.3 oz. EDP is $360 at Neiman Marcus.

Amouage also touts Exceptional Extraits, which have high concentrations of perfume oil. For example, Reflection Man 45 Extrait de Parfum has a 45% concentration of perfume oil.

Béatus, another purveyor of high-end fine fragrances, has inked its first major distribution partnership with Neiman Marcus. The brand was co-created by longtime beauty industry veteran Gabriel Reboh and Billy Busch—yes, that Busch, the American beer maker.

The Neiman Marcus store in St. Louis and the retailer’s e-commerce site will carry Béatus’ inaugural collection of highly concentrated eau de parfums (Gardens, Alhambra, Giverny, Sylve Noire, Tropical Forest and Haute Futaie).

Travel and lifestyle company Tumi rolled out its fourth men’s fragrance, Atlas [00:00 GMT]. The scent features citrus notes from around the world, including Italian bergamot and Florida grapefruit, with notes of amberwood balanced by labdanum, geranium and ginger. Additional accords include Haitian and Javanese vetivers, Indian sandalwood and moss.

In February, fragrance brand Phlur relaunched with the debut of a new floral musk fragrance called Missing Person.

Launched in 2015 and one of the first “clean” fragrance brands, Phlur was acquired by beauty incubator The Center in January 2021. Influencer and entrepreneur Chriselle Lim joined later that year to lead the brand’s relaunch.

Missing Person has top notes of skin musk, bergamot nectar and sheer jasmine; fresh cyclamen, neroli blossom and orange flower at the heart; and a base of sandalwood Australia oil, blonde wood and white musk.

“If nude were a perfume, this is it,” Lim said about the juice.

Fragrances to follow will include a handful of Phlur original fragrances as well as new creations, according to the brand. In fact, just as this issue went to press, the brand rolled out Lost Cause (fresh woody-floral) and Phloria (white floral).

With consumers spending more on higher-priced fragrances, and even mass market colognes and perfumes posting gains, the fine fragrance sector has emerged as a force, post pandemic.