Premiumization and Refills Drive Fine Fragrance Sales

Fine fragrance sales in Europe were hit hard by retail closures during the pandemic. But the category remains remarkably resilient. The annual bonanza of launches resumed in 2022, but with less razmataz than in the past. New brands are launching at far higher price points, leading to a significant premiumization of prestige fragrance. Meanwhile, refillables are a small but significant trend within the category.

With its heavy dependence on sales through traditional retail channels, European fragrance suffered steep sales declines during the pandemic. Sales rebounded in 2022, with men’s and women’s sales increasing 6.7% to nearly $14.6 billion.

Lia Neophytou, senior analyst, GlobalData said the gain was inevitable with the return to social occasions after a long period of isolation.

“The sector is anticipated to meet and surpass its pre-pandemic value this year driven in part by rising inflation, though volumes will remain below pre-pandemic levels,” she predicts.

A Retail Recovery

Discovery sets were the big story for during the pandemic. They allowed online retailers to reach audiences and promote sampling. But as retail opened, there have not been any significant changes in the way fragrance is sold.

“Brick-and-mortar sales recovered and remain the only place to fully experience a fragrance, but there is still so much more they could be doing to enhance the experience for consumers, such as storytelling, personalization, incentives and availability,” asserts Emma Reinhold, co-author of Innova Market Insight’s latest Premium Fragrance Report. “Diagnostic tools could also help bring fragrance more to life and attract new customers.”

Reinhold identifies four European retailers who help brands develop stronger, more cohesive offers at the counter.

“Harrods Salon de Parfum creates a full experience with each brands. Sephora’s return to the UK will be one to watch when its flagship opens in 2023. Wow Concept in Madrid has an interesting fragrance offer and La Samaritaine, Europe’s largest beauty space, offers consumers more at the fragrance counter.”

Fragrance Premiumization

The most notable trend is the tendency for new fragrances to launch at high price points. According to The NPD Group, UK sales of liquid fragrance with a retail price over £125 ($144) increased 91% in the first half of 2022 compared to a 33% sales gain for the total premium fragrance market.

“Both men’s and women’s eau de parfum and perfume formats have increased in importance and are growing faster than the rest of the market,” observes Emma Fishwick, NPD UK Beauty. “While we recognize that there is pressure on people’s expenditure now, they are seeking better value for money…larger sizes and more potent formulas are more cost effective.”

There are numerous examples of high-priced fragrance launches and not all come from artisan or niche brands. For example, Dior J’Adore Parfum d’Eau is the latest iteration of this best-selling fragrance which retails at just over $100 for 50ml (EDP); Guerlain Shalimar Millésime Tonka is a limited-edition of the original Shalimar and is available as an EDP at $108 for 50ml. Even Hugo Boss Boss Bottled pushed up its price point to $99 for 100ml (EDP)—the larger size arguably offers better value.

Standout fragrance launches this holiday season include new scents from Chanel, Byredo and Gucci.

Chanel No.1 de Chanel L’Eau Rouge, which leverages red camellia extract. “It comprises 97% naturally derived ingredients, thus appealing to consumers who pay close attention to ingredient lists and those who seek ‘natural’ plant-based formulations,” comments Neophytou.

Byredo Eyes Closed is a unisex fragrance from Swedish luxury brand Byredo. It features the festive “warm” and “sweet” scents of cinnamon, cardamom and ginger, with a delicate clean finish.
Chloe Rose Naturelle Intense features organic rose and oak essences from upcycled wood. It is likely to appeal to its environmentally conscious target consumers.

Gucci The Alchemist’s Garden A Reason to Love is the latest in Gucci’s haute couture fragrance line. It is an oud-based fragrance with notes of damascene rose and tolu balsam and presented in a lacquered black bottle.

Jo Malone White Moss & Snowdrop Cologne is a light wearable cologne, described as smooth and aromatic, and fitting for the upcoming winter season.

Improved Sustainability

When brands presented their new offerings in August and September, refillable packaging was a theme. Some new launches with refillable options include Good Fortune by Viktor & Rolf, D by Diesel and Prada Paradoxe.

Fragrance refills are debuting in mass and prestige. They are one way to communicate and improve sustainability credentials. “Environmentally conscious consumers are likely already engaged with these formats, though additional marketing is still required from brands to communicate their benefits to a wider audience,” believes Neophytou. 

Refillables are a step forward in reducing packaging waste, but represent a fraction of what is needed to “green up” the sector. “Brands are ignoring areas such as sourcing and farming which offer huge opportunities for improvement,” argues Reinhold, who says that refills are seen as a relatively easy way to improve sustainability credentials. “They do still create packaging waste, but while consumer demand for sustainability continues, we can expect to see more refills launching,” she predicts.

Brands offering something new and innovative that captures the consumer’s imagination are best placed to benefit from the bounce-back in post-pandemic sales. Smaller size formats will appeal to consumers during times of economic hardship, while a compelling back story and greater focus on sustainability will help brands gain new customers. According to Reinhold, brands that package together a scented solution to all the elements that affect consumers today will see the best return. 

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Imogen Matthews
Headington, Oxford UK
+44 1865 764918
www.imogenmatthews.co.uk
 
Imogen Matthews is a respected consultant, journalist and researcher who commentates on trends in the beauty industry. She regularly contributes to many of the world’s foremost beauty trade titles, has served on the Board of Cosmetic Executive Women (CEW UK) and won the prestigious Cosmetic Executive (UK) Achiever Award. Founded by Imogen in 1993, The Premium Market Report remains the only in-depth report to examine trends in the premium cosmetics, skincare and fragrance industry.