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Bitter Sweet: The Smell of a Paradigm Shift in the Global Fragrance Market

July 2017

Mature fragrance markets have settled into a steady pace and are gearing strategies towards creating meaning and value, sacrificing short-term gains for long-term loyalty. Meanwhile, emerging hotspots represent a mixed bag of opportunities, with Latin America being an extreme case of value over everything. Multinationals are seeking growth in global expansion but few have broken down cultural barriers. However, resistance is futile, seismic shifts are occurring and the industry must adapt.

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Above-average performance propped up by Latin America

At 5.5% growth in 2016, the fragrance industry reached its peak over 2011- 2016 period. The industry sat well ahead of the wider beauty market and only one percentage point behind dynamic colour cosmetics.

Distinct departure from traditional purchase motivators

Developed markets bore the brunt of the dramatic reprioritisation of consumer agendas, Western Europe and North America delivering growth rates of 2.3% and 2.5%, respectively. A refined sense of self, heightened sophistication and conscious consumption habits all benefited premium but dented mass.

Retreating gender binaries have knock-on effects

Genderless scents had another good year, also, on the back of societal shifts, as the blurring of gender roles continued to reinvigorate the lackluster unisex category, delivering 4% value gains.

Ethical consumption’s universal appeal makes it a trend worth buying into

Simplifying formulations and acting with integrity appeals to consumers the world over. Increasingly discerning long-time wearers of fragrance are scrutinising bottles and looking for safer alternatives.

Personalisation the vehicle for value creation

In a quest for differentiation in a generation, and industry, mired by homogeneity and lack of creativity, personalised scents continue to grow in popularity. Premium offerings need refining and mass options need discovering but regardless, technology and big data will play a crucial role.

Mass markets swell but premium balance stands strong

Mass outgrew premium in 2016, a pattern that is set to endure to 2021. However in market weight, fragrance will remain premium’s domain, as niche and bespoke offerings hike up unit prices and maintain relevance.

Introduction

Scope
Key findings

A Global Perspective

Fragrances forge ahead
Brazil shifts volume, US churns value
Regional tussle escalates
Local barriers to emerging markets
Seeking silver linings in Western Europe

Category Dynamics: Community and Self

Fragrance choice heavily tied to income
P ersonalisation propped up by quest for self-improvement
Celebrity brands make way for lifestyle tribes
Niche offers the reverse exclusivity perspective
Case Study: Roja Dove Commercialising the “nose”
Niche hitting the mainstream?
Rising competitive pressure on image driving brands

Category Dynamics: Gender Blurring

Few alliances in pattern of gender polarity
Shifting gender frontiers
What is the lifecycle of “genderless”?
Selling sex or scent?

Product Evolution: Lifestyles Demand Performance

Commutable formats with minimal commitment
Can fragrances take the heat?
Finding meaning in functionality
The mini- lennial mindset

Product Evolution: Nuturing a Sustainable Future

Wasted opportunities
Upcycling demands versatile packaging
Halal positioning benefits from green credentials
Detoxifying scent

Fragrance Retailing Paradigm Shift

Need for education defines distribution
E-commerce expansion requires seismic culture shifts
Sizing the digital opportunity
Balancing the traditional with the social media
Fragrance brands embark upon gamification
Big data complements the intrinsic art of perfumery
The store as a discovery portal

A View to the Future

Asia Pacific’s modesty comes to the fore
Redefining not declining
Identifying innovative in-ways
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