Fragrances has been one of the worst beauty category casualties of the pandemic in the US, with an expected half a billion USD loss in 2020. Premium women’s fragrances made up almost half of the absolute value loss in 2020, which is expected given that the category represents 51% of fragrances in the US.
Steep declines in Q2 2020 led to fragrance players adapting to digital ways to connect, such as virtual consultations, livestreaming, social media questionnaires to encourage fragrance discovery (eg L’Oréal Groupe’s Luxury Fragrance Finder on Pinterest) and Zoom launch parties (eg Coty’s launch of Marc Jacobs’s Perfect). Although the olfactory nature of fragrances makes online purchases challenging, US consumers in 2020 craved connection with brands and community, underscoring the importance of fragrance players to nurture communities digitally.
Formulation and packaging changes will increase product variety over the forecast period. Indie, legacy and mass brands are increasingly positioning themselves as “clean”, using claims such as cruelty-free or vegan, to stand out in a crowded market.
Unlike colour cosmetics, which also suffered from the home seclusion trend, fragrances cannot enhance one’s appearance on a Zoom call. Therefore, usage occasions and positioning of fragrances will be re-invented over the forecast period to encompass psychological factors for the individual, beyond out-of-home usage occasions.
Premium fragrances will fare better than mass fragrances over the forecast period, with mass unisex fragrances having the least negative predicted decline out of the other categories. Historically, unisex fragrances have over-indexed total fragrances performance, with premium and mass unisex fragrances outpacing historic CAGRs of other fragrance categories, arising from shifting consumer values that favour inclusivity over gender-specific positioning that are also impacting personal care categories, such as deodorants and bath and shower.
Mini-packaging in fragrances is still desired, with slim elegant fragrance sprays, or “purse sprays” currently trending, with notable launches from Oriflame, Bath and Body Works, and Jo Malone London. The increased unit price of mini-fragrances will help the category recover in the long run, but the preference for these packaging types seems counter to long-term sustainability trends.
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