The average 3% CAGR forecast for fragrances over 2013-2018 is shaped by two distinct trends. Firstly is the move beyond traditional perfumery, stretching into alternative product forms to remedy spending cuts and tap into aspiring consumers in emerging markets. Secondly is a perceived mundane product offer that may lead sales to level off in affluent markets, raising questions about the quality of scent novelty. This report delves into these issues and examines how the future market may evolve.
Other discretionary categories, chiefly colour cosmetics and skin care, have grown at a similar pace over 2008-2013 suggesting comparable market dynamics, in terms of overall macroeconomics and consumer trends. At 10%, fragrances held a static share of the total BPC value sales over 2013-2018.
The region will account for 40% of the global premium fragrances absolute value growth over 2013-2018, raising its share of the global market from 13% to 16%. Saudi Arabia and South Africa will top the league. Cultural influences and a growing retail penetration are among the key drivers.
While fashion brands have made perfume an accessible luxury beyond higher-priced ticket items, premium players have further extended product variety with low-cost options, cross-category variations and celebrity brands to fill growth gaps and enter markets, not otherwise attainable with traditional perfume.
A proliferation of launches in fragrances has led to a perceived sameness among consumers, resulting in a tepid industry performance. This points to a need to invest time and resources in captivating scents, even if they command higher prices, but stimulate genuine consumer interest.
The rise of niche segments seeks to combat the perceived market sameness, by tapping into the desires of discerning consumers. However, a growing niche segment can be detrimental if competition leads to creativity fatigue.
While channels such as pharmacies and internet retailing have gained share, department stores compete by creating novel in-store experiences.
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