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The Fragrance Phenomenon: Redefining Value and Priorities

November 2022

The COVID-19 pandemic refreshed global demand for fragrances, resulting in long-term repositioning to self-care and wellness. The US and China witnessed a renaissance in 2021, especially in premium. Global growth was propelled by e-commerce, aided by the industry’s successful pivot into the digital space overcoming sensorial barriers. Trending innovations reflect heightened demand for value creation, which will grow in importance as unit prices fluctuate and remain uneven across top fragrance

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Key Findings

Fragrances shift to wellness and emotional wellbeing

Perception of beauty has changed to encompass intrinsic motivations, benefiting fragrances, which, up until recently, focused on social occasions and pleasing others. Although still niche, wellness claims in fragrances are growing from a small base and include energy boosting, vegan and aromatherapy. Next, consumers will be looking for scientific evidence to show aromatherapy and functional fragrances have a physiological effect to improve health.

US and China witnessed a fragrance renaissance in 2021

As the first and sixth largest fragrance markets, respectively, the US and China stand out as being the largest historic contributors to growth, especially in the premium segment. Channel shifts to e-commerce and incremental growth through more frequent purchasing boosted the category in the US, while growth in China was aided by high demand for niche and homegrown fragrances.

Trending innovations in fragrances reflect heightened demand for “value creation”

Fragrance players are incorporating features from megatrends, such as wellness, digitalisation, sustainability, personalisation and inclusivity, to create more value for consumers in fragrances. Of these, digitalisation is having the greatest current influence. Personalisation in fragrances is projected to be influential over the forecast period, with key players investing in AI-driven diagnostics during the fragrance selection process.

Fragrances’ projection globally is steady and optimistic, despite risks

Due to the high baseline of fragrance market size post-COVID-19, it is unlikely to return to 2019 levels globally. However, several factors post risks for future growth, such as cannibalisation from duty-free/travel retail, from fragrance-adjacent non-beauty categories (eg aromatherapy), and deceleration from hyper-cycle of consumption and price hikes. While rising unit prices remain uneven across top fragrance markets and segmentation types, optimism is fuelled by self-care narratives and purchase patterns of Gen Z and Millennial consumers.

Scope
Key findings
Fragrances is the fourth largest in beauty and personal care behind skin, hair and colour cosmetics
Fragrances make a solid rebound in 2021, driven by premium and wellness positioning
N. America accounted for majority of growth in 2021, but W. Europe the largest region
Premium makes up two thirds of global fragrance market, but regional differences exist
Women’s makes up largest fragrance type, but unisex is fastest growing globally
US and China witnessed a fragrance renaissance in 2021, especially in premium segment
Rising unit prices uneven across top fragrance markets and segmentation types
Fragrances prospects noted in emerging markets of south and southeast Asia
E-commerce, niche positioning, “vegan” and “no alcohol” claims drive SE/S Asia momentum
Restrictions on international travel offered domestic opportunities for fragrances
Deceleration expected in largest fragrance market, the US, while e-commerce grows
In second-largest market Brazil, premium and e-commerce grow from pent-up demand
In third-largest market France, fragrances see strong rebound in premium and e-commerce
Fastest growing market of China to witness boost in niche and homegrown fragrances
Fragrances’ cultural significance in Middle East drive personalization, sustainability prospects
Perception of beauty has changed to encompass intrinsic motivations, benefiting fragrances
Fragrances shift to wellness and emotional wellbeing
Trending wellness claims in fragrances include energy boosting, vegan and aromatherapy
Yanbal’s Aromatherapy collection capitalises on popularity of essential oils
UK supplement company The Nue Co launches functional fragrances to address stress
Amid much movement in top 10 fragrance brands, Chanel maintains its leading position
Mobile-first, visuals and Gen Z feedback among premium fragrances’ digital transformation
Christian Dior leverages livestreaming and social media platforms to maintain its leading rank
Mass fragrances incorporate sustainability features in sourcing and product life cycle
E-commerce leaps in 2020 and to remain a pivotal channel, overtaking direct selling in 2021
Recent business activity includes mergers and acquisitions among brands, suppliers
Megatrends in fragrances reflect heightened demand for “value creation”
Self-care positioning, microbiome-friendly formulas bring fragrances closer to wellness
New launches expand multifunctionality, delivery formats and ingredient-led beauty
Gamification in the metaverse creates personalised NFT auras that can be produced offline
Fragrance houses debut AI-enabled platforms, while Tiktok launches fragrance brand
Carbon-negative footprint and ethical ingredient sourcing are top-of-mind
Green chemistry underlines future sustainability innovations, especially upcycling
Personalisation spans from mass customisation to neuroscience-backed selection
Changing consumer values place less emphasis on distinct male-female characteristics
Category extensions and opportunities beyond fine fragrances
Opportunities beyond fine fragrances: Baby and child-specific fragrances
Uses, limitations and naturals trend may keep baby fragrances niche
Hair mists/perfumes/fragrances represent accessible luxury from fine fragrance players
Air care is a natural extension, due to existing supply chain connections
Key findings
SWOT Analysis
Fragrances’ projection globally is steady yet optimistic, despite risks
Euromonitor’s definition: Fragrances
Overview of Beauty Survey
Overview of Beauty Survey: Product coverage

Beauty and Personal Care

This is the aggregation of baby and child-specific products, bath & shower, deodorants, hair care, colour cosmetics, men's grooming, oral hygiene, fragrances, skin care, depilatories and sun care. Black market sales and travel retail are excluded.

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