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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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.
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.
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.
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.
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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