Not So Desperate

April 11, 2006

Sure celebrity scents have a short lifespan, but industry observers insist that these fragrances have provided a much needed lift for a sagging beauty category.

Coty has signed the Desperate Housewives to a fragrance deal.
Has Coco been replaced by Sarah Jessica? Will the vixens on Wisteria Lane make everyone forget about White Diamonds? Driven by a demand for celebrity-inspired scents, the fragrance industry has rebounded from declining sales over the past few years with a modest gain in 2005. Industry experts insist sales increases have much to do with younger consumers experimenting with fragrances for the first time. That’s because they’re attracted to celebrity-driven scents such as Lovely Sarah Jessica Parker by Coty and Fantasy Britney Spears by Elizabeth Arden. Over time, industry experts insist that this newfound interest in fragrance by younger consumers will provide a boost to classic fragrance sales, too. According to Euromonitor International, global fragrance sales topped $27.5 billion (retail) in 2005—an increase of 9%—thanks, in large part, to the weak U.S. dollar. In the U.S., fragrance sales exceeded $6.2 billion (see chart, p. 50)—for an increase just over 3%.

Taking a closer look at U.S. results, the NPD Group, Port Washington, NY, estimated that prestige fragrance sales rose 3% last year to $2.9 billion. More specifically, sales of women’s fragrance rose 2% to about $2 billion, while sales of men’s products added 5% to nearly $1 billion. After several years of setbacks, industry observers are pleased with the recent performance, but they warn that the fragrance industry isn’t out of the woods just yet.

“The market is just showing the first signs of recovery,” warned Karen Grant, beauty analyst with NPD Group. “The fourth quarter of 2005 was still not as big as the fourth quarter of 2000.”

She noted that the men’s market has outperformed the women’s segment on the strength of existing product sales and the popularity of new launches such as Armani Code by Giorgio Armani Parfums and Polo Black by Ralph Lauren Fragrances. On the women’s side, Coty Prestige scored big with the launches of Euphoria Calvin Klein and Lovely Sarah Jessica Parker.

Lovely Sarah Jessica Parker may be one of the most successful celebrity-driven scents out there, but the actress is certainly not alone. In recent years, the fragrance industry has received a boost in sales from a gaggle of Hollywood stars and starlets. For example, Jennifer Lopez has a stable of scents under the JLo aegis. Beyoncé has her own line under the Tommy Hilfiger umbrella and one-time supermodel Niki Taylor is the celebrity behind Begin.

A Star-Crossed Market?

Classics too, can get a boost from celebrities. Liv Tyler is the famous face alongside Very Irrésistible by Givenchy and even Chanel No. 5, probably the best-selling fragrance of all time, registered a gain in sales once actress Nicole Kidman signed on as a spokesmodel.

Avon’s Surreal includes berries, tropical florals and rich red amber.
“Chanel has always been strong, but now we are seeing 20 to 25-year-olds trying the fragrance,” said Ms. Grant. “That wasn’t happening five years ago, and Nicole Kidman has had a lot to do with it.”

In today’s media-obsessed society, you can be sure that marketers are on the lookout for new spokespeople. Just last month Coty signed a deal with Touchstone Television to develop a fragrance based on “Desperate Housewives.” But Coty executives insist that the license will extend beyond fragrance to make the ladies on Wisteria Lane more of a lifestyle brand.

Coty certainly isn’t new to the concept of celebrity-centered scents. The company already markets fragrances promoted by Jennifer Lopez, Kimora Lee Simmons, Celine Dion and, of course, Ms. Parker. Unfortunately in Hollywood and on fragrance counters, fame and sales can be fleeting.

Years ago, a fragrance’s lifespan could be measured in years or decades. Today, even the best-selling new scents begin to die off after 12 months or so. While some blame the fickle consumer for the lack of fragrances with staying power, others insist that the department stores must shoulder some of the blame as well.

According to Ms. Grant, while department store executives keep demanding new, new, new, they have a very hard time classifying fragrances and helping to educate consumers.

“They don’t always do a good job explaining,” said Ms. Grant. “There must be a story, an experience attached to the fragrance. It’s not just an open sell. You have to entice her and teach her (about fragrance). Especially with younger consumers.”

Unfortunately, rather than educate, too many marketers inundate consumers with scents and more scents and several dozen flankers too.

According to Michael Edwards, author of Fragrances of the World, 357 new fragrances were launched in 2000, but last year that total topped 480. Flanker scents jumped even more dramatically—rising from 65 in 2000 to 103 last year. With so many scents to choose from, consumers are getting more confused—not confident—about their fragrance selections.

To help cut through the clutter, Fragrances of the World 2006 sorts—by fragrance family— 4,500 selective, niche, masstige, mass, limited edition and travel retail fragrances. According to Mr. Edwards, the guidebook helps sales associates find the right fragrances for their customers and also makes it easy for them to suggest an alternative when a particular fragrance is not available.

“It’s not that people don’t like fragrance,” he concluded. “It’s just difficult for them to find one that they like.

What Women Want

Women, especially, like fragrance. A recent study by The Benchmarking Company found that 4% of women identify perfume as their must-have beauty product. Yet, fragrance still trails beauty staples such as moisturizer (16%), mascara (13%) and lipstick (10%).

“Fragrance has become much more important in the overall beauty regime,” observed Alisa Marie Beyer, president of The Benchmarking Company, a Washington, D.C.-based consumer research firm.

The company’s Pink Panel is an online database of nearly 100,000 women who are regularly surveyed to find out their views on beauty. According to recent survey results:

• 39% of women said they purchased a fragrance in the past three months;

• 46% of women said perfume means beauty care; and

• 64% of women will recommend a fragrance to a girlfriend.

“Word-of-mouth fragrance advertising is unbelievable,” insisted Ms. Beyer. “More women are demanding fresh, natural, clean fragrances like Philosophy’s scents and Escada fragrances.”

But interestingly enough, broad appeal can actually shorten a fragrance’s lifespan.

“You end up the worst of the best and the best of the worst,” insisted Mr. Edwards, who added that the key to a successful fragrance comes in polarizing people—60% loathe it and 10% love it.

“At its peak, Giorgio never had more than 1.6 to 1.8% share, but it was a huge hit. However, if marketers insist on using focus groups to develop scents with broad appeal, then they’ll always end up with fragrances that are middle-of-the-road.”

What Works with Women

A celebrity, pretty bottle or eye-catching ad campaign may draw women to a scent, but keeping them means the juice must be appealing. For several years, women, and men too, have preferred floral-based scents, but their preference for lighter fragrances may be on the wane, according to NPD’s Ms. Grant.

Ralph Hot is a gourmand scent that’s aimed at teens and women ages 15-25.
“Florals still make up the bulk of fragrance purchases, but Euphoria and Armani Code are both orientals. That shows you that consumers are looking for something new.”

Women are building fragrance wardrobes too, and wearing different fragrances depending on the occasion, the time of day or how they’re feeling.

“There’s a large palette of scents out there and there’s a movement toward wearing a variety of scents,” explained Ms. Beyer. “Years ago, you were either a musk or a floral girl. But that’s not the case any longer.”

Women may be wearing a variety of scents, but for Michael Edwards, no one fragrance category stands out above another.

“I’m not a believer in trends. Too often they become one me-too following the other,” he insisted. “Fragrance is an emotion. It’s more than a toothpaste, more than a breakfast cereal. It must have passion and emotion.”

The Scents Themselves

Just in time for Spring, Clinique is rolling out Happy in Bloom.
Mr. Edwards may not be a big believer in trends, but he noted that many fragrance houses are more than willing to jump on the bandwagon when a particular combination of fragrance notes strikes an accord with consumers. For example, the gourmand trend has been popular for the past couple of years and Ralph Lauren acknowledges that popularity with its introduction of Ralph Hot—its first in the gourmand fragrance category.

Aimed at teens and women ages 15-25, Ralph Hot includes top notes of spicy cinnamon, almond blossom and mandarin. Mid notes of sensual mocha cream, orchid honeysuckle, jasmine, fresh milk accord and fig, and base notes of luscious maple, creamy vanilla, amber, musk and sandalwood.

“Hot takes the Ralph Lauren fragrance portfolio into a whole new olfactive territory,” said Signe Gammeltoft, president, worldwide, Ralph Lauren Fragrances. “Gourmand is an exciting new direction for Ralph Lauren Fragrances.”  

Avon recently entered the floral gourmand segment with Avon Extraordinary, which combines notes of chocolate, orchid and champagne.

What other fragrances are set to captivate consumers this spring?

Guerlain is in-troducing a trio of fragrance under the L’Art et la Matiéres umbrella. The three scents include Rose Barbare, with notes of Ottoman rose and honey-chypre; Angélique Noire, which includes bergamot and vanilla; and Cuir Beluga, which features mandarin orange, amber, heliotrope and vanilla. All three scents, as well as new alcohol-free baby fragrance called Petit Guerlain, are available exclusively in Bergdorf-Goodman.

Meanwhile, Avon executives expect women to be drawn to its Surreal scent, which debuted earlier this month.

“Many fragrances involve escapist fantasy. Surreal incorporates fantasy with trends in color and olfactive for a modern spin on the theme,” explained Lily Pulido-DeStefano, U.S. beauty marketing director, fragrance.

For a limited time, beginning this month, Clinique is offering Happy in Bloom, which is billed as a fresh, frosty floral with top notes of yellow plum, frozen fruit and watery green notes. Middle notes include muguet, white freesia and a mimosa accord that links back to the original Happy scent. Base notes include transparent amber and white wood.

Building on the success of is Armani Code for Men, Giorgio Armani is launching Armani Code for Women. The fragrance will be available in 2,200 department and specialty stores throughout the U.S. The scent, created by IFF, incudes top notes of Chinese ginger, middle notes of Tunisian orange blossom and jasmine sambac, and base notes of precious woods and honey.

The designer fragrance division of L’Oréal hopes to capitalize on the success of last year’s introduction of Armani Code. In its first year, the scent had sales in excess of $50 million and was the No. 2 best-selling men’s fragrance in department stores last year, according to NPD Group (see chart, 44).

Also this spring, Liz Claiborne will rollout Tracy by Ellen Tracy as well as a new fragrance under the Curve umbrella called Curve Chill for Him and Her.

Looking ahead, in a nod to all things celebrity, Guerlain signed two-time Oscar winner Hilary Swank to be the face for a new, as-yet-unnamed, fall fragrance.

With celebrity-inspired scents drawing new consumers to the category, the fragrance industry may be entering a new growth cycle. But a boost in sales won’t slow down introductions. In fact, as long as they rely on the fickle world of celebrity for inspiration, most industry observers expect fragrance lifecycles to continue to erode and that means perfumers and marketing teams will continue to work overtime to find the “next big thing.”
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