Scent Sales Slip Again

March 28, 2008

After another year of soft sales and an economic slowdown ahead in the U.S., can the next round of scents turn the tide for the fine fragrance business?

Scent Sales Slip ...Again

After another year of soft sales and an economic slowdown ahead in the U.S., can the next round of scents turn the tide for the fine fragrance business?

Christine Esposito
Contributing Editor

It was another year of steady launches and a few high notes, but by the numbers, 2007 was just so-so, according to analysts tracking the fine fragrance market.

According to Port Washington, NY-based NPD Group, prestige fragrance sales fell one percent in 2007 to $2.94 billion.  On the mass side, 1.3% growth in the men’s sector couldn’t offset the second straight year of decline in women’s fragrances. According to IRI, fragrance sales in food, drug and mass merchandisers (excluding Wal-Mart) fell 2.2% in 2007 to $550 million. Men’s sales were $210 million with women’s fragrances tallying $340 million during the year, down four percent from 2006.  (When Wal-Mart is added in, women’s sales slid further, dropping 7.1%, according to IRI.)
Will the class of 2008 fare better? Marketers hope so, and have been busy rolling out their spring and summer launches, hoping new florals, seasonal scents and limited-edition flankers will inspire consumers to spend more.
The newest scent from Hugo Boss.
But to complicate matters, there’s talk of recession, or at the very least, further economic slowdown in the U.S., fueled by the fallout from the sub-prime mortgage mess and $100-plus barrels of oil. With tighter budgets, will consumers shun fragrance in favor of everyday staples like milk, mortgages and gasoline?
The good news is, Americans love to shop and their conspicuous consumption and penchant for swiping plastic may continue even as their paychecks shrink. According to a recent NPD Fast Checks poll, 79% of respondents said they thought the U.S. was in or headed toward bad economic times/recession, but 55% said the situation has had no impact on where they shop. Further, more than half of the respondents said they were least likely to change spending habits on affordable purchases such as cosmetics and fragrances.
Union Square is the newest launch from Bond No. 9.
Although the cosmetics industry has always been considered recession-proof, fine fragrances aren’t entirely safe. Even if consumers spend money on beauty care as the economy slows, they have less time to spend in the fragrance aisle. Additionally, there are more ways to experience fragrance today. 
“Women are living busy lives. Often she can get scent in others ways—body wash, laundry detergent, home fragrances. Scent comes through in different forms,” said Leigh Anne Rowinski, a beauty expert with IRI.       

Classics Come Back

According to the Fragrance Foundation, more than 400 new men’s, women’s and unisex fragrances were launched in 2007. With an average of 1.13 new scents bowing each day, even die-hard fragrance fans had a hard time keeping up.
“The number of launches seems insane to me—and 2008 looks to be as bad as 2007,” a well-known perfume blogger told Happi.  (As of March 7, the Fragrance Foundation listed 25 new launches, but fine fragrance blogs were reporting many more.)
Did the tidal wave of new scents send people back to their old standbys? According to Karen Grant, senior beauty analyst with NPD, sales of existing women’s brands (those that have been on the market since 2006) rose two percent or nearly $31 million last year.  Which fragrances fared best? Acqua Di Gio, Beautiful, Coco Mademoiselle, Chanel No. 5 and Cashmere Mist were the top five prestige scents sold in 2007, according to NPD.
Cynthia Rowley and Avon have teamed up to launch two scents this spring: Flower (top) and Petal.
While celebrity perfumes have helped to introduce younger consumers to fragrance, marketers are also rolling out new versions of their classic perfumes, offering neophytes (and long-time customers) a new way to experience these scents.
For example, Guerlain is introducing Eau de Shalimar, a light yet sensual interpretation of the legendary oriental that bowed in 1925. Eau de Shalimar’s top notes include lime, bergamot and orange with mid notes of vanilla, rose and jasmine. The powdery base features iris. Debuting at Macy’s East this month, a 50ml EDT spray is $65.
A Chloé signature scent is making a comeback with Coty. (The original, which debuted in 1975, has been discontinued.) Robertet perfumers Michel Almairac and Amandine Marie combined floral powdery notes of peony, lychee and freesia that give way to a “more sensual side of the rose, derived from the velvety interior
of the flower,” as well as magnolia, lily of the valley, warm amber and cedarwood. Inspired by the sleeve of a Chloé blouse, the detailed square flacon is accented with an oval cap, a silver collar, metal plaque and hand-tied ribbon.  The line—which includes 1.7- and 2.5oz. eau de parfums selling for $85 and $110, respectively—is available at Saks Fifth Avenue and Chloe boutiques.
On the men’s side, P&G and Chanel are adding new scents to their proven Hugo Boss and Allure Homme stables.
Boss Pure is the newest addition to the Hugo Boss line, part of P&G’s Prestige Fragrances unit. Boss Pure’s aquatic nature comes through with top notes of fig water and fizzy Mediterranean citrus. The heart features notes of lily and hyacinth and the base includes massoia (a tree species from New Guinea.). EDT sprays are $49.50 (1.7oz.) and $65 (2.5oz.) with a 2.5oz. aftershave spray selling for $47.
With some going to the dark side for their flankers—ala Christian Lacroix Noir, Derek Jeter Driven Black and David Beckham Instinct After Dark—Chanel is bucking the trend with Allure Homme Edition Blanche. This new “white” version of Allure Homme blends notes of lemon, ginger, Haitian vetiver, Madagascan vanilla and sandalwood. Sold as an eau de toilette concentrée, a 1.7oz. bottle is $55 and the 3.4oz. package is $75.

Hardly Garden Variety

There is no denying the timeless appeal of floral fragrances, and this spring, the market is blooming with scents inspired and created by famous designers.

Bond No. 9’s latest Andy Warhol fragrance is Union Square, a seductive green floral billed as an “ambi-sexual, daringly balanced mix of sweet and cool,” according to the New York City fragrance marketer. Crafted by Givaudan, notes include lily of the valley, sweet blue freesia, white birchwood, amber and silvercloud musk. Bond No. 9’s instantly recognizable star-shaped flacon is decorated with fuchsia, red and yellow flowers with blue blades of grass, giving the feel of psychedelic paper cutouts. Available in 100ml and 50ml flacons for $195 and $135, respectively, Andy Warhol Union Square is available at Bond No. 9’s New York boutiques and Saks Fifth Avenue.   

Designer Cynthia Rowley is returning to the fragrance market this spring via her alliance with Avon. (Her signature scent debuted in 2005 with Riveria Concepts, prior to its acquisition by Elizabeth Arden.) Next month the designer will unveil Flower and Petal, a pair of scents created by Firmenich. Flower features notes of Casablanca lily, freesia, cashmere woods, warm vanilla, skin musk, velvet woods and sandalwood. For Petal, Ms. Rowley opted for a lighter essence of Flower, creating a light floral green that is geared for young girls or women who are young at heart, according to Avon.
“The scent of my mom’s fragrance, which she would wear on special occasions and spritz on me before going out, is one of my favorite memories from childhood. I wanted to make something that I could share with my daughters—only with their own fragrance,” the designer said in a statement. Flower comes in 50ml bottle ($30) reminiscent of a keepsake jewelry box, with Petal in a smaller pink version for $15.
Another summer fling for CK One.
With Flower Princess and Bouquet set to launch this spring, Vera Wang continues to expand her scent collection with Coty. Flower Princess, created by Harry Fremont of Firmenich, is a sparkling floral with top notes of green ivy, tangerine and dewy water lily, with a heart of orange flower petals, Moroccan roses, jasmine sambac and riviera mimosa. Base notes include apricot skin, amber, woods and musk. 
For Bouquet, IFF perfumer Loc Dong joined top notes of dewdrops, Sicilian bergamot and black currant leaves. The heart features paperwhite narcissus and honeysuckle with base notes of lavender, Moroccan cedar and white iris root. Flower Princess is $52 and $68 for 1.7- and 3.4oz. EDT sprays, respectively, while Bouquet eau de parfums are $67 and $87 for 1.7- and 3.4oz. bottles.

That Summer Feeling

Fragrance marketers, always on the hunt for new revenue streams, continue to offer limited edition seasonal fragrances that they say capture summer in a bottle and have the ability to spur spending.
Bouquet is new from Vera Wang.
“Summer fragrances help respond to the growing consumer demand for ‘newness’ within the fragrance category,” said Dennis Keogh, senior vice president of U.S. marketing with Coty Prestige. “This market segment has become a very important volume generator for the category. Our retail partners do a good job of advertising, promoting and merchandising summer fragrances as an important product classification.”
Coty is filling the category with a number of summer fragrances, highlighted by limited edition CK One and Eternity scents available this month at Macy’s and macys.com.
The clear blue juice inside its iconic flask bottle helps tell the story of CK One Summer, the new addition to this category defining fragrance line. Harry Fremont of Firmenich blended notes of waterfall accord, watermelon and fluid hedione with watermint, cucumber, cardamom mid notes and a dry down of moss, blonde woods and musk. A 3.4oz. EDT is $42.
Guerlain's new Figue-Iris.
Eternity Summer, a floral green scent created by Pascal Gaurin and Yves Cassar of IFF, has fresh top notes of wet bamboo leaf, crushed basil and sparkling golden mandarin. The heart features lily of the valley, hydroponic midnight-blooming jasmine and neroli. The dry down groups airy musks, orris and ginger root. Eternity for Men Summer—another IFF juice created by Jean Marc Chaillan and Carlos Benaim—includes blue rush accord, kumquat, chilled citrus and mimosa, followed by herbaceous complex, living juniper berry and vintage lavender. The dry down includes guaiac wood, spicy cardamom, sheer patchouli and melted amber resin. Each is $52 for a 3.4oz EDT.
Coty’s Marc Jacobs brand is rolling out Splash Summer 2008, a trio of limited edition scents. For Basil and Grapefruit, Coty turned to Andrea Lupo of Takasago, while Honorine Blanc of Firmenich created Pear. Worn alone or layered, the EDT sprays are $65 at department stores and Marc Jacob boutiques.
Another seasonal launch designed to whet consumers’ appetites are Very Irresistible Givenchy Summer Cocktails. In the women’s version, notes include crushed mint leaves, star anise, blackcurrant, aquatic notes, sandalwood and rose. Very Irrésistible Givenchy Fresh Attitude For Men Summer Cocktail features star anise, mint leaf, peppermint, grapefruit, green cardamom, lavender, grand vert basil and transparent green aquatics on a woody base. Both retail for $52 at Sephora. 
The Eternity franchise expands again in time for summer.
Two new limited edition Aqua Allegoria scents will be added to Guerlain’s Eaux Fraîches stable. The first, Figue-Iris, plays on the theme of green fruitiness contrasted by a powdery note that runs through the entire composition. Accords include grapefruit, bergamot, violet, fig, iris, vetiver and vanilla. Composed by Marie Salamagne of Firmenich and Sylvaine Delacourte, artistic director of Guerlain fragrances, Aqua Alegoria Laurier-Réglisse features bergamot, orange blossom, liquorice wood, laurel, violet and galbanum. Available at Sephora, both scents are $52 for a 75ml bottle.
Following up Delicious Night for Women, this month DKNY adds limited edition summer scents to the Delicious collection. Be Delicious Charmingly Delicious and Red Delicious Charmingly Delicious come in apple juice-inspired bottles with removable charms.  Both 4.2oz. EDTs retail for $55.

New Faces in the Crowd

As new scents make their way to market this spring and summer, new alliances are setting the scene for fall and beyond. And while there’s been talk of continued fatigue in celebrity scents, new deals suggest marketers remain starstruck. The music industry remains a muse for fragrance marketers. More recording artists will replace their microphones with dipsticks in the coming months as they team up with major beauty firms.
Coty is going country, having signed a new deal with Tim McGraw. The company hopes the success of Mr. McGraw’s music—he has 30 No. 1 hits and has sold more than 36 million albums—will translate into a successful signature scent. The fragrance will be distributed in major retailers across North America this summer, according to the company.
Parfums Givenchy will collaborate with Grammy Award-winning pop artist Justin Timberlake for the launch of its new men’s fragrance. The company is remaining mum on the Timberlake project, which will launch this fall. A worldwide rollout is planned for 2009. 
Also looking to hit the right note is the Puig Beauty & Fashion Group, which has formed an alliance with Colombian singer/songwriter Shakira. According to the Barcelona-based beauty products firm, the nine-time Grammy winner will develop—with a dedicated team—fragrance as well as beauty and personal care items.
Even with a big name attached to a project, celebrity doesn’t guarantee blockbuster success every time. Last year’s top selling new launch in the mass market was Shania Twain’s flanker Starlight. But according to IRI, the scent’s sales of $4.8 million were half of what her debut scent garnered. And all eyes will be on David Beckhman’s flankers to see if they can keep the momentum of David Beckham Instinct, which was the top men’s mass launch of 2007, pulling in sales $6.7 million. It seems that when a star is actively pursuing his or her primary career and developing fragrances, the scent may sell better.
“What we have come to understand is that it is important that the celebrities are involved in their brand visibility, as well as letting the public get to know them through their career events, including being on tour, or launching a new CD, their sport being in season, and making the rounds on the talk shows to promote their work,” explained Ms. Rowinski of IRI.
In addition to musical collaborations, there has been a resurgence of designer alliances in the fragrance business. Most recently, Elizabeth Arden announced a long-term global licensing agreement with Aeffe S.p.A. to market and distribute beauty products with designer Alberta Ferretti. In the deal, Arden will produce and market the fragrance collections with creative direction for the scents to come from Ms. Ferretti. The first scent is expected by spring 2009.
With her preppy print dresses remaining popular for decades, it is hard to believe Lilly Pulitzer doesn’t already have a signature scent. That will change this fall as the designer’s company recently inked an accord with PulsePoints LLC (a joint venture between Mane and Gary Farn, Ltd.). The collection—which will include a series of scents as well as bath and body and home fragrance products—will debut in November at Lilly Pulitzer stores and Lilly Pulitzer Via shops. Plans include expanded distribution to specialty and department stores by spring 2009.    
“We are building the ultimate lifestyle brand with multiple categories and know fragrance is a huge part of our consumer’s life,” said James Bradbeer, Jr., president of Lilly Pulitzer. “Over time we have noted our Lilly Lover’s desire to incorporate the Lilly brand into all aspects of her lifestyle, and we believe fragrance is the perfect extension.”

Connecting with Consumers

From classic to seasonal to celebrity, every fragrance on the shelf in 2008 will find itself vying for attention in a crowded and competitive market during decidedly tough economic times. The secret to success will be connecting with consumers, or more accurately, as many consumers as possible.
“The key to success is remaining highly relevant to consumers’ ever-changing aspirations,” said Mr. Keogh of Coty, which will further expand its lifestyle brands portfolio with a new Playboy fragrance this fall. “Whether it is a designer, a celebrity, or an athlete, fragrance must resonate with the contemporary consumer mindset.”
Further, the mass retail environment must become more experiential, taking a page from what Starbucks has done for the coffee industry, according to Ms. Rowinski.
“There is a need to change the way fragrance is marketed and the retail environment,” she said. “With products usually locked behind glass doors, there must be more information that can help consumers appreciate the fragrance, appreciate the notes and why it was created. It needs to go beyond the celebrity. Companies recognize there is a need to get more users involved in the brands and fragrance aisle—and the retailers recognize it too.”