Stuck in the Middle

August 3, 2009

High- and low-end fragrance brands are holding their own during this recession. But mid-tier brands, like so many other consumer product categories, are suffering.

Stuck in the Middle

High- and low-end fragrance brands are holding their own during this recession. But mid-tier brands, like so many other consumer product categories, are suffering.

Tom Branna
Editorial Director

Mid-priced fragrances are stuck between a rock and a hard place. Like every recession before this one, brands caught between luxury and economy have been hurt the most by the economic downturn. The good news is that high priced scents and mass market fragrances are holding their own, according to industry experts.

Sales of premium fragrance products, those priced at $100 and above, represented approximately 9% of total fragrance juice sales in the first quarter of 2009, and generated $26 million, a 10% increase from a year ago, according to a recent study by The NPD Group, Inc., Port Washington, NY.

Aerin Lauder designed the bottle for new Private Collection Jasmine White Rose. It is similar to the original and to the Amber Ylang Ylang but has a different finish and unique stones.

“Growth in premium fragrance (and makeup), while smaller segments compared to premium skin care, are driven by the fact that these products are still perceived as more niche and unique to the prestige arena,” said Karen Grant, senior global industry analyst and vice president of beauty, NPD.

Julie Vergnion, product manager, fine mist and samplers, Rexam Personal Care Division, agreed with NPD.

“At the high end, fragrance represents a dream, an escape, a magic that enables the consumer’s purchase decision even in economic times such as these,” she noted.

The permission-to-dream was the driving force behind the development of Cascade, the newest scent from Coty Prestige, which debuted in Europe this summer. The Cascade flacon was inspired by the diamond earrings of Chopard’s latest Haute Joaillerie Red Carpet collection, designed by Caroline Scheufele and worn by Elsa Pataky at the Cannes Film Festival in May 2009.

“No matter what the economy looks like, with Chopard fragrances we want to make women dream,” explained Stefanie Fitzgerald, vice president for Chopard fragrances. “The look of the flacon is closely linked to the fragrance inspiration.

Declines Across the Board

While Coty Prestige executives are dreaming of better days ahead, for many mid-tier brands, fragrance sales have been a nightmare.

“The mid-market is the one that is hurt. The price point is higher than for the mass product, yet the brands don't represent the same ethereal, escape-like experience as in the prestige sector,” observed Ms. Vergnion.

For the first five months of 2009, sales of prestige fragrances sold in department stores declined 10% to $744 million, according to NPD. Women's prestige fragrancesales fell 10% to $522 million and men’s sales dropped 9% to$221 million. While fragrance declines in food, drug and mass markets have not been as steep as those in the mid-market, sales have slipped a bit. According to data from Information Resources, Inc., Chicago, sales of women’s fragrance in these channels fell 2.85% to nearly $329 million for the 52 weeks ended June 21, 2009. The masculine category declined even more—down 5.75% to approximately $200 million. Results do not include Wal-mart sales.

On the bright side, there have been some growth areas in the mass fragrance sector. According to John Deputato, senior vice president, client solutions, Information Resources, Inc., celebrity brands are performing very well with the women’s celebrity segment up 12.5% and the men’s celebrity segment up 5.6%.

The Cascade flacon design resembles the most upscale Chopard Joaillerie pieces.
“In the women’s category, brands like Halle by Halle Berry, Mariah Carey Luscious Pink, M by Mariah Carey and D&G Light Blue are helping to drive the category,” observed Mr. Deputato.

Neil Katz, president and chief executive officer of Parlux, has been a big believer in the pull of celebrity even when detractors were suggesting that star-driven scents were passé. The company is rolling out Fancy Love by Jessica Simpson, a flanker to last year’s Jessica Simpson launch, having launched celebrity scents including Siren Paris Hilton and Queen by Queen Latifah.

Parlux isn’t only about celebrity fragrances; designers have a place at the company’s launch pad. Parlux introduces Natori later this month and for men, Marc Ecko debuts next month.

Natori, developed by designer Josie Natori, is a sparkling floral oriental that’s housed in a deep purple flacon inspired by the lotus blossom and created by Dale Kan of Brandonology, which also designed the carton. Rexam made the pump and Qualipac supplied the cap, which is said to mimic the smooth shape and surface texture of a river rock. A 3.4oz EDP retails for $110.

Coty, too, has looked to fashion. Last month, the company announced a collaboration with the House of Balenciaga to create a fragrance in time for a February 2010 launch. Actress and singer Charlotte Gainsbourg is the face of their new fragrance.

Whether fragrance aficionados shop for products in Wal-mart or Saks Fifth Avenue, cost-conscious consumers are finding new ways to enjoy their favorite fragrances during tough economic times. Jenifer Brady of Brad-Pak, noted that consumers are trading down from full-size bottles to 1oz. variants that may retail for as little as $30-45.

“Seems like the consumer still wants to use fragrance, but does not want to shell out a tremendous amount of money for a full size product,” she said.

Consumers aren’t the only ones counting their pennies these days. According to Ms. Brady, fragrance marketers are purchasing more stock items and buying packaging components only as needed.

“People don’t want to lay out money and have their products sitting around waiting to sell,” she explained.

And when they decide to open their wallets or place that order, more consumers and marketers are looking for innovative packaging ideas.

“Clearly, innovative packaging has taken on even greater importance for a product's retail success, as consumers are more cautious with their disposable income,” said Ms. Vergnion.

The Art of the Spray

With everyone watching their spending habits, suppliers must ensure that their bottles, actuators and caps work as well as advertised. To that end, Rexam researchers study pump performance in order to enhance the spray characteristics and flexibility of actuation.

Bond No. 9 Oud celebrates the company’s NoHo address.
“A perfect example is our MaxiMist spray, for improved granulometry,” noted Ms. Vergnion. “We have an R&D team dedicated to the study of canal geometry, the calculation of flows and turbulence—in order to develop the optimal fine mist pumps that can handle the world’s most complex formulas.”

She noted that superior spray quality enhances the end-user experience and increases trial and repurchase. Innovation, in short, ameliorates the effects of a market decline. One example of successful innovation from Rexam is the XD-11 fine mist pump, which is another in the company’s line of “invisible” diptubes.

“Dedication to innovation will keep us, and our customers, positioned to accelerate hard as economic conditions improve,” she said.

Why Wait for a Bailout?

With most economic experts in agreement that the worst of the recession is over and that economic recovery may already be underway, bold marketers are going ahead with plans for new fragrances in time for the all-important holiday selling season.

One of the boldest brands these days is Bond No. 9, which is promoting its “Bailout Package” for Holiday 2009. The Swarovski Purple Velvet Peacekeeping Treatment is a blackcurrent, lily-of-the-valley, cedarwood musk perfume wrapped inside an exorbitant limited edition Swarovski treatment. Every square millimeter on the surface of each container is emblazoned with glittering Swarovski stones giving off a deep, rich, non-stop seductive shimmer.

All this luxury isn’t for the faint-of-heart or light-of-wallet. A cylindrical 7ml refillable pocket spray—displaying a “mere” 700 stones—retails for $225. Want more bling? A circular token compact with 750 stones on its surface and filled with the scent of your choice--costs $300. For those who prefer the weight of 2,500 stones, the 50ml superstar bottle costs$500. And finally, for the budget-unconscious, there’s the 42-ounce amphora vitrine, emblazoned with 17,500 stones, outfitted with a golden spigot, and topped off with an elliptical mirror resting on a honeycomb base. Get it filled with any Bond No. 9 fragrance for a mere $3,500.

“Laurice (Rahme) is trying to offer something for everyone,” explained Trish White, a Bond No. 9 consultant. “She’s covering all the bases in this recession with gifts at every price point.”

Ms. Rahme, founder of Bond No. 9, is doing just that with inexpensive offerings, such as refillable pocket sprays and solid perfume tokens, each retailing for$85. The Now-and-Forever pocket spray is available in a variety of Bond No. 9 scents such as Astor Place, Brooklyn and Nuits de Noho. The refillable gold token is available in some of Bond No. 9’s most popular scents including Andy Warhol Union Square, Chinatown and Chelsea Flowers.

Also this holiday season Bond No. 9 is rolling out an eponymous scent, Bond No. 9 Perfume Oud. The company calls it a study in contrasts—a mingling of East and West, Dubai and New York, ancient and modern—that captures the emerging international mood of 21st century New York. Moreover, it contains 30% perfume, not the customary 20%, built on ingredients such as rose, tonka bean and musk. A 3.4oz. bottle will cost $330.

For marketers such as Bond No. 9, which have a broad selection of fragrance options at every price point, TricorBraun offers an array of packaging components, explained Suzanne Fenton, director of marketing.

“What we’ve seen is that while business is lighter in the higher price point products, the lower and middle-price points have grown,” she explained.

At the same time, Ms. Fenton told Happi that TricorBraun is getting more inquiries from customers regarding how they can make their packaging more sustainable by lightweighting, using post-consumer recycled materials and bio-based materials.

While boutique brands such as Bond No. 9 run the gamut this Fall, Estée Lauder is playing it a bit more safe, with extensions of popular scents.

Lauder, for example, is rolling out Private Collection Jasmine White Moss—the third installment in the Private Collection. According to the company, founder Estée Lauder developed this scent years ago, but it remained locked away at fragrance house International Flavors and Fragrances. Her granddaughter, Aerin Lauder, senior vice president and creative director at Estée Lauder tweaked the scent, described as a lush green floral chypre, for 18 months before she was happy with the results. The end formula contains 15 100% pure natural fragrance absolutes. The bottle, a play off existing Private Collection bottles, is a collaboration between Ms. Lauder and Doug Lloyd of Lloyd and Co.

“Estée always incorporated elements of blue and white into her surroundings —her rooms, her bathrooms, her dining rooms, everywhere,” said Aerin Lauder in a statement. “This third fragrance is a tribute to her love of blue and white.”

The Private Collection Jasmine White Moss parfum cap is embellished with natural semi-precious gems including white jade, dark and light lapis, sodalite, black agate, mother of pearl and blue lace agate stones. The stones selected for each cap are different, making each piece unique. Prices range from $325 for 1oz. parfum spray to $75 for a 6.7oz. body crème. Suppliers include Pochet (glass bottle), Rexam (pump), Qualipac(cap), Topflight (base label) and Knoll Packaging (box).

The Combinations Are Endless!

Perhaps the boldest move in fragrance this Fall is from Nouveau Paris, which is launching 14 fragrances for men (Dumann) and women (Les Fleurs). The mid-priced scents, $85 for women and $75 for men, are being marketed with an interesting twist—all ofthem can be creatively layered due to the exceptionally high-quality of their ingredients, allowing the wearer to adjust his or her scent according to their changing mood and lifestyle. That enables the consumer to create an endless array of fragrances by blending just a few scents.

But is the consumer willing to turn perfumer to save some money? With Fall just around the corner, and the all-important Holiday selling-season to follow, forward-thinking fragrance houses and their suppliers are wracking their brains trying to figure out a way to lure consumers back to the fragrance counter.