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Fragrances: The Year Ahead

Fragrance marketers and suppliers hope for stability this year after a 10 percent drop in U.S. department stores in 2009.

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Balenciaga Paris

Photo By George Chinsee

Bernd Beetz

Photo By Courtesy Photo

Halle Berry Pure Orchid

Photo By George Chinsee

Appeared In
Special Issue
WWD Special Report issue 01/29/2010

Stabilization.

It’s a word fragrance marketers and suppliers use to describe what they hope will prevail this year after a thumping drop of 10 percent in U.S. department stores for 2009.

There was no argument that 2009 was a tough year for fragrances, but as Felix Mayr-Harting, executive vice president for fine fragrances worldwide at Givaudan, put it, “I think there’s a renewed sense of optimism as we go through a new year.”

The holidays offered a glimmer of hope, according to Bernd Beetz, chief executive officer of Coty Inc. “The Christmas business was a good point of stabilization for the market,” he said. “It was not what we would all ideally dream of, but it was certainly an improvement. I think it will signal a change for 2010, and point things in a positive direction. So, from that, I take a lot of encouragement.”

Said Nicolas Mirzayantz, group president of fragrances at International Flavors & Fragrances, “Now is a good time to reevaluate our brands [and ask] what is the new model that will be relevant?” He added that 2009 “was a very difficult year both in the U.S. and Europe. We saw a major correction in the market; destocking was happening at every part of the business — from retailers to consumers to brands.

“Hopefully, we will see some stabilization in 2010,” he said.

Veronique Gabai-Pinsky, global brand president for Aramis and Designer Fragrances, BeautyBank and IdeaBank at the Estée Lauder Cos. Inc., echoed that sentiment.

“We should see replenishment of our brands,” she said. “[Destocking] is not something that’s going to be sustainable going forward.” Gabai-Pinsky said she believes the market for fragrances will be roughly flat in 2010. “Moving forward, I don’t see tremendous growth. [The market] may be better in Europe than in the U.S., but the status quo in the size of the business [will remain].”

Joël Palix, worldwide president of Clarins Fragrance Group, a unit of Groupe Clarins, said after a 9 or 10 percent decline in the U.S. fragrance market in 2009, he hopes for a better 2010. But, he conceded, “We might see a smaller decline in 2010.”

In Europe, which saw gains in some countries last year (20 percent in the U.K.) and declines in others (5 percent in Spain and Italy), Palix noted, “I think 2010 will be flat. It will be a slow recovery for the [overall] perfume industry.”

One trend that executives are seeing within the marketplace is segmentation of upscale, nice scents versus a value proposition. Some consumers, they said, are willing to pay for what is perceived as a luxury product while others are looking for value.

“We saw last year that the luxury, niche market was growing,” said Mirzayantz, who added, “You see segmentation between niche, prestige; midmarket, and a more value offering.”

Gabai-Pinsky also noted that, “The high-end piece of the business continues to grow. We see that as an opportunity going forward.”

When it comes to celebrity and designer fragrances, it is Mayr-Harting’s feeling that these categories will continue to be important in the U.S. “Celebrity fragrances remain very relevant and I think that will remain the case.” He also noted that, “We’ve seen a number of great designer launches.”

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