Oldie, but goodie. I completely agree with the "too much" sentiment - I think we definitely have reached a tipping point here.
from WSJ
Why the Perfume Business
Is Beginning to Stink
And Stagnating Sales Lead
Some Brands to Go Upscale
December 24, 2007;PageB1
PARIS -- After years of gorging on celebrity scents
and fashion-house fragrances, consumers are turning up their noses at
designer perfumes.
"The offer is so enormous, you get lost going into a
perfume shop," says Daniela Andrier, a perfume-maker at Swiss fragrance
company Givaudan SA. "It's like eating off a plate with too much food and you lose your appetite."
Over the past few years, exclusive fashion brands such
as Prada, Gucci and Hermès have been churning out new fragrances as a
way to ensnare consumers who can't afford their $5,000 bags, but will
splurge on a $100 bottle of "eau de toilette." Celebrities such as
Jennifer Lopez and Celine Dion have also unveiled eponymous fragrance
lines.
Hermès unveiled an exclusive perfume line, Hermessence. |
More than 200 new so-called prestige perfumes -- those
sold in department stores and cosmetics shops, rather than lower-end
drugstores or supermarkets -- were unveiled in the U.S. alone in 2006,
according to the last available figures from market research firm NPD
Group.
Yet despite the entries, sales of these high-end
perfumes, which make up 60% of the overall fragrance market, have been
slowing. Total revenue rose 3% to $18 billion globally in 2006,
according to research firm Euromonitor, and is expected to grow even
less in 2007. By comparison, the overall luxury goods sector has grown
by about 12% this year.
Some perfume launches have proven to be big flops.
Last year, YSL Beauté, the beauty division of fashion and retail
conglomerate PPR
SA that makes perfume for fashion house Yves Saint Laurent, pulled a
scent, Nu, from the market five years after it was introduced. It also
stopped selling a recent men's fragrance, M7, in the U.S. after sales
stalled. A spokesman says other new YSL perfumes, such as Cinéma, have
performed better.
The reason is olfactory overkill. To lure consumers,
perfume brands have mounted huge advertising and distribution
campaigns, selling perfumes in their own boutiques as well as in
department stores and airport duty-free shops world-wide. They have
also kept prices low; while high-end leather bags and sunglasses have
steadily risen in price, most designer perfumes still cost less than
$100.
"All the new perfumes resemble each other too much,"
says Bouchra Sentissi, 47 years old, who was recently browsing
Sephora's aisles in Paris in a heavy fur coat. "They just change their
packaging, but everything smells the same inside."
Ms. Sentissi, who has been loyal to Chanel No. 5 for many years, was looking for holiday gifts.
"Too fruity," she winced, pointing to shelves stocked with new launches from Dior, Cacharel and Gucci.
Companies like Chanel and Prada are creating ultra-exclusive scents to fight the glut in the perfume market, but high ingredient costs have held down profits. |
Besides turning off consumers, the plethora of
perfumes has also hit bottom lines. With so much competition, many
companies spend as much as $50 million to promote a major new scent.
That's equivalent to an entire year of sales for most perfume brands,
making it increasingly difficult to recover the costs.
"Perfume with longevity and huge profits has
dissipated," says Wendy Liebmann, president of New York-based
consultancy WSL Strategic Retail.
Some fashion brands have been trying a new strategy to make perfume an upscale purchase again.
Hermès International SA recently unveiled a new line
of exclusive perfumes called Hermessence. The French fashion house's
scents, such as a new lavender-and-licorice-smelling Brin de Réglisse,
cost $190, or nearly twice the fashion house's major perfume lines such
as Kelly Calèche.
The collection, which is only available in limited
Hermès boutiques, is packaged in luxurious bottles and in travel-size
vials that cost $135 apiece. There's even a $590 version of the perfume
that is sold in a personalized leather cuff.
In April of this year, fashion designer Tom Ford
unveiled Private Blend, a line of 12 scents -- evoking aromas such as
tobacco, gardenia and cedar -- sold at trendy department stores such as
Harvey Nichols in London and La Rinascente in Milan.
Italian fashion house Prada SpA was the first to tap
into consumers' discontent in 2003. Designer Miuccia Prada dropped in
on Ms. Andrier's lab at Givaudan outside Paris to discuss the idea of
an exclusive floral scent.
Ms. Andrier got to work on a perfume comprised mainly
of natural oils, rather than the synthetic ingredients that make up
most fragrances on the market. Ms. Andrier's Iris, Carnation, Ambery
Leather and Orange Blossom scents were introduced in Prada's boutiques,
at $150 each. Like Mr. Ford's new perfumes and Hermessence, Prada's
Exclusive Scents line is unisex.
So far, the new ultra-exclusive perfumes aren't reaping bouquets of profits, partly because they're so expensive to make.
For example, Chanel SA's new Les Exclusifs line uses
greater proportions of pricey ingredients such as iris extract, which
takes seven years to develop.
But, at $175 for a 200-milliliter bottle, Les Exclusif
perfumes sell for the same price per ounce as Chanel No. 5, whose
recipe isn't as costly to make though it's one of the most expensive
fragrances on the market.
Giorgio Armani SpA's most expensive scent, Privé,
which costs $185 a bottle, uses raw ingredients -- such as bergamot,
neroli and vetiver -- that are up to 10 times more expensive than those
used for other Armani perfumes. The bottle, which is made out of
African kotibe wood and caps made to look like jade and moonstone, is
costly to manufacture as well.
Yet the scent remains unprofitable three years after
its launch. French cosmetics company L'Oréal SA, which makes the
perfume, says it's sticking to the scent because it hopes the cachet
around it will stoke interest in Armani's more mass-market fragrances.
Working on Privé was like "a laboratory of ideas,"
says L'Oréal international brand manager Patricia Turck Paquelier. "How
can we invent the next Chanel No. 5 that will last 100 years?"