The Estee Lauder Companies produced a set of results that it has branded ‘outstanding’ this week – but among the double-digit growth in skin care and Asia Pacific, there was one line on the balance sheet that wasn’t quite as rosy. Sales of fragrances decreased 5 percent on a reported basis in the second quarter of fiscal 2019, compared to the same period last year.
According to the US prestige beauty giant, the drop was due in part to lower net sales of certain designer fragrances – although luxury and artisanal fragrances delivered solid performances – the latter strong enough to be noted by CEO Fabrizio Freda as one of the quarter’s highlights.
It’s a trend reflected in the wider fragrance market too – Euromonitor pegs CAGR at 3 percent between 2017 and 2022, which is some way short of similar estimates for the skin care and make-up sectors. So is the fragrance category in flux? Are the days of the mid-range designer scent dead?
And if so, why? There could be a number of reasons – first and foremost – and I’m going to be bold here, there’s been a distinct lack of innovation in the category. And by lack of innovation, I don’t mean a lack of launch activity. As a nascent beauty journo many moons ago, I remember being mystified at the number of launches I would attend without ever really seeing anything new. At TFWA in Cannes I’d sit through presentations of endless flankers. I was bored then, I’m bored now. And it looks like I’m not the only one.
Yes, in our fast-paced beauty industry, the big-name fragrance formula has remained surprisingly static. Whereas the make-up category and the skin care segment have reacted to the millennial / gen Z consumer mindset, perfume appears to be stuck in a bit of a rut. After all, this new generation of shoppers wants creative input, personalization, individuality – and the high street is delivering with mix and match scents for layering, for example, while the designer and celebrity camps remain dictatorial. It’s no coincidence that L’Oréal has invested in personalized fragrance brand Sillages Paris. I would wager that we can expect further M&A activity in this space as artisan and personalized scents gain ground.
Second, the retailers that designer scents rely on are struggling too – department stores’ woes are well documented but at least they maintain an air of glamour (or at least the best ones do). Try buying a perfume in a drugstore. You have to traipse the aisles of vitamins, sanitary pads and piles treatments to find a sales assistant who will unlock the glass cabinet they are secured behind. Compare and contrast with Miller Harris’ multi-sensory, individually designed stores that appeal to the experiential shopper – one doubles as an art gallery, another hosts poetry readings. Perfumes even have their own sound recording designed to bring the scent to life – the wind rustling the leaves of a pear tree, for example.
Third, there are now reams of articles from top media outlets all devoted to dupes – all celebrating cheaper copycats. The US$20 body spray that ‘smells just like Chanel’, the US$5 body mist that’s ‘better than a designer scent’. All these headlines add up to a loss of perceived value – if it’s possible to recreate the scent for US$5, what are we paying for exactly?
Of course, any blockbuster perfume brand worth its salt would contest that – we’ve all seen the features on Grasse’s rose and jasmine fields. The problem is it’s clearly not worth the extra US$60 to those snapping up Aldi’s best. So, if it’s not on their top-notch notes or their name, how can big-name brands hook us?
One area where the fragrance category is catching on is format innovation – Mugler’s perfuming pencils and YSL’s Black Opium Click were both hits last year and there’s no doubt more to come on the different delivery front if the popularity of Glossier’s You solid perfume and the Jo Loves Paintbrush is anything to go by. Will 2019 be the year that fragrance gets reinvented? I sincerely hope so.