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This feature originally appeared in the May 2007 edition of our sister publication GCI Magazine (www.gcimagazine.com)
According to Euromonitor International’s (www.euromonitor.com) latest data, fine fragrances put in a surprise appearance as a top performer in the cosmetics and toiletries market. The sector stood out as showing particular growth in 2006, coming in third after sun and baby care with an increase of 7% to reach $30.7 billion. In 2005, fragrances were the sixth most dynamic sector, beaten out by emerging categories such as men’s grooming products and skin care, where value-adding has been aggressive. This article focuses on the drivers of this change in fortune by examining key regions and markets and monitoring trends over the last year.
Mature Markets Reverse Meltdown
Together, Western Europe and North America account for almost 60% of global fragrance sales in value terms. In spite of the category’s formidable size, average annual growth since 2000 had, until 2006, been somewhat disappointing; both regions consistently registered rates below the global average. Euromonitor International’s 2006 results, however, indicate that, in both markets, fragrance is coming out of the doldrums with each clocking growth over 2%. In both markets, the premium sector is driving growth. However, this is somewhat deceptive in that it is in the main the lower end of premium or discounting that is fueling sales. In the United States, for example, manufacturers are exploiting the migration of consumers towards the mass retail environment with innovative strategies geared to this arena. Elizabeth Arden introduced its Curious Britney Spears premium fragrance into the mass market channels with specially designed smaller packages at price points under $20 to attract younger consumers—to great success. Similar tactics were employed in the United Kingdom, illustrating that creativity and perseverance can go some way to reviving an ailing category.
Direct Sellers Drive Emerging Markets