FMA Recap: Fragrance in Tough Times

Michael Carlos, Givaudan.
Michael Carlos, Givaudan.

The relationship of perfume to economic cycles was the focus of Michael Carlos' presentation at the Fragrance Materials Association's (FMA) spring dinner. Carlos, Givaudan's worldwide president of fragrances, examined this "olfactory pendulum," beginning in the years leading up to the Great Depression. That age was marked by the launch of scents such as Shalimar and Chanel No 5, which evoked exuberance and extravagance. The Depression years, meanwhile, were marked by the counter-intuitively prestige-positioned Joy, which was a success despite its price point. Much later, Carlos explained, Anais Anais was launched during the economic woes of the 1970s, while the 1980s was characterized by the sensuality of blockbusters such as Opium and Obsession.

Today's economic woes are profound, and likely to reshape the fragrance industry. Consumers are trading down in fabric and home care options, while "destocking" their fine fragrance collections before heading back to retailers for another purchase. While Carlos noted this cycle will subside and sales will pick up, demand may be lowered for some time. In such an environment, the proliferation of flankers is no longer possible. In addition, said Carlos, mass and high-end luxury will do well, with the middle ground between the two likely being lost over time. How companies deal with this phenomenon in the future will be crucial. 

“The desire to know more increases exponentially,” Carlos said of growing fragrance regulatory scrutiny. Here he urged industry cooperation and sound science in the service of intellectual property protection and consumer and NGO education. In addition, he said, the fragrance industry must continue to communicate its value, citing the statistic that while fragrance accounts for 6% or less of any given consumer product's cost, it actually drives 50% of the value in consumers' eyes.

Finally, Carlos discussed the opportunity and challenge of developing markets. Maturing developed markets, he said, will continue to shrink in significance compared to developing regions, he said. China and India alone will experience impressive expansion. And Brazil, currently the second largest market for fine fragrances, will soon be number one. However, Carlos pointed out that that market is dominated by mass-market offerings. In addition, countries such as China are not likely to embrace fragrance in any significant way. Were that to change, Carlos said, the potential would be significant.

On a parting note, Carlos stressed that fragrance has always been crucial and that the benefit of scent must be imparted to consumers and journalists.

Schrankel Honored
During the event, FMA honored Kenneth Schrankel (formerly of IFF) for his contributions to the fragrance industry. In his acceptance, Schrankel discussed the value of cooperation among member companies in the interest of the industry. He thanked friends and colleagues for their work in key endeavors such as the advancement of qualitative risk assessment.

“My work in the industry as a volunteer for FMA has been a wonderful experience," he said. "I’ve always looked out for the industry, but I also looked out for IFF. I fully understood that if we didn’t stand together we’d fall ... Safety and regulatory concerns continue to expand due to continued pressures from consumers, NGOs and governments, [requiring] ever increasing vigilance."

Schrankel highlighted the need for the fragrance industry to have a seat at the table whenever its fate is being considered. "If you’re not part of the discussion," he noted, "it’s extremely unlikely you’ll be part of the solution." He added that emergency fixes are insufficient and can cause unintended consequences for the increasingly complex future. Schrankel urged a commitment by colleagues to developing the next generation of regulatory experts in a spirit of sound science and cooperation.

Finally, he thanked his wife and family for their patience throughout his career. 

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