Global Fragrance Industry
The world fragrance and perfume industry is expected to exceed $36 billion in 2017, according to research from Global Industry Analysts. Market growth is fuelled by demand from emerging markets and consumer lifestyle trends granting an increasingly central place to grooming. Market growth is, however, inconsistent across various geographic zones because growth in any one geographic zone depends on the living standards, disposable income and GDP of the country. Consumer demand for cosmetics and toiletry products is largely dependent on demographics and lifestyle trends, in particular the importance of luxury and status.
Regional Market Share
In 2010, the fragrance and perfume sector within the G8 nations (US, Canada, Germany, France, UK, Italy, Russia and Japan) generated revenue of almost $16.3 billion, having maintained a yearly growth rate of almost 1% over the four preceding years, reports MarketLine. The market has a forecast worth of almost $18 billion for 2015, representing a climb to almost 2% yearly growth over five years. The US leads the G8 fragrances and perfumes market with close to 33% market share, having generated close to $5.3 billion in 2010. The US is predicted to remain dominant in the G8 market, and should reach almost $5.7 billion in 2015.
Global Industry Analysts places the EU at the top of the global fragrances and perfumes market. Many EU fragrance and perfume manufacturers dominate the world market, with their brands carrying a certain cachet all over the world. The market segment represented by men’s fragrances and perfumes is strong, with three quarters of EU men using male fragrance. In certain countries – such as Slovenia, Romania and Italy – the men’s fragrance market segment is larger than that of women’s fragrances.
Consumption of perfumes and fragrances in Asia is relatively low, aside from Hong Kong and Singapore, according to research from Global Industry Analysts. This low consumption rate can be attributed not only to economic climates but also to the traditional perception of perfumes and heavy scents being used as a way to mask body odor. Growth potential in these regions is vast, especially as Asian women are following Western trends in fashion and personal care, and are very receptive to using well-known brands as a composing factor of their personal image.
China’s private label penetration rate in the perfume and fragrance market currently stands as less than 5%, according to research from Canadean. EU fragrances remain popular in China, due to brand loyalty and good levels of disposable income. Changing age structures are shaping China’s fragrances market. This points to the importance for suppliers of targeting the younger population to attract new consumers. Large retailers do not feature as an important distribution channel in the Chinese fragrances market. International names such as Walmart and Carrefour hold only a minority share of the market. Consumers in China favor specialty stores for fragrance purchases, pointing to the importance for supplies of building up good relationships with independent retailers.
In the US perfumes and fragrances market, though private label penetration is quite low in general, it is higher when it comes to female fragrances than scents for men or unisex fragrances, reports Canadean. Urbanites represent almost three quarters of the unisex fragrances market, with rural dwellers contributing just over a quarter in terms of market share. Urbanites would therefore seem more inclined to purchase unisex fragrances, while consumers in rural areas remain faithful to male and female fragrances.
The UK fragrance market has been experiencing growing demand from men, though the economic recession saw the luxury market suffer, according to KeyNote research. Sales of male fragrances and toiletries have, however, been quite moderate in relative terms, pointing to a male attitude toward these products as necessities. Sales usually helped by a boost during holiday seasons have witnessed some degree of decline over recent years as the economic recession saw consumers cut spending in general and splashing out less around festive periods. It is predicted that the men’s toiletries and fragrances market in the UK will grow to €1.75 billion by 2015. Growth will be fuelled by the launch of new products and increased consumer spending linked to economic recovery.
Leading players currently operating in the global perfume and fragrance market include Coty, Polo Ralph Lauren, Avon, Procter & Gamble, L’Oreal, Chanel, Estee Lauder, LVMH, Gucci, Bulgari, Puig, Elizabeth Arden and Versace.
Fragrance Industry Trends
Future growth in the global perfumes and fragrances market will be driven by the development of new products, including fragrances catering for consumers favoring natural products and environmentally friendly ingredients. Suppliers will also cater more to specific consumer segments such as fragrances for babies and young children, reports Global Industry Analysts. Scents specifically for teenagers represent an area with huge potential for growth, with baby boomers the second-most lucrative demographic consumer segment. Suppliers will therefore likely concentrate their efforts on these two groups.
Leading Industry Associations
- International Fragrance Association
- British Fragrance Association
- Canadian Cosmetic Toiletry and Fragrance Association
- American Society of Perfumers
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