The Business of Luxury Fragrance is Sweet!

As sure as falling temperatures, flying phalanxes of geese and golden leaves herald the arrival of autumn, so too does the appearance of a flock of new luxury fragrance introductions. Like clockwork, each fall brings forth dozens of launches in a bewildering array. This season there were several fairly significant events in the category, with Louis Vuitton re-entering luxury fragrance for the first time in almost 30 years; make-up artist Charlotte Tilbury launching her first scent; ditto Alexander McQueen, architect Philippe Starck, and shoe designer Christian Louboutin (the latter two actually launched three new scents at once, and sadly none of them smell like new shoes fresh out of the box). Tom Ford introduced Orchid Soleil; Aerin Lauder debuted Tangier Vanille; and SJP (that’s Sarah Jessica Parker, for the uninitiated) launched “Stash,” her new fragrance, which she describes as smelling “like a sweaty European man.”

OK, then. Moving right along.

Who is wearing all of these scents? And why does the luxury fragrance industry keep launching new offerings every season? And is it really worth it to pay more for the most expensive scents?

We here at Dandelion Chandelier decided to sniff around a number of glittering luxury department stores and luminous charming boutiques in a quest for answers.

The global fragrance industry is a $30 billion business. While it has been fairly flat for the past five years, with a 3% growth rate last year, the most robust segment of the market is the highest end: sales of niche luxury brands grew 15% last year. The sense of overload that many of us experience when entering the fragrance section of a luxury department store or boutique is not unfounded: one expert estimates that there are currently 360 niche fragrance brands, and 1,642 brands globally. Euromonitor reports that there are more than 100 new fragrance launches each year.

Niche brands, like Diptyque, Creed, Penhaligon, Roja and Byredo, tend to focus on scent – not on a celebrity spokesperson – have higher concentrations of perfume extracts, more natural ingredients, and tend to last longer. And of course, they’re generally much more expensive than their mainstream counterparts.

The industry growth pattern holds true for both men and women, by the way. Many scents can be happily worn by either gender (even Chanel is clued into this now, with its new “Boy Chanel” fragrance); top-of-the-line fragrances are growing rapidly for both genders, while the middle- and lower-ends are declining somewhat for both (although Axe is still hanging tough). Mainstream brands seem to have hit a wall in recent years after relying too heavily on celebrity names and faces for growth (although we’re totally down with Johnny Depp as the face of Dior’s Sauvage). L’Oreal and Coty began losing market share after launching too many “flanker” variations on the same fragrance name, resulting in overcrowding on the shelf and confusion in the minds of some consumers.

Part of the growth in niche brands has been fueled by sales at luxury department stores like Harrod’s, Bon Marche and Bergdorf Goodman. But a new generation of high-end perfume and cosmetics stores has also helped drive sales and elevate the category in the past few years – places like Liquides, Jovoy and Nose in Paris, MiN and Aedes Perfumery in New York, Scent Bar in LA and Space NK in the UK and US. Not to mention websites like LuckyScent.com, Scentbird.com, and Colette.fr.

Major houses like Chanel, Guerlain, Dior and Hermes are competing with niche luxury brands by launching limited edition fragrances (Guerlain launched a new suite of its Four Seasons fragrance line this fall). Instead of fighting them, Estee Lauder cleverly bought niche brands Le Labo, By Kilian, and Frederic Malle, although the company seems to keep its corporate ownership well out of sight at point of sale.

These are extremely high-margin businesses, which is why there are so many players, and new entrants coming in all the time. NDP estimates that for every $100 bottle of perfume, the oils to create the scent cost only $2. Of course, there is cost involved in product development, marketing and distribution – but still. That’s a business model anyone could love.

Scent is a part of most people’s lives: according to NPD, 83% of American women wear perfume (59% of women use it daily), and 63% of men between the ages of 18-64 said that they wear scent occasionally (you can assume that teenage males participate in the category at a higher rate). Half of the men aged 18-64 stick with one brand, and 80% of them plan their fragrance purchases in advance. In contrast, 79% of women who use fragrance own between 2-10 bottles, and 8% own 11 or more.

Note to those who aspire to be hip, and/or to sell things to those who are: 90% of women and 81% of men who self-identify as “trend-setters” wear scent daily.

As a person who has worn the exact same fragrance for the past 25 years, I was clearly an outlier and an absolute dullard in the olfactory department – until we started this little adventure at Dandelion Chandelier, I thought that $60 per bottle for fragrance was a reasonably high price point and that once you found your signature scent, you were basically good to go for the rest of your life.

Turns out that, as in many other cases, I was wrong.

Here, gentle readers, is what we smelled (and heard and saw):

–If you are willing to pay a great deal of money (think $300 and up for a 100 ml bottle), you can buy a fragrance that is extraordinary – complex and beautiful. We sampled at least 50 different fragrances at the top end of the market, and it’s remarkable how many varied layers of scent there can be in one fragrance, how long a luxury fragrance can last on your skin (24-48 hours), and how ridiculously gorgeous the bottles can be.

–As with many luxuries, you can spend just as much as you want on fragrance at the high end. JAR fragrances, created by jeweler Joel A. Rosenthal, run almost $800 per ounce. The world’s most expensive is reportedly made by Clive Christian, a British line with dead-simple authoritative fragrance names like C, L, V and No. 1. The brand’s Imperial Majesty scent, launched in 2006, is sold exclusively in a 16.9-ounce Baccarat crystal bottle with a solid gold collar for $215,000. If that’s a bit much for you, No. 1 goes for $865 for 1.6 ounces.

–Like any artisanal luxury category, scent has its own vocabulary and semantic rules. Just so you know, one is never to use the word “cologne” to refer to men’s fragrance. We are to use the words “scent” or “fragrance.” That’s it. “Sillage” is the trail that your scent leaves behind. (I would have thought that the industry would have come up with a better word than that – sillage sounds like something oily and smelly, too close to sewage for my taste).

–While fragrance is a unique luxury category, it bears some resemblance to other luxury products. Like wine, sampling fragrances will bring you closer to the earth – you’ll smell flowers and fruit; trees, plants and moss, spices; animals; and sometimes, even decay. Like fashion, you’ll find that certain products speak to you emotionally, whereas others will make you shake your head in puzzlement or even disgust. You might start your journey thinking that there is one right answer for you, only to find that you want to own a suite of fragrances. Like apparel and accessories, fragrance is about how we see ourselves, and who we want to be, and sometimes that means we need to own more than one.

–Like the artisanal movement in beer, wine, spirits and gourmet foods, there is a clear preference at the highest end of the fragrance market for hand-crafted, highly personal formulations. The mere mention of the corporate players Estee Lauder, Coty and L’Oreal seems to be offensive in this milieu – apparently, those are viewed as places to make a living as a perfumer, not places to live the dream.

–As with fashion, with fragrance you’re likely to find that you’re choosing based not just on what you want, but on what your partner, your family, your co-workers, and even the strangers next to you on the train want. It’s an intimate decision that somehow ends up involving a lot of people.

–As with any expensive luxury product, you’ll want to seek some expert advice before you buy anything. Happily, in any large city, that will be easy to find. I had engaging conversations with numerous salespeople as I learned about this category, and I was pleasantly surprised at how willing they were to let me sample everything, how knowledgeable they were about the origin of the brands they were representing, and how generous they were in steering me to other brands if the one they were offering wasn’t suitable. The sampling process itself is delightful – you are given a piece of heavy card stock, sometimes with the brand’s name, upon which the salesperson will gently spray a particular scent. If you think you like it, you can get a small sample in a spray bottle to take home with you. I remember back in the day when you had to use the “tester” bottle on the counter and spray it on your wrist, and after the fourth sample you had no idea what you were smelling. This is far more genteel, and much more effective.

–Finally, also as with many luxury products, there is very little customization or personalization allowed. I inquired about this several times and was met with surprise and a whiff of condensation. Somehow the thought of someone mixing their own fragrance was leaving everyone cold. I finally realized that, like clothing designers, the perfumer is the expert craftsman, who knows what works and has a very strong point of view that you need to either buy into or not. There’s no free-lancing, and no DIY. Leave the formulations to the experts, and just enjoy. The one exception? You can layer fragrances (just the way you can layer lipstick colors) – buy two or three scents from one house and layer them, and suddenly you’ve created your own.

Our next post will delve into some specific scents, not with the goal of telling you what to buy, but with an eye to illuminating the role of origin stories, fragrance names, in-store displays and the salesperson who is working with you. There are some interesting lessons in all of that for other luxury categories.

For now, though, let’s take a moment and appreciate perhaps one of the least-celebrated of all our five senses. Our sense of smell is thought to be one of the most primal: a powerful trigger of memory, a vital protection from danger, an irresistible sexual lure for those we are trying to attract. As a result, scent has existed almost as long as civilization itself. As we age, our sense of smell may fade. Fourteen million Americans suffer from some sort of lack of a sense of smell, a condition known as anosmia, which can lead to an increased risk of depression. So while there’s time, let’s all agree to stop and smell the roses – and the grapefruit, and the vanilla, and the moss – before the scent fades away.

Forward This Article