At first glance it seems the UK fragrance market is flourishing. Figures from research group Mintel valued the UK female fragrance sector at 419m last year.
New fragrances are launched almost daily and designer and celebrity-branded perfumes – a trend Coco Chanel started in 1925 – are going strong. Practically every celebrity, from Luciano Pavarotti to the Welsh rugby international player Ieuan Evans, now has his or her own scent.
But not everything in the garden is rosy. Evans has already found the annual 237m aftershave market can turn sour. His Ieuan Number 14 was withdrawn this month with only 30 bottles sold.
In the fine fragrance market, sales are more encouraging but even here there is evidence of decline. The number of perfumes on offer is increasing, but the value of the market is not. Although the UK female market was worth 419m last year, this is a drop of 21 per cent since 1989.
One reason behind the decline is the growing availability of fragrances through budget outlets such as Superdrug, Asda and Boots, which frequently offer perfumes 30 per cent cheaper than department stores.
These outlets undermine the high-priced sell of the department stores. Datamonitor figures show that only 43 per cent of UK fine fragrance sales were made through department stores last year. And, according to Lorna McKnight, former fragrance buyer for Harrods and a retail and cosmetics consultant, department stores are doing little to reverse the trend.
There is evidence fragrance houses are conniving in this apparent threat to their profits. Despite a Monopolies & Mergers Commission ruling in 1993 that there was already sufficient price competition in the market, and that fragrance houses could continue to withhold supply to discounters, Sanofi-owned YSL now supplies direct to Superdrug.
Although the majority of stores buy from wholesalers, Superdrug spokesman Bill Jones says the chain is in talks with another 60 fragrance houses to follow YSL’s example.
With traditional markets devalued or saturated, the fragrance houses need new recruits. McKnight believes the way forward is innovation. There is evidence this is happening, but apparent confusion over the best policy.
Christian Dior and Procter & Gamble are toning down key, established fragrances while playing up an apparent trend towards lighter scents. Dior launched Tendre Poison, a subtler version of Poison in 1994, and P&G will launch a lighter version of Giorgio Beverly Hills, Revitalisation, next February.
Elsewhere, buyers at Harvey Nichols and Liberty report a rise in aromatherapy-based scents from manufacturers such as Aveda. Unisex scents are also predicted to be popular next year following the launch of Calvin Klein’s CKOne in August.
Meanwhile, others are banking on nostalgia. Miners International is relaunching Seventies brand Hai Karate,and LancÃ´me relaunched its 25-year-old O de LancÃ´me, last month.
There is also evidence of a move beyond the intense competition for females aged 25-plus. Baby perfume ranges are now
on sale from Guerlain and Givenchy, Cacharel’s LouLou Blue will target girls aged 13 upwards, and YSL will target the male market later this year with Opium Pour Homme.
Innovation has proved successful in some areas. Unilever’s Escape by Calvin Klein and L’Oreal’s TrÃ©sor, both launched in the past four years, are al-ready in the UK top ten, according to Datamonitor figures.
But not all are succeeding. “Baby perfume is definitely not selling and it will never happen in this country,” says McKnight, who says there is a cultural barrier in the UK to these products.
Lorraine Wilson-Morris, editor of the beauty trade magazine Esprit, says marketing is an area fragrance houses must reassess.
The UK female fragrance industry spends an annual 28.8m (Register-MEAL) on advertising, up 40 per cent since 1989. Advertising now accounts for seven per cent of sales as opposed to 5.3 per cent in 1989. But Wilson-Morris says other areas are overlooked.
“The houses have to be prepared to invest in good PR. Many think PR is expensive and put more into advertising, but PR gets the brand known,” she says.
Perhaps the perfume market is not quite as fragrant as its glossy images suggest, but even if the market is in decline, things are far from crisis point. L’OrÃ©al is said to do 70m worth of business in the perfume market each year. Chanel and EstÃ©e Lauder each hold a share of the female sector worth an estimated 45m.
Manufacturers are having to spend on innovation to compete. But as Jeremy Smith, a consultant with Datamonitor points out, if the fragrance houses suffer a few hiccups along the way, “I think they can afford it”.