Fragrance industry remains luxury standout over demand

Bloomberg

Glassmaker Pochet du Courval SAS has been making perfume bottles for the world’s top beauty brands since before
the telephone was invented, through countless consumer booms and busts. Executives at the French company say they have never been busier than they are right now.
“The demand is just so strong that we can’t keep up,” said Yves Bouquier, the president of Pochet’s US subsidiary. “We’ve never delivered more perfume or beauty bottles in our entire existence.” The company delivered 270 million glass perfume bottles and beauty jars this year. That’s a record for the 400-year-old company, which says it produced the first bottle designed by a perfumer in 1853 for Guerlain.
Global sales of high-end fragrances began to pick up during the pandemic and have been gathering steam during the past year. Demand appears to be holding on, at least for now. While sales of other luxury goods — particularly more accessible, entry-level products — have slowed somewhat as the economic outlook dims, demand for perfumes and eaux de toilette has remained robust.
“Fragrance has been kind of an afterthought,” said Nik Modi, an RBC Capital Markets analyst. “That is starting to change.”
The growth has led to a debate among analysts and beauty company executives about whether the momentum will continue apace or begin to fade like other pandemic flashes-in-the-pan.
“We initially thought, ‘OK, this is just pent-up demand,’ but we’ve seen it continue for approximately three years,” said Michel Atwood, chief financial officer of Inter Parfums Inc., which manufactures and distributes fragrances for brands including Oscar de la Renta, MCM and Donna Karan. “As we’ve started to understand the consumer growth, what we’re finding is there are a lot of new consumers,” he added. “When consumers start taking interest in this category — they typically stay. It’s a bit of an acquired taste, like wine.”
High-end fragrance sales in the US from January through October totaled $4.6 billion, up 56% from 2019 levels and 13% versus the same period last year, according to data from NPD Group. And it’s not just higher prices that are boosting those figures — unit sales were up nearly one-quarter in the first 10 months of this year versus prepandemic. The sector of fragrance and other prestige beauty items is the only one that’s showing growth in the number of units sold among the 14 discretionary retail spending categories that NPD tracks.
Sales of mass-market fragrances, meanwhile, have fallen and are well below prepandemic levels, according to data from Information Resources Inc.
Fragrance manufacturers and retailers expect demand for their high-end products to remain strong throughout the holiday season and beyond. “This shift is clearly a structural shift,” said Sue Nabi, CEO of Coty Inc, which makes fragrances for brands including Gucci, Hugo Boss and Calvin Klein.