Overall, the year 2018 revealed positive trends in the Americas, with a +6% and +10% growth in the US and South America, respectively, while Europe achieved a relatively stable growth at +1%. However, the data released in late September 2019 highlight rebalanced growth dynamics. The North-American market experienced a marked slowdown, with a rate reduced to +1%, and Europe made some progress, with +2%. Still, these improved dynamics in Europe remain driven by the same markets as in 2018, i.e. Southern countries, Spain (+5%), and Italy (+6%), while France and the UK recorded null or negative values.
“It should be said there is a major difference to take into account: perfumes remain the premier category of prestige beauty in Europe, in all countries, contrary to North America, where they are the 3rd category after makeup and skincare. This means Europe is a prominent area on the perfume market. And in terms of turnover, it represents more than twice the US,” explains Mathilde Lion.
The growing influence of Global Shoppers
If Europe remains a key market, it is also partly due to its counting the most tourists: 767 million in 2018 (+6%, compared to 2017). And these count among the biggest perfume consumers, both in Travel Retail and on local markets.
“This phenomenon cannot but intensify, and it already has a significant effect on the category,” adds Mathilde Lion. Indeed, beauty is the category that attracts half the visitors in Duty Free areas. And within this category, 67% of consumers turn to women’s perfumes, and more than half, 56%, make a purchase, which is the highest conversion rate in Travel Retail. In addition, women’s perfumes offer the highest global average buying basket (66USD), which is even higher among Asian travellers: up to 99USD for Chinese tourists.
Four trends to remember
One of the main market changes is the growing potential of e-commerce. “On the most connected markets, it is really e-commerce that drives perfumes’ growth, although the penetration rate is lower than on the other categories. Online skincare has boomed,” says Mathilde Lion. Perfume penetration rates remain low: in 2018, they reached 17% in the UK, 14% in the US, and only 7% in France, so there is a huge potential to harness. However, there was a slowdown in perfume on this channel in France between January and October 2019, with a 7% growth in this category, compared to 16% in 2018.
Secondly, Eaux de Parfum dominate women’s perfumes, and this trend has also been intensifying in the men’s perfumes category, to the detriment of Eaux de Toilette. “Higher concentrations are increasingly popular in men’s fragrances, and this is going to last,” foresees the analyst. In Europe, men’s Eaux de Parfum launches had increased by 32% in late September 2019, and there was a 4% increase in women’s – no change compared to 2018.
Third, the lower growth rate of fragrances over 150 euros (fine and niche fragrances, leading brands’ exclusive collections…) is worth mentioning. This category grew by 6% in 2019, compared to the two-digit growth rate observed over the past few years. “There are fewer launches. And if these fragrances still contribute to perfumes’ upmarket move, they will not change anything on the global level, because they represent a very limited market share,” comments Mathilde Lion.
Lastly, naturalness is gradually inviting itself in the perfume category. The natural perfume market achieved a very strong growth in 2017 in the US, and then a slowdown in 2018, although ethical and ingredient expectations are still strong. “This trend still weighs very little on this market: 19 million dollars in the US, i.e. 0.5% of the market. So, there is a gap to bridge,” explains Mathilde Lion.
In conclusion, the growth is maintained, although there are distribution issues to take into account. Consumer expectations change, there are still as many launches, which keeps the category healthy, and the naturalness demand is slowly emerging. We will see what happens during the festive season, which is still likely to influence results in any country.