Fragrances and Perfumes Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The global fragrances and perfumes market is projected to grow at a CAGR of 5.5% during the forecast period, 2021-2026.

COVID-19 has not just negatively impacted the fragrances and perfumes market across the globe but as the world is recovering from its impact it has resulted in a generation of opportunities for many private players to emerge in the markets, to cater for the inflated demand. Furthermore, COVID-19 has led to a major consumer shift, as customers are no more brand loyal in developing countries and are trying new brands in the low-stock environment.

According to Loreal, the consumption of beauty and personal care products including fragrance and perfume over the period was strongly impacted by the closure of millions of points of sale (specialty stores, perfumeries, department stores, airport stores, etc.) which caused a real crisis of supply, rather than demand, with consumers temporarily unable to purchase products and services.

The COVID-19 crisis is likely to accelerate trends that were already shaping the market, such as the rise of the global middle class and the use of e-commerce. Online distributors are recording an increased interest, as home-bound consumers explore retail alternatives. Some beauty-product brands and retailers with inventory and shipment operations ready to scale up are reporting e-commerce sales twice as high as their pre-COVID-19 levels. For instance, Sephora’s US online sales are reportedly up 30 percent versus 2019.

The growth of the fragrances and perfumes market is primarily influenced by unpredictable and continuously changing fashion trends. Thus, key market players are focusing on developing exciting, unique, and new fragrances, to attract different consumer groups across the world.

Perfumes and colognes, along with body sprays and other scented body products, are likely to witness significant growth during the forecast period. Likewise, the premium fragrances are driving the growth in developed regions, like North America and Europe, with a decline in the value of mass fragrances.

Companies compete on different factors, including product offerings, price, ingredients, and marketing activities, to gain a competitive advantage in the market. Some of the other prominent players in the market are Shiseido Co. Ltd, Revlon Inc., Chanel SA, Hermès International SA, and Avon Products Inc.

Key Market Trends

Increasing Expenditure on Advertisement and Promotion

R&D and advertisement are driving the growth of the market studied. Key players are investing in these factors to influence consumer purchase decisions. Furthermore, the rising influence of social media and celebrity endorsement is impacting the advertisement strategies adopted by key market players. With the rise in online sales, cosmetics, and perfume retailers are increasingly adding images and videos to boost perfume and fragrance sales. Some online cosmetic retailers also offer the possibility to get their perfumes and fragrances customized. Thus, the key market players are heavily investing in advertisement and promotion to attract consumers to the digital platform. For instance, L’Oréal developed a tool, dubbed cockpit, which measures the ROI and productivity of its media investments in real time. This enables better decision-making while formulating performance strategies. and in 2018, L’Oréal spent USD 9.21 billion on advertisement and promotional activities, an increase of 20.39% during the period between 2016 to 2018. Furthermore, over the forecast period, the market studied is expected to witness a significant growth in sales of artisanal and custom fragrance products, owing to increasing expenditure on advertisement and promotion.

Asia Pacific Emerges as the Fastest Growing Market

The Asian countries such as China, Japan, South Korea, Indonesia, Malaysia, Singapore, and others are some of the major contributors in making the Asia Pacific the fastest growing market for fragrance sand perfume in the global marketplace. Lately, pocket perfumes have risen to popularity because they are convenient to carry around and can be used on the go, therefore acting as one of the major drivers of the Indian fragrance and perfume market. FMCG giant, CavinKare recently launched the first-of-its-kind sachet perfume under its brand, Spinz. Furthermore, China is one of the world’s hotspots and fastest-changing beauty markets and is experiencing burgeoning demand for luxury perfume and fragrances, thus resulting in an increasing number of foreign manufacturers expanding their footprints in the Chinese market. For instance, the luxury brand Chanel launched a full range of perfumes in the official flagship store of Tmall. Chanel is among the top three choices of fragrance brands for Chinese consumers and by the end of 2017 held 6.42% of the market share in China.

Competitive Landscape

The fragrances and perfumes market is highly competitive and comprises international and regional competitors. Coty Inc., L’Oreal, LVMH, and Estée Lauder dominate the market with the help of major strategies, including acquisitions, expansions, and product launches. The rest of the market is occupied by small players, who are specific in manufacturing various personal care and cosmetics products.

Companies compete on different factors, including product offerings, price, ingredients, and marketing activities, in order to gain a competitive advantage in the market. Key players are focussing on the online distribution channels for the online marketing and branding of their products to attract more customers. Some of the other prominent players in the market are Shiseido Co., Ltd, Revlon Inc., Chanel SA, Hermès International SA, and Avon Products Inc.

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