2023 was a big year for the fragrance industry with the niche/artistic sector gaining its fair share of the limelight. Consumer interest in the category grew more than ever before. Mergers and acquisitions involving major brands were particularly active. Innovation and creativity, though key characteristics, gave way to some predictable industry practices while non-negotiable topics, like sustainability and the use of technology, continued to drive advancements. It was also a year that saw the return of bricks & mortar. Let’s take a closer look at each of these developments to see how they played out and to imagine what they could predict for 2024.

An Olfactory Expression of Self

Since the pandemic, fragrance in general has been running annual double digit increases in key markets, yet everyone has been expecting the growth to slow down. It hasn’t been the case as there is more and more interest in the category. Trend reports from Circana, Euromonitor and other sources note an increase in usage among men and among Gen Z. What bodes well for the niche/artistic sector is that many consumers don’t want to follow the crowd – they are looking for a scent that complements their sense of self and that allows them to assert their individuality.

Consequently, niche fragrance provides unique olfactory experiences that appeal to those who want to be different. Their perfumers are exploring new scent landscapes: from rare – even extinct – flowers, to exotic spices and unexpected gourmand ingredients. In addition, the rise in feel-good fragrances is stronger than ever as consumers seek scents that will boost their mood much more than ones that could attract a potential partner. Fragrance is finally the invisible accessory that enhances our appearance but also affects our state of mind.

The Undeniable Power of TikTok

This social media platform has become a behemoth in its ability to promote content that drives trends. The popular hashtag, #PerfumeTok, which boasts over 8 billion views, is considered somewhat responsible for the cult followings behind fragrances such as Maison Francis Kurkdjian’s Baccarat Rouge and Le Labo’s Santal 33. It’s a vehicle for self-promotion via short video content, and if the video goes viral, sales can skyrocket. Furthermore, the content doesn’t have to be polished and sleek to appeal, so for brands with small budgets, this is a plus.

Even if there is genuine and accurate information on this platform, the viewer needs to be cautious to weed out the fake facts. It’s also unfortunate that TikTok is partly responsible for the rise in interest in dupes – wherein knockoffs and lower priced alternatives are suggested over the original, authentic and pricier product. Regrettably this phenomenon shows no signs of abating as we go into 2024, and especially given the price of some fragrances which are way beyond the reach of many consumers.

Premiumisation

In contrast to the success of dupes and clones, high end collections and luxurious lines are seeing some of the largest growth in the fragrance category. The current demand for tenacious, beast-mode fragrances paves the way for sales of more intense concentrations such as eau de parfums, elixirs perfumes and extraits. Although prices can at times be exorbitant, if the product delivers with a sense of prestige, with scent as a mood booster and confidence creator, the price may be less important.

The unfortunate Increase in Flankers

I can’t take credit for spotting this trend, but it was brought to my attention when I was monitoring YouTube reviewer, Justin Copeland. Mainstream brands have been notorious for creating flankers: those fragrances that are spinoffs of the original, perhaps with a slight variation on the olfactory composition. But now we see a blurring of the lines between mainstream and niche as a flood of flankers hit the shelves – some with a point of difference and some that make you ask, does the flanker provide an added value? Mancera Intense Cedrat Boisé, Creed Aventus Absolu, the Nishane X collection and Maison Francis Kurkdjian’s Forte extensions of the Aqua fragrances all fall into this trend. Will it continue? If it’s about sell-in coupled with sufficient sell-thru, it’s a trend that is here to stay.

Mergers and Acquisitions

The Niche/Artistic fragrance world was rocked by several monumental deals that happened mid-year. In June the global luxury group Kering acquired the House of Creed for a staggering €3,5 billion. This move came several months after the group had created Kering Beauté which aims to take its beauty businesses in-house. The acquisition of Creed gives instant legitimacy to the division since, after all, Creed is estimated to hold a 10% share on the global high end luxury fragrance market.

June was also the month in which Advent International, one of the world’s leading private equity firms, took a majority stake in the Dubai-based Sprecher Berrier Group of Companies which includes Initio Parfums and Parfums de Marly. Industry sources valued the deal at over $700 million. French born Julien Sprecher melded his two passions, fragrance and the history of the razed Chateau de Marly, when he created Parfums de Marly in 2009. Initio Parfums Privés, founded in 2015, brings together the science and power of scent to empower the wearer.

Elsewhere, in Spring, the Estee Lauder Companies invested in Vyrao, a niche brand based on the concept of energy-healing and finished the year by taking a minority interest in Chinese perfume brand Melt Season. This move could indicate a strategic decision to be present in the Chinese market through a domestic brand.

Sustainability

All sectors of the luxury industry are seeing a greater emphasis on sustainable practices including niche/artistic fragrances. From sourcing ingredients to upcycling to recyclable packaging to refillable bottles to measuring carbon footprints, there is not one aspect of the business that isn’t touched. All the major oil houses are deeply committed to creating proprietary ingredients that adhere to environmentally friendly practices and they have stepped up their communication efforts to be transparent and to inform the general public. As consumers continue to demand more clarity, all industry players need to have a sustainability position as part of their values.

Technology

Artificial Intelligence is finding its place in the perfume world. It can analyse data pertaining to ingredients, compounds, consumer preferences and more to suggest scent combinations that may appeal to specific target audiences. Throw neuroscience in to the mix and it can help the perfumer to create fragrances that can trigger specific emotions. AI can also speed up the process of identifying fragrances that need to be reformulated due to new IFRA regulations, a daunting task. Clearly access to this kind of technology is beyond the independent perfumer or brand, but it is an industry development that cannot be ignored.

Technology has also had a tremendous effect on the development of fragrance finders and diagnostic tools, such as WikiParfums and Puig’s AI.LICE which facilitate the selling ritual at point of sale as well as online. The use of these applications and sites will continue to evolve and will play a greater role in self-serve retail environments. They should also be harnessed for the powerful ability to train and educate both staff and the consumer alike.

The Return of Bricks & Mortar

As the pandemic became a foggy memory, and the general public was less fearful of braving the crowds, 2023 marked the grand resurgence of the physical store. Hungry for experiences and human contact, consumers flocked back to stores to be entertained, to be delighted, to be tempted and to discover new products and services. Many shops and brands experimented with immersive animations*, with pop-up shops and with events and elevated service in line with luxury price points. Online shopping is still important but somewhat relegated to replenishment or to being the go-to location for finding information, deals and discounts. Single brand stores, where there is full control of the image, the assortment and the experience, opened at a feverish pace.

One caveat to take into consideration: shelf space in a real store is finite. Brands with extensive collections, oversized packaging and numerous references will be curated by multi-brand stores in the hopes of creating an optimum assortment. It is estimated that most brands do the bulk of their business with one or two key references. Retailers are only too aware of these numbers.

Final Thoughts

With these observations in mind, what do I envision for 2024?

*The emotional benefits of wearing fragrance will continue to be explored – and appreciated – in the year ahead, a year in which strained political situations, economic challenges and global heath and climactic concerns aren’t going away. Fragrance will be a comfort in tough times. Niche/artistic brands have been trendsetters in incorporating ingredients known for aromatherapeutic benefits into their creations so the outlook is positive.

* Gen Z, who avidly follows #PerfumeTok, who reads about niche perfumes and who watches YouTube videos, will drive trends including further exploration into vegan, cruelty free, natural, and gender neutral scents. The niche sector has pioneered this movement and further development is inevitable.

*TikTok, with its short video content, will still be the preferred social media platform, but viewers will be more discerning. Creators who are quirky, relatable, unique and authentic will have the most success.

*Conglomerates and Private Equity groups will look for investment opportunities into brands who are poised for expansion and rapid growth and who have a cult following.

* In the discovery process, consumers will gravitate towards brands with a strong point of difference that is authentic and who have core values and an environmental stance which align with their own. Consequently, brands, niche or mainstream, who haven’t polished their storytelling or who have a dubious origin, will be given the cold-shoulder by the consumer.

*Recyclable and refillable packaging will take center stage. Witness the recent installation of a refill station at the Perfume Shoppe in the UK. Yes, in collaboration with L’oreal who has the means to fund the product development, but it’s bound to kickoff a demand where those who don’t comply will be left behind.

SOURCES

BW Confidential October – December

How Gen Z have shaken up the Multi Billion dollar Fragrance Industry, National Post

* Immersive Exhibits & Experiences: Scent Comes to Life