Market Analysis: Fragrance

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  • Topic: LVMH, Perfume, Odor
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A) Market analysis: Fragrance
1) The fragrance market

The fragrance market is the major part of the care market. During the 90’s, this market has known a considerable growth. Currently, it might be entering a maturity phase. The perfume market is highly competitive and there are a lot of fragrance houses which are competing for sales. The total global market is over 25 billion Dollars. Many great fashion designers have entered the market of fragrance (Chanel, Lanvin, Givenchy, Yves Saint‐Laurent, Balenciaga …). After that, the speakers of the cosmetic market launched their own perfumes (Yves Saint Laurent, Estee Lauder) and finally, the family brands made their entry on the market (L’Oreal, Procter & Gamble, Unilever…). These brands have a relatively different strategy from the other. They launch some new products quite frequently in order to pushed women to often switch perfume. A lot of brands try to enter this market every year (around 300) but most of the famous fragrance houses are on this market for many years. During this time, they developed their name, brand image, by making huge investments and careful brand positioning and promotion. For example, a company like Chanel is now considered as an exclusive, luxurious and sophisticated quality brand. At the geographical level, the new areas of consumption are Asia except Japan, Eastern Europe and the Latin America; those cause the growth of the market. The mature markets, on the other hand, are Eastern Europe, America of North and Japan, and the growth is relatively weak on these markets. As a conclusion we can say that this market came to maturity and is seeking innovations. These innovations can come from the brands but also from the way products are distributed.

2) The French fragrance market

The total French perfume market represented 1.85 billion euro in 2010. It represents 65% of the beauty market (perfumes, care, and make-up). The good 2010 performance come as well from the women alcohols (+2,5%) as from the men alcohols (+3,6%). The growth for women’s perfumes comes almost from the small bottles (44ml and less) while the bigger bottles stimulate the growth for men’s perfumes. The sells for perfumes boxes (coffrets) have also risen, in particular on December (43% of the turnover). Globally, the launch of new products in 2010 were less performing than in 2009 even if certain news have known a good success like for example Lady Million de P. Rabanne or Bleu de Chanel. Source: The NPD Group / panel Beauty Trends 3) The LVMH Group

First, Louis Vuitton is a famous brand which takes part of a group called LVMH (Louis Vuitton Moët Hennessy). This group is a world leader in luxury and possesses a unique portfolio of over 60 prestigious brands. The group is active in five different sectors: * Wines & Spirits

* Fashion & Leather Goods
* Perfumes & Cosmetics
* Watches & Jewelry
* Selective retailing

3.1) The “Perfumes & Cosmetics” sector
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The sector that will interest us in this case is of course the “Perfumes & Cosmetics” sector. LVMH is a major player in the perfumes, make-up and skincare sector; it relies primarily on a portfolio of brands representing French companies with an international presence: * Christian Dior

* Guerlain
* Givenchy
* Kenzo
The group also supports the development of other high-potential brands like “Benefit” and “Fresh”, two growing American brands; Acqua di Parma,… 2 new perfumes have also recently entered the business group: Fendi and Pucci

4) Brands in presence

1) Inside the LVMH group:

a. Christian Dior – 5 perfumes:
i. Chiffre d’affaires 2009 Christian Dior parfum: 825 359 239 € Innovation – The House
ii. Sexy – Make-Up
iii. Beauty Skincar
iv. Dream – Fragrance

b. Guerlain

Chiffre d’affaires 2009 Guerlain :
Perfumers since 1828. Few houses can boast such exceptional...
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