We have been discussing it in private for a while, but now it has become more widely known: The perfume sector in the USA despite the tumultous stream of fragrance releases isn't growing as one would have expected. Although much has been demonized due to the crisis that began in 2008, the reasons may run deeper as the US economy is expected to make a recovery from its recessionary state leading up to 2017.
According to the most recent report by Canadean, an in-depth market research company who do panel research across the fast-moving consumer goods (FMCG) sector: "Consumer demand for Fragrances remains relatively weak. With a volume Compound Annual Growth Rate (CAGR) of 0.9%, the sector is forecast to be one of the slowest growing in the US Health & Beauty Industry to 2017. It will remain ahead of only the Haircare sector, but well behind other mature sectors such as Male Toiletries, Suncare and Oral Hygiene. Value growth is expected to be higher, at 1.6%. However, the value of Mass Fragrances across Female, Male and Unisex Fragrances categories will grow faster than Premium Fragrances, showing that value growth is being driven by trading-up within the Mass market.
Male Fragrances is the second largest category in the US Fragrances sector with a 30.9% share of the market in 2012 in both value and volume terms, but it is forecast to be the fastest growing to 2017. Both value and volume are projected to increase above the line at 1.7% and 0.9% respectively.
The share taken by Female Fragrances in 2012 was double that of Male products, at 66.4% of the market. Category growth is forecast to be slightly lower than that of Male Fragrances, although it will mirror the sector average for both value and volume CAGR. Unisex Fragrances took 2.6% of the market and has a projected value CAGR of 1.6% to 2017. Volume growth is expected to be slightly better than the sector average, at 1.0% for the same period.
Health & Beauty Stores record the best growth in 2012. Hypermarkets & Supermarkets, Department Stores and Drug stores & Pharmacies together accounted for almost three quarters of all Fragrances distribution in 2012. Whilst all three channels witnessed improved share, it was Health & Beauty Stores which saw the best growth, perhaps indicating a move towards more niche products at a premium price".
Perhaps this is why hip brands with their finger on the pulse, such as Marc Jacobs, are dedicating a unique site to the education and interactive fun of their customers while promoting their fragrances (such as the latest, Honey by Marc Jacobs). There is a need for engaging the consumer, obviously.
We have more interesting (and insider-rich!) commentary to do on the niche and premium perfume sector soon, so stay tuned at Perfume Shrine.