Replace the "lipstick effect"? The pandemic has accelerated perfume sales

Or affected by the epidemic, consumers' consumption habits in the beauty category have changed in the short term, wearing masks has reduced the demand for lipstick, and perfumes that are not obscured by masks have become an entry-level luxury that provides an olfactory experience, and the "perfume effect" is replacing the "lipstick effect".

According to the "2021 China Perfume Industry Research White Paper" jointly released by Yingtong Group and Kantar Consulting, perfume has become the fastest growing segment in the cosmetics category in the global market, and China's perfume market has entered the fast lane, and in the next five years, China is expected to become one of the most important incremental markets in the global perfume market.

Looking at the financial reports of the world's major cosmetics groups in the first half of 2021, it can be found that the growth rate of perfume sales is relatively high. Among them, the sales revenue of the perfume and beauty segment of LVMH Group reached 3.02 billion euros in the first half of 2021, achieving a 37% increase. L'Oréal Group's first half 2021 financial report mentioned that the fragrance category of the high-end cosmetics division (sales increased by 28.1% to 5.47 billion euros) increased significantly, above the market average.

Estée Lauder Group's Fragrances division saw net sales rise 23% to US$1.93 billion in 2021 and operating profit increased from US$17 million to US$220 million, second only to skincare. Coty Group's sales revenue for the fourth quarter of fiscal 2021 increased by 89.6% year-on-year, and luxury perfumes contributed approximately 51% of the company's net income from continuing operations. Perfume giant Inter Parfums had net sales of $410 million in the first half of fiscal 2021, up 17.9% from the same period in 2019.

It is worth mentioning that although the scale of China's perfume market is small, the growth rate is also relatively fast. According to Euromonitor data, China's perfume market will grow at a compound annual growth rate of 14.9% in 2015-2020, and is expected to be 22.5% in the next 5 years, and by 2025, the retail sales of China's perfume market will reach 30 billion yuan; while the global market will grow at a compound growth rate of about 7% in the next 5 years and reach 432.1 billion yuan in 2025. The comparison shows that in the next few years, the growth rate of the Chinese market will be about 3 times that of the global market, and the development potential is huge.

In this context, many domestic brands are emerging. According to Tianyancha data, the Smell Library just completed tens of millions of dollars in Series B financing on September 14, which was exclusively completed by Spanish perfume giant PUIG (Puig). RE Perfume Room completed its strategic financing on January 19, 2021, with CITIC Capital participating. In addition, there is Guanxia, which completed the A round of financing in December 2020, and Sequoia China participated. In addition, domestic brands such as Scentooze Santu, Ballio, DAILY LAB, Plustwo Plus Rabbit have also entered the vision of Chinese consumers in the past two years, and even the news that ByteDance will personally set up a perfume brand "Emotif" has also come out.

In the view of Wang Wei, vice president of Yingtong Group in China, there will still be some differences in brand concept between Chinese consumers and foreign consumers. Foreign perfume brands pay special attention to the brand concept, and for the rise of niche incense, Chinese consumers have emerged some ideas that want to have their own personalized labels, through the unique aesthetic of perfume for personalized expression.

For the competitive landscape of domestic perfume brands, Wang Wei believes that the opportunities in the market are still very rich. "With the layout of these brands in the Chinese market, to a certain extent, competition will be intensified, but in the Chinese market, the top 10 perfume brands currently only occupy 42% of China's overall perfume market share, and there is no single brand share of more than 10%, so the market still has very rich opportunities, and China's omni-channel is more mature in hardware support, so it provides a very inclusive and friendly environment."