In the next five years, China is expected to become one of the most important incremental markets in the global perfume market. Recently, the "2021 China Perfume Industry Research White Paper" released by Yingtong Group and Kantar Consulting shows that the global perfume market is growing against the trend. Among them, the Chinese market is growing rapidly and may become the main growth driver of the global market in the future.
The "2021 China Perfume Industry Research White Paper" was released.
Since the outbreak of the epidemic, wearing masks has become a semi-mandatory social requirement, "to a certain extent, makeup has lost its meaning", and the sales of colored products such as lipstick have declined significantly; but perfumes that will not be obscured by masks have replaced lipstick as an important category for consumers to improve their sense of happiness.
As can be seen from the financial reports of major cosmetics groups in the first half of 2021, the growth of perfume categories is extremely eye-catching. Sales revenue from the Luisilt Mouq Group's Perfumes & Beauty segment grew by 37% to €3.02 billion in the first half of 2021, with specific mention of the success of dior and Kihi's perfumes in the earnings report; L'Oréal's premium cosmetics division in the first half of 2021 saw significant growth above the market average; Estellan's fragrances division grew 23% longer net sales in 2021. To US$1.93 billion, operating profit increased from US$17 million to US$220 million, the growth rate of the fragrance category was second only to the skincare category, and the sales revenue of coty group in the fourth quarter of fiscal 2021 increased by 89.6% year-on-year; Luxury perfumes contributed about 51 percent of the company's net income from going concern; perfume giant Inter Parfums had net sales of $410 million in the first half of fiscal 2021, up 17.9 percent from the same period in 2019.
Although China's perfume market is currently small, it is growing rapidly. According to Euromonitor's latest data, China's perfume market will grow at a compound annual growth rate of 14.9% between 2015 and 2020, while the growth rate in the next 5 years is more optimistic, expected to be 22.5%, and by 2025, the retail sales of China's perfume market will reach 30 billion yuan. The compound growth rate of the global market in the next 5 years is about 7%, and 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.
According to the white paper, high-end perfumes are the main force in the growth of China's perfume market, and the market share increased from 70% in 2015 to 91% in 2020. Among them, high-end neutral perfume is the subdivision with the highest compound annual growth rate.
Lin Jing, senior vice president of Yingtong Group, believes that the integration and diversification of channels, the innovation of content and the ultimate application of aesthetics have become the reasons for the increase in the demand for perfumes. In the context of the epidemic, the concept of consumption has once again escalated, and it is very important that consumers' demand for perfumes has changed from pleasing others to pleasing themselves.
Lin Jing, Senior Vice President of Yingtong Group.
Another noteworthy point is that in the past three years, the top ten of China's perfume market share are all international brands, but the market share of a single brand has not exceeded 10%, and the total top 10 is about 42%. This means that the oligarchy has not yet emerged, and there are still great opportunities for domestic brands. Judging from public information, a number of domestic brands have been favored by the capital market.
For example, Smell Library completed strategic investment and Series B financing in 2016; Guanxia obtained A round financing such as IDG Capital and Zhen Fund in March 2019; Yufan Group (whose brand is "Ballio") obtained strategic investment from Ouyou Capital in October 2020; RE Perfume Room obtained strategic financing in January this year, with CITIC Capital participating; Scentooze Santu has completed a round of financing in May this year; and so on.
Wang Wei, vice president of Yingtong Group China, said that in the Chinese market full of opportunities, if brands want to succeed, they must first find their own unique advantages and establish a solid brand perfume culture, and Chinese brands need to protect the power of sustainable development of the brand with more powerful cultural heritage and unique ingenuity in addition to fully grasping the feelings and cultural resonance of consumers.
"Finally, with the brand's unique fragrance and service to establish a deeper and closer emotional connection with consumers, digital technology can help brands more deeply and accurately understand consumer preferences, so that they can more targeted development of products and experiences, and provide more interactive and interesting or private services." Wang Wei said.