(Source: Racked)
Perfume has typically been a product that drives sales in the beauty category for luxury brands, offering an entry-level price point for customers of all income brackets to buy into the magic of the brand. As Business of Fashion reported, perfume sales have stayed strong in light of the industry downturn, ‘with global sales estimated to have risen 2.9 percent to about €15 billion last year. Within that, sales by niche brands jumped about 15 percent to around €1 billion’ (Reuters, Business of Fashion). Typically, luxury brands have outsourced their fragrances, building licenses with beauty giants like L’Oréal and Estée Lauder, and are driven by massive marketing campaigns with celebrity endorsements. This has worked well for brands in the past, however, the emergence of rising ‘indie’ (or ‘niche’) fragrance brands is disrupting the luxury fragrance market.
Le Labo was launched in 2006 as a response to the dilution of the big brand fragrances of the 1990’s, evoking the art of perfumery with their laboratory-like store design. As their founder, Edouard Roschi recounts: “What was missing then was the charming and romantic aspect of the perfumer’s work, which was overcast by marketing”. In 2014, Le Labo was acquired by Estée Lauder, who were keen to cash in on this niche trend for a brand that had gained a cult following.
Image: Le Labo markets their stores as 'fragrance labs', where customers can experience the blending of each fragrance. (Source: Le Labo).
Estée Lauder later acquired niche brand By Kilian (2016), founded in 2007 by Kilian Hennessy, the grandson of the co-founder of the LVMH group. The unique fragrance is designed to tell a ‘story through scent’, and even the packaging has been thoughtfully designed to be keepsakes. Estée Lauder has established itself as a lead player in this growing market, with a history of purchasing niche perfume brands and turning them into global luxury players (i.e. Le Labo, Jo Malone, and Frédéric Malle).
Also in 2016, Estée Lauder’s competitor L’Oréal purchased niche perfume brand Atelier Cologne, who make ‘colognes absolues: pure scents that combine citrus notes with raw materials’. Estée Lauder produces fragrances for luxury ‘mono’ brands such as Yves Saint Laurent, Armani, and Ralph Lauren who have seen a slowing down of perfume sales over the years.
These acquisitions emphasize just how strong the trend for niche brands is in the market, signaling to luxury brands that ‘one size fits all’ scents that lack an authentic story, marketing, and ingredients are no longer competitive within the luxury fragrance market.
Image: The scents from Louis Vuitton's new fragrance range all features flowers from Grasse, France and leather from the atelier. (Source: Allure).
One luxury brand that has responded to this fragrance revolution is Louis Vuitton, who earlier this year announced their launch of a collection of fragrances targeting middle-income shoppers. The fragrances cost around €200-300 each, comparable to niche brands like By Kilian. The launch shows that luxury ‘mono’ brands must respond to this market disruption in an authentic way, creating a range that allows the customer to pick and choose their scent, while breaking away from the traditional marketing campaigns of the past.
Have these indie brands truly disrupted the luxury fragrance market? Will other luxury brands follow Louis Vuitton’s lead and reinvigorate a stagnant fragrance market?
References:
https://www.luxurydaily.com/by-kilian-joins-estee-lauder-companies-to-grow-business/
https://www.businessoffashion.com/articles/creative-class/creative-class-edouard-roschi-perfumer
https://www.luxurydaily.com/loreal-acquires-niche-perfumery-atelier-cologne/
https://www.nytimes.com/2016/10/03/fashion/fragrance-duty-free-retail.html
http://fashionista.com/2014/10/estee-lauder-le-labo
http://www.racked.com/2016/11/21/13669848/estee-lauder-acquisitions