The global “Nichi (premium) perfume” market is growing four times faster than ordinary perfumes. Beauty dinosaurs such as L’Oreal and Estee Lauder also seem to be picking Nikki perfume as a next-generation source of income and aggressively seeking mergers and acquisitions.
According to the Boston Consulting Group (BCG), the share of niche perfumes in the overall perfume market has nearly quadrupled from about 5% before the COVID-19 pandemic to about 20% now. The market research company Circana estimated that the growth rate of the niche perfume market is four times faster while the global perfume market is growing steadily at an annual average of 3%. Patrice Belliard, who managed the high-end perfume brand at Estee Lauder, told the Financial Times (FT) that this trend will continue for the next five years.
Perfume is a representative product line that is considered to be highly profitable due to its low cost ratio of 5-15%. It is classified as a “small luxury” that is relatively easily accessible to consumers of various ages due to its low price compared to luxury bags. The trend of “ward roving,” in which different types of scents are layered according to time, place, and situation (TPO), is spreading through SNS, stimulating the consumption of young people as well. Niche Perfume, which is made of high-end ingredients with a perfumer’s touch, is also in line with the consumption trend that prefers special and unique scents. The rapid growth of the perfume market has led to trillions of M&As. L’Oréal concluded a contract to buy Caring Bote (the beauty division of Caring Group) for $4.7 billion last month. Caring Bote owns Creed, a leading Niche perfume brand. L’Oréal made it official that it plans to strengthen its leadership in the luxury beauty sector by incorporating Caring’s iconic luxury houses into its portfolio. Estee Lauder, its biggest rival, has also started efforts to acquire Pucci, a Spanish company that is the parent company of the Niche perfume brand Byredo.
“Despite slowing consumption due to the ‘Small Luxury’ trend, luxury beauty continues to grow,” a beauty industry official said. “Global beauty giants, whose performance is slowing, are moving to build growth engines through their luxury beauty businesses.”
SALLY LEE
US ASIA JOURNAL
