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Celebrity-endorsed perfumes on the rise

The launch of more than 30 celebrity-endorsed perfumes this year has buoyed the sector. But how many will survive?

Oct 24, 2007, 12.17 AM IST
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Last month, Kate Moss became the latest celebrity to lend her name to a perfume with a product expected to generate sales of £25 million in its first year. The celebrity-fragrance market is worth an estimated £255 million, with sales having increased by 2000% since 2004, according to The Perfume Shop. More than 30 have launched in the UK alone this year.

Elizabeth Taylor was the first to capitalise on her stardom, with the launch of White Diamonds in 1991, while Unilever-owned Coty kicked off the recent surge with the launch of Jennifer Lopez’s fragrance, Glow by JLo, in 2002. If picking over the details of their favourite celebrities’ love lives in the glossies, buying their clothes on the high street and watching them on TV is not enough for ordinary women, they can now even smell like them.

More than 30 celebrity scents have been launched in the UK this year, with names as diverse as Jade Goody and Mariah Carey getting in on the act. No longer content with fighting it out for headlines in Heat, the stars are now squaring up at the beauty counters.

With perfume houses needing to spend at least £1 million on advertising a new brand if it is to have an impact on the market, celebrity variants confer an immediate level of awareness by virtue of the name. While it will be big business for those that succeed, few are expected to survive beyond the first year. There is only limited shelf space, and as old brands have to be discarded to make way for new ones, products’ life cycles are inevitably short.

But celebrity-endorsed fragrances are popular with perfume houses because they attract younger consumers. Almost one in five 16-to-24-year-olds owns a celebrity fragrance, according to TGI. The launch of so many celebrity scents has buoyed the market, and value sales, excluding duty-free, are predicted to reach £638 million this year. Annual growth in the market has been running at about 5% for the past few years.

Despite the high-profile launches — Elizabeth Arden is putting £2 million into advertising Mariah Carey’s M fragrance — the top spots are taken by the longer-established brands. However, in a highly fragmented market, even the bestselling Chanel No 5 accounts for only 5%. Last year, 220 perfumes were launched. To minimise the risk associated with launches, fragrance houses often opt for spin-offs of existing brands or limited-edition versions.

Boutique fragrances are another emerging trend. Les Senteurs and Roja Dove’s Haute Parfumerie are two stores offering niche perfumes for women who are seeking a more select scent. Fashion houses such as Prada, Hermes and Dior are creating private collections of perfumes with restricted availability, often for sale just in their own boutiques. The sector is dominated by a handful of firms. The biggest of these, Coty, was boosted by the acquisition of brands such as Calvin Klein from Unilever in 2005. It divides its range into three categories: designer, celebrity and lifestyle.

L’Oreal's brands include Giorgio Armani and Ralph Lauren under its Prestige & Collections banner; its most recent launch, Hypnose, was under its Lancome cosmetics brand. L’Oreal also acquired a presence in the mass market last year following its purchase of The Body Shop and won the licence for Italian fashion brand Diesel, which should help it attract younger customers.

While Chanel is not as big as Coty or L’Oreal, it can boast three of the top five brands, thanks to its consistency and focus on classic perfumes. While eschewing the celebrity-endorsed launches, Chanel does, however, use big names in its advertising and invests heavily in TV, as illustrated by Chanel No 5’s Nicole Kidman ad campaign.

Manufacturers have tried to even out business over the year, but the two months leading up to Christmas still account for nearly three-quarters of retail sales, with almost one in two women receiving fragrance as a gift.
The market has been boosted, however, by women’s predilection for having more than one fragrance on their dressing table. The increase in the turnover of fragrances has also contributed to this trend by stimulating interest in the market and making way for the introduction of brands. The downside is that there are too many brand launches, which is resulting in product life cycles becoming shorter.

Consumers nowadays have a much wider selection of outlets from which to buy perfumes, partly as a result of a rise in the number of discount perfumeries such as The Perfume Shop and The Fragrance Shop. Their arrival has had a negative impact on sales at department stores, although Boots remains the biggest retailer in this sector.

The market is predicted to fare well in the coming years, outstripping the growth enjoyed over the past five. By 2012, the sector should be expanding at 5.6% a year, thanks to shoppers trading up to more expensive scents and volume sales increasing as a result of the availability of more mass-appeal products.

As most women in the UK do not wear fragrance every day, increasing the frequency of use will also boost the sector.
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