Fragrances and Perfumes Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

Market Overview

The fragrances and perfumes market is projected to register a CAGR of 5.5% during the forecast period, 2021-2026.

COVID-19 has not just negatively impacted the fragrances and perfumes market across the world, but its impact has resulted in a generation of opportunities for many private players to emerge in the markets to cater to the inflated demand. Furthermore, COVID-19 has led to a major consumer shift, as customers are no more brand loyal in developing countries and are trying new brands in the low-stock environment.

According to L’Oréal, the consumption of beauty and personal care products, including fragrance and perfume, was strongly impacted by the closure of millions of points of sale (specialty stores, perfumeries, department stores, airport stores, etc.), which caused a real crisis of supply, rather than demand, with consumers temporarily unable to purchase products and services.

The COVID-19 crisis is likely to accelerate trends that were already shaping the market, such as the rise of the global middle-class population and the use of e-commerce. Online distributors are recording an increased interest, as home-bound consumers explore retail alternatives. Some beauty product brands and retailers with inventory and shipment operations are reporting e-commerce sales twice as high as their pre-COVID-19 levels. For instance, Sephora’s US online sales are reportedly up by 30% versus 2019.

The growth of the fragrances and perfumes market is primarily influenced by unpredictable and continuously changing fashion trends. Thus, key market players are focusing on developing exciting, unique, and new fragrances to attract different consumer groups across the world.

Perfumes and colognes, along with body sprays and other scented body products, are likely to witness significant growth during the forecast period. Likewise, premium fragrances are driving the growth in developed regions, like North America and Europe, with a decline in the value of mass fragrances.

Companies compete on different factors, including product offerings, price, ingredients, and marketing activities, to gain a competitive advantage in the market. Some of the other prominent players in the market are Shiseido Co. Ltd, Revlon Inc., Chanel SA, Hermès International SA, and Avon Products Inc.

Scope of the Report

Fragrances and perfumes have improved the grooming habits of individuals and have become essential products of day-to-day life. The market is segmented by product type into parfum or de parfum, eau de parfum (EDP), eau de toilette (EDT), eau de cologne (EDC), and other product types. By consumer group, the market is segmented into men, women, and unisex. By distribution channel, the market is segmented into online retail stores and offline retail stores. The offline retail stores segment is further sub-segmented into supermarkets/hypermarkets, specialty stores, convenience stores, and offline retail stores. The market is segmented by geography into North America, Europe, Asia-Pacific, South America, and Middle-East and Africa. For each segment, the market sizing and forecasts have been done on the basis of value (in USD billion).

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Key Market Trends

Increasing Expenditure on Advertisement and Promotion

R&D and advertisements are driving the growth of the market. Key players are investing in these factors to influence consumer purchase decisions. Furthermore, the rising influence of social media and celebrity endorsement is impacting the advertisement strategies adopted by key market players. With the rise in online sales, cosmetics and perfume retailers are increasingly adding images and videos to boost the sales of perfumes and fragrances. Some online cosmetics retailers also offer the possibility to get their perfumes and fragrances customized. Thus, the key market players are heavily investing in advertisement and promotion to attract consumers to digital platforms. For instance, L’Oréal developed a tool, dubbed cockpit, which measures the ROI and productivity of its media investments in real-time. This enables better decision-making while formulating performance strategies. In 2018, L’Oréal spent USD 9.21 billion on advertisement and promotional activities, an increase of 20.39% during the period between 2016 and 2018. Furthermore, the market is expected to witness significant growth in sales of artisanal and custom fragrance products over the forecast period, owing to the increasing expenditure on advertisement and promotion.

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