Fragrances in focus: Future trends after record-breaking sales and big acquisitions

23 Jan 2024 --- Many personal care and beauty companies experienced a strong 2023, with fragrance firms especially enjoying the year amid record-breaking sales and mergers and acquisitions.

LVMH’s fragrance and cosmetics division grew 12% year-over-year in the first nine months of 2023, while L’Oréal Luxe achieved 6.1% growth in the same period with the “fragrance category again the stand-out performer.” 

Last year, Gucci owner Kering acquired the centuries-old luxury cologne maker Creed for a reported €3.5 billion (∼US$3.8 billion). At the time, it stated:

“The high-end luxury fragrance segment benefits from strong market dynamics fueling double-digit growth, high profitability, and significant revenue recurrence driving long-term resilience through the cycle. The beauty category is a natural extension of Kering’s luxury universe, and the Group is confident its expansion in this strategic segment will create lasting value for the Group and its Houses.”

The new year started with companies like Bogart buying Provence-based Rose et Marius with plans for international expansion. 

At the same time, L’Occitane opened the door to the home fragrance market, acquiring the Italian luxury brand Dr. Vranjes Firenze.

Rising demand for fragrances was evident given the record sales posted by top companies, despite or perhaps because of the inflationary environment. Industry analysts point to fragrances as an “affordable luxury” for consumers who want to splurge conservatively.

In light of the recent merger and acquisition activity, the sector seeks to further capitalize on consumer demand for products that provide differentiation and innovation. 

It is poised to be another exciting year for the fragrance industry thanks to a focus on uplifting moods, re-introducing and upgrading iconic perfume notes and innovative technology that helps companies and consumers attain sustainable goals.

Natural ingredients and personal brands
Natural ingredients produced responsibly remain critical, but the industry knows consumers demand efficacy. Therefore, fragrance innovation continues to push boundaries with mood-boosting fragrances, innovative ingredients and sustainability.

Fragrance innovation continues to push boundaries with mood-boosting fragrances, innovative ingredients and sustainability.Lu Ann Williams is global insights director of innovation at Innova Market Insights. She tells Personal Care Insights fragrances are key to individuality:

“It has now become part of someone’s personal brand — and the smell has to last. This year, we will see more parallels in the trends in food and personal care.”

“Ingredients are really in the spotlight with consumers looking for ones that deliver in food and personal care products.” 

Data from Innova Market Insights shows between July 2018 and June 2023, fragrance launches had a 12% average annual growth globally. Europe was the leader of these launches. Women’s fragrances dominated product launches, but the male-targeted claims were also popular. The rise of ethical claims shows fragrance brands are moving toward more sustainable approaches.

The market research company also looked at skin care launches in the US with a fragrance and found they peaked during Q4-20 and Q3-21. Additionally, it suggests pre and probiotic claims increased in popularity for US skin care products with fragrances. 

The top 10 claims in the US skin care launches with a fragrance based on growth were Probiotics, Fragrance-Free and Prebiotics.

While fresh fragrances remain at the pinnacle of skin care products, Innova Market Insights suggests warmer fragrances are slowly becoming more popular, with Rose, Fresh and Cool/Cooling as top fragrances in skin care products in the US based on share (Q4-22 to Q3-23).

The market analyst firm sees summer-oriented fragrances emerging in US skin care product launches with Papaya (68.2%) and Warm/Warming (+44.3%).

Givaudan’s new vanilla-scented precursor
The vanilla scent is regarded as a sweet, warm and delicately floral fragrance in terms of olfactory harmony. Its smell is often described as sweet and creamy. 

Givaudin recently expanded its fragrance precursor collection with Scentaurus Vanilla. The fragrance manufacturer tells Personal Care Insights:Lu Ann Williams of Innova Market Insights says fragrance “has now become part of someone’s personal brand — and the smell has to last.”   

"Beyond the olfactory aspect of vanilla and everything associated with it (deliciousness and universal sweetness), the interest is above all to have a product which does not color, unlike vanillin/ethyl vanillin. It is activated by oxygen; this is the principle of our technology; the precursors range…It is, therefore, a whole new olfactory territory that opens up for perfumers and consumers with long-lasting [benefits].”

Sustainability still significant
Williams at Innova Market Insights acknowledges that sustainability remains a key trend. However, she points out that it may not be the primary purchase driver, just as with food, but it can be the tiebreaker. 

Givaudan also says product efficacy is still paramount while striving for sustainable goals:

“As for sustainability, of course, it is still very relevant. Our customers are still very demanding and expect from us to move into this direction when it is possible, of course. The main challenge is to keep the same efficacy — that is why sometimes it takes more time.”

“In line with the company’s sustainability ambitions, Scentaurus Vanilla is a biodegradable molecule according to the Organization for Economic Cooperation and Development guidelines and was developed according to the Principles of Green Chemistry, in line with Givaudan’s proprietary FiveCarbon Path.”

“The molecule was designed in accordance with the Safe-by-Design approach while aiming to improve our palette of fragrance ingredients by using materials based on renewable and reduced carbon, improved processes and energy input. Satisfying the sustainability expectations of consumers’ today, Scentaurus Vanilla is another example of a tailored solution…for happier, healthier lives while helping Givaudan Fragrance & Beauty achieve a biodegradable fragrance palette by 2030.” 

Fragrance impact on emotion and mood
Psychologist Joachim Mensing studied the “effect of fragrance on consciousness, emotion and mood.” 

In his book, “Beautiful SCENT: The Magical Effect of Perfume on Well-Being,” he links the Stone Age to current brain research:

“...it goes back to antiquity. Furthermore, it is about the topic of smell. It starts unconsciously, can remain completely unconscious, but can also become conscious quickly and thus be experienced as smelling.”

Bell Flavors & Fragrances believes consumers are taking a new approach to life, refocusing, reprioritizing and revitalizing their routines.“I also present the effects of odors, fragrances and perfumes, as well as essential oils, on moods, emotions and cognitive experience on the example of some first newer studies. Our olfactory brain shows amazing abilities. This even goes so far that brain regions and networks around the piriform cortex, which is part of the olfactory brain, can change and even create entirely new olfactory perceptions from the outside world, which cannot be understood by outsiders. However, therapy with fragrances can also be used for a whole range of diseases and symptoms.”

Health and wellness watch
Bell Flavors & Fragrances sees health and wellness as a key trend for fragrances this year with “the best version of ‘you’ as consumers demand personalization, natural solutions and an inward focus” with:

Refreshed Rituals: A New Lens on Life
Consumers have taken on a new approach to life, refocusing, reprioritizing and revitalizing their routines. Products and experiences must align with evolving lifestyles emphasizing balance, consistency and simplicity, all with health and well-being.

Functional: Elevating the Everyday with Added Benefits
Individuals look beyond the basics of nutrition, hydration and hygiene, seeking added benefits from functional ingredients that support a holistic approach to their health and well-being.

Customized well-being: Let’s Get Personal with Health and Wellness
Out with the one-size-fits-all approach and in with customization. Consumers embrace a ‘taking health into my own hands’ approach, demanding solutions that speak to holistic wellness and their ‘healthspan.’

As we move forward, it is clear that industry is committed to meeting and exceeding consumer demand for products that smell good, work well and contribute positively to the environment.

By Anita Sharma