Customer and Market Segmentation in Fragrances and Perfumes

Thomas Brownlees

Thomas Brownlees

CEO and Founder,
440 Industries

Introduction

The fragrance and perfume industry is quite interesting when you look at the numbers it generates every year. To become a major challenger in the market, you will have to consider these insights and plan your entry strategically. 

In this guide, we are going to talk about different customer segmentation for the fragrance industry and help you to figure out the recent trends in the market. So, let’s cut to the chase, and get started!

In this post we are going to discuss:

1. Key Consumer Insights of Fragrance and Perfume Market in 2020
2. Fragrance and Perfume Market Key Segmentation
3. Segmentation by Usage
4. Segmentation by Type
5. Segmentation by Distribution Channel
6. Segmentation by Geography
7. Key Players in the Value Chain
8. Conclusions

Key Consumer Insights of Fragrance and Perfume Market in 2020

Here are some of the key consumer statistics and trends that you should know about the fragrance and perfume market. These statistics have been reported by Statista.

  • The fragrance market across the globe is currently valued at $46 billion. This billion-dollar industry is projected to grow steadily with inflation.
  • If we talk about the flavour and fragrance market in the United States, it was valued at a whopping $5.99 billion.
  • If we take the North American region we will find that the industry makes $465 million in sales just from women. On the other hand, the continent makes $327 million annually from men.
  • Back in 2015, the total sales value of the fragrance and perfume industry in the United States was $8 billion.
  • Take the prestige fragrances in the United States into consideration and you will find that the direct-to-consumer sales are a total of $285 million annually. 46% of this amount comes through the sale of gift sets.
  • 5.5 % of the women’s fragrance sales in the United States are from white diamonds by Elizabeth Taylor.
  • The sale of shaving lotions and men’s fragrances at the supermarket in grocery stores in the US amassed over $86 million.
  • 32% of the consumers claim that they are strongly influenced by discounts and promotions offered online or at retail stores.
  • 75% of the women population claims to wear perfume on a daily basis.
  • The number of fragrance choices the United States has is currently more than 1100. This is a 400% increase from the year 1997.

Fragrance and Perfume Market Key Segmentation

The fragrance and perfume industry has had a strong impact on the personal grooming habits of individuals across the globe. It is no longer perceived as a commodity of the affluent since it is gradually becoming a day to day essential product used by millions of people every day. However, these products are still used as a reflection of personal Panache and individuality.

The changing fashion trends and the growth in the importance of fragrance have been fueling the industry and making it a worldwide phenomenon in 2020. 

The fragrance and perfume industry is largely based on segments like usage, type, distribution channel, and geography. If we talk about the customers, the fragrance and perfume industry gets money from all genders and parts of society. We are going to talk about all these segments and help you understand the fragrance and perfume market in much detail.

We are going to segment the fragrance and perfume market on the basis of usage, type, distribution channel, and geography. We will also discuss the key players in the value chain to find out what value they are bringing to the table.

So, without any further ado, let’s gain insights into one of the fastest-growing industries in the world.

Segmenting by Usage

Female. The usage of perfumes by females surpasses every other gender across the world. In the United States, four out of five women state that they use a fragrance product such as perfume on a regular basis. As mentioned earlier the industry makes $465 million every year from purchases done by women. 52% claim to have purchased fragrance products from Sephora. They are strongly influenced by product prices, especially the women who shop online. Women in the United States are 35% more likely to wear a fragrance that reflects their moods. They even find wearing a fragrance a sort of personal treat to enhance their moods. Women who are regular users of perfume and fragrance find themselves purchasing new products as often as once per month. When it comes to completing the shopping process, women take up to 6 minutes.

Male. The industry gets $327 million annually from men purchasing perfumes and fragrances. Men buy shaving lotions and fragrances worth over $86 million mostly sold at supermarkets and grocery stores in the US. When it comes to shop perfume, men usually take an average of 30 seconds to complete their purchase. This is mostly because they are not inclined towards experimenting with their fragrances. They usually change their fragrance twice every year. The Perfume industry trends are very much fueled by the preferences of men around the world and how they approach the use of perfume products. Almost 25% of the products offered by the perfume industry are targeting men at the moment. However, 60% of the male population claims to wear a perfume product infrequently. Only 40% of the population claims to have perfume they use at home. You will be surprised to know that almost 25% of the world’s male population claims that they never purchase perfume or fragrance products for themselves.

Unisex. All major traditional fashion luxury players have had to adapt to the growing popularity of unisex fragrances across the globe. The current gender-neutral trend in the fragrance industry has made the industry evolve quickly. Sooner than later we might not find any ‘for men’ or ‘for women’ in the retail stores. The creation of a unisex fragrance happened in the 1990s and was fueled by Calvin Klein’s CK One. The Banana Republic came out with eight unisex fragrances as its icon fragrance collection. In 2010, 17% of all fragrances launched by deemed as unisex. Approximately 51% of the global launches in 2018 were claimed to be gender-neutral. Premium unisex fragrance brought in the maximum profit in the fragrance category in 2018. The global sales for unisex fragrance were up by 7.5% which led the fragrance industry to generate $2.4 billion. Liberty London, a retailer in the UK, has reported a 40% rise in sales of unisex fragrances.

Segmenting by Type

Perfume. Valued at $31.4 billion in 2018, The perfume market is expected to grow at a CAGR of 3.9% till 2025. The factors that are responsible for the market growth of the perfume industry is personal grooming and demand for luxury and exotic fragrance. Perfumes have become a significant part of the cosmetic and personal care industry. Product innovations have also boosted sales in the perfume market over the years. If we talk about numbers 75% of millennial women are inclined to buying natural products and 45% of them prefer to have healthy perfumes. The preference for premium fragrances among consumers is a major reason why there has been a decline in demand for mass perfume products. 

Deodorants. The market size for deodorants is currently valued at $62.9 million and is expected to expand at a CAGR of 14.1% till 2025. The deodorant market is mainly driven by the growing preference for chemical-free products. There has been an increase in demand for organic deodorants that are less harmful to the skin. The rising awareness regarding the harmful effects of aluminum salts in female consumers has made deodorant brands use modern technology and innovative solutions to come up with less harmful products. The consumer trends show that 16% of men and 14% of the men have reported skin irritations by the use of deodorant. 

Others. The fragrance market is also occupied by home fragrance products. These are mostly diffusers, sprayers, scented candles, and other products. The home fragrance market is currently valued at $5628.9 million and is expected to reach $9122.6 million by 2026. Talking about CAGR, the market is expected to grow at a CAGR of 6.3 % till 2026. These products come in a variety of designs, colors, styles, and are geared to enhance the aesthetics of the home.

Segmenting by Distribution Channel

Some of the main distribution channels for the fragrance market are specialty retail stores, multi retail stores, and online retail stores. The offline segment is still the largest distribution channel among the three. This is because most customers want to test the perfumes and fragrances before they take the product home. The offline segment holds 92.1% of the market share and is challenged by online retail stores that are growing quickly and are coming up with exciting offers thanks to their negligible overhead costs. Some of the offline distribution channels include supermarkets, hypermarkets, brand outlets, drug stores, and other unorganized retail markets. If we talk about India, Thailand, Bangladesh, and other developing countries, you will find that the unorganized retail sector is one of the key distribution channels for fragrance products. Direct selling to consumers is not that popular in these areas. However, Amway has broken the shackles and has become the largest direct seller of personal care and household care products which also include fragrance products like car fresheners and room fresheners. Talking about online channels that are projected to grow at a CAGR of 4.2% till 2025, the increasing penetration of high-speed internet and smartphones across the globe is only going to fuel the online retail sector. It also brings in the convenience factor which often attracts the consumers towards buying products online. Not just that, it also provides convenient delivery services which will definitely go on to encourage the online sale segment for the fragrance industry.

Segmentation By Geography

The regional insights are also important to understand how the fragrance market works across the world. Let’s talk about North America first. The largest market for fragrance is in North America which has a market share of 33.9%. The North American fragrance market is projected to reach $30.27 billion by the year 2025. This will mostly be backed by major manufacturers who are all set to launch new products into the market and gain a competitive edge. The Asia Pacific region is also one of the fastest-growing regions for fragrance manufacturers. The region is expected to grow at a CAGR of 4.9% till 2025. There are many new players that are surfacing in developing countries like India, Bangladesh, Thailand, and Taiwan to cater to the increasing number of consumers. Even China is not backing off from the challenge and is coming up with high-quality organic fragrances to lure its young market.

Key Players in the Value Chain

There are many key players in the value chain of the fragrance market. Some of the most influential players are:

  • Coty UK
  • Procter & Gamble Prestige Beaute
  • Loreal
  • LVMH
  • Givaudan
  • International Flavors & Fragrances
  • Estee Lauder Beautiful
  • Kilian
  • Firmenich
  • Symrise

Most manufacturers in the fragrance market are open to adopting strategic steps which can be mergers and acquisitions, technological innovation, or product innovation to triumph in their particular market. They are even keen on increasing their geographical reach to boost their product penetration mostly in the developing countries in the Asian subcontinent. They are willing to establish strategic partnerships with importers to cater to the customers’ demand for premium imported perfumes and deodorants. The demand is expected to increase which is why these manufacturers are focusing more on marketing especially in developing countries and other untapped regions of the world.

Conclusions

There you have it. We have shared some of the most crucial insights into the perfume and fragrance market. It is very important for you to take the segmentation of the market into consideration if you are willing to grow in the perfume and fragrance industry. We hope this piece of content brought great value to you and thank you for the time you spent reading it!

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Customer and Market Segmentation in Fragrances and Perfumes In this post we break down the ways in which the perfume and fragrance industry can be broken down, in order to identify how to carve your perfect niche.
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Sources and Further Research

Thomas Brownlees

Thomas Brownlees

I am an Anglo-Italian business lecturer and consultant based in Florence, Italy. In 2017 I started 440 Industries, an education and training company focused on fashion, music, and technology. Our mission is to help students, entrepreneurs and managers in overcoming the challenges of starting, developing and scaling their business in the creative industries. When there's a will, there's a way!

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