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Putting on perfume before going out, tulip scent in the bedroom, tropical fruity bath oil in the bathroom... These fragrance-related consumption habits are gradually becoming daily routines and new lifestyle of contemporary young people.
Consumers' love for "fragrance" has been highlighted in all categories. Perfume, aromatherapy, and toiletries with fragrance retention have all become new growth points. The Perfume Industry Market Prospects and Investment Research Report in 2020 mentioned that the scale of China's perfume market will exceed RMB 40 billion by 2022.
During the 26th China Beauty Expo, top international brands Bulgari, Versace, Anna Sui, Coach, niche perfume brands 4711, CLEAN, TOUS, TRUSARDI, MASAKI, as well as Boitown, RECLASSIFIED, and Barrio all showcased their creations at the special “Fragrance zone in Hall W2.”
It can be seen that olfactory economy is heating up due to the awakening of market consumption awareness and the rise of the younger generation of consumers.
#1 Growth and Market Penetration
Fragrance based products have always been a relatively niche market in China. At the "2021 China Cosmetics Retail Industry Conference" hosted by CBE, Lin Jing, senior vice president of Eternal Group, revealed that China's perfume consumption market only accounts for 2.5% of the global market share at RMB 390.6 billion.
However, with the changes in consumer group structure, more and more “cheerful” young people begun to enter the fragrance field, and China's fragrance industry is heating up rapidly. Lin Jing introduced that China's perfume market increased by 26.6% in 2020, and perfume accounted for 3% of the beauty market.
In particular, it is worth noting that from the perspective of the growth rate of the entire perfume market, the penetration rate of the perfume market continues to increase, which shows that the frequency of perfume use by young people in China is increasing, and more and more young consumers are willing to buy perfume products.
#2 Post-95s behind the Billion RMB olfactory economy
In terms of fragrance market user insights, Lin Jing pointed out that the current Chinese consumers can be roughly divided into four categories: early adopters in first tier cities who are keen to try new experiences; cautious followers who live in second tier cities and below who pay attention to product reliability and channels; senior specialists with advanced knowledge and high income in first tier cities; and classic supporters who live in second tier cities and below who value usage experience.
It is worth mentioning that the use of perfume tends to be lower as people age. At present, the main consumer in our country are the post-90s, post-95s and even post-00s. Compared with the previous generation, these young consumers pay more attention to their quality of life. Their aesthetic consciousness has begun to be awaken, and they have completed the transition from practicality to self-pleasure in consumption. Except for perfumes, most fragrance products are exactly the ones that are most in line with the characteristics of "consumption for pleasing oneself". According to statistics, nearly 80% of consumers buy perfume mainly for self-pleasure, and perceptual consumption is greater than rational consumption.
In addition, the consumption potential of male consumers in the fragrance market is also being stimulated, and the number of male users buying perfume is increasing. Young Beast, a domestic fragrance brand, previously disclosed to the media that the proportion of male to female users for their brand is 4:6.
#3 Imported fragrances gaining speed, with niche fragrances being a major hit
For the longest time, consumers' brand choice for perfume is very concentrated in China. In 2019, the top ten perfume brands accounted for more than 60% of the market share. However, driven by the upsurge of the olfactory economy, more and more young people have begun to choose niche fragrance perfume products to show themselves and express their individuality.
According to statistics, in 2020, imported perfume on the Tmall international platform increased by 70% year-on-year, among which "niche fragrances" have risen the fastest, with a three-digit growth year-on-year. Imported niche perfumes have become a new rising star on Tmall International Beauty.
Data shows that over 24 million people have purchased imported aromatherapy, fragrance products and toiletries on the Tmall international platform in the past year, covering over 50 countries. According to a list published recently, Danish Forest Fragrance, Israeli Mango Kiwi, King William Pear and other highly personalized niche fragrance flavors are quite popular among young consumers.
At China Beauty Expo this year, niche fragrances from all over the world received great attention. In the special "fragrance zone" at the exhibition, the perfume giant Eternal launched the niche perfume brand 4711 and CLEAN. In addition, there was the fresh and lovely niche fragrance from Spain – Tous, cool and elegant TRUSSARDI from Italy, avant-garde and concise MASAKI, etc.
#4 Domestic brands meeting consumers' demand
With the transformation of channels and the rise of the new generation of consumers, domestic perfume brands are gradually rising to meet consumers’ demands from multiple perspectives such as quality, taste, appearance, and price.
According to data from Baidu perfume industry report, domestic perfume brands have carved up 3% of the brand search in the perfume industry. Among them, the top three growth rates were from Boitown (96%), Barrio (76%), and Vivinevo (47%).
Insiders pointed out that one of the difficulties faced by many domestic brands is that perfume contains alcohol, and the production process can be very dangerous, so the entry barrier for perfume factory is very high. If this problem can be resolved, a brand might become the next Boitown.
In order to ensure innovation and quality, Boitown established its own factory as early as 2013 to strengthen its product quality control and supply chain flexibility. As a strong support of the Boitown brand, Shanghai Fenshang Biotechnology Co., Ltd. boasts a strong supply chain system, integrating raw material resources, formula R&D, product design, and production control. It is a comprehensive cosmetics factory specializing in the processing of perfume and household fragrance products. With that kind of mature and solid supply chain, coupled with the unique fashion foresight, natural fragrance material, and excellent product quality, enabled Boitown to quickly move ahead and set off a new trend in perfume consumption.
In addition, with the rise of domestic brands, products with Chinese characteristics have become a new favorite for the young. Many domestic perfume brands have begun to incorporate the two elements of "Oriental Aesthetics" and "Chinese Reminiscence" into their products. For example: the aromatherapy product "L.B.K Water" launched by the Scent Library in 2018, and the "City Series" launched by new domestic Chinese perfume brand Assassina - Shanghai’s bar in the early morning, Chengdu with culinary culture, Guangzhou filled with the smell of herbal tea, and Harbin with cold weather. They combine fragrance with nostalgia to bring back a good memory.
For the new consumer groups of Generation Z, the luxury attributes that have been put on perfumes are gradually declining. Perfumes, which used to be status symbols, have become embellishments in daily social life. Mintel data shows that 42% of respondents will pay a premium for products with unique fragrances.The rise of the "olfactory economy" has stimulated the growth of products such as perfume, aromatherapy and fragrance, and the billion RMB economy boom will continue to heat up. It can be predicted that there will be more and more personalized brands with strength, taste, content and story in the future. In China's new consumption era, we will "sniff" out more business opportunities.