The U.S. prestige fragrance industry has shown robust sales despite economic uncertainty, and there is still room for further improvement as long as consumers see value.
The NPD Group released results on the U.S. fragrance industry showing sales of $1.6 billion in U.S. department stores year-to-date (January to September) 2012, with men's fragrance sales growing slightly faster than women's.
According to Karen Grant, vice president and senior global analyst, there is still a great opportunity for further growth in the market too.
"It is quite a compelling story that despite the economic uncertainties that prevail, we continue to see sizable pockets of growth in prestige fragrance. And, when one considers the price, these fragrances are often treasures and truly an investment," she said.
"Yet, if we were to compare the scope of the premium market in countries like France, the U.S. still has significant opportunity to expand sales further in this frontier. Consumers are continuing to invest where they see the value.”
Designer fragrances accounts for nearly three quarters of the total market, according to NPD, and grew the same rate of the overall category performance, while jewelry and niche prestige fragrances almost tripled.
New dynamic from jewelry brands
Jewelry fragrance brands like Boucheron, Bulgari, and Cartier and niche fragrance brands like Creed and Jo Malone helped to take this segment of the fragrance category to double-digit growth in the first nine months of the year.
"The fragrance brands that are being sold in more selective distribution are experiencing explosive growth. We've seen this trend with high-end designer brands like Tom Ford and Jimmy Choo and this is also evident today with jewelry and niche fragrance brands," said Grant.
"Even though niche and jewelry brands make up only nine percent of the total prestige fragrance market they are creating a new dynamic in the larger fragrance arena.”
Grant explains that they are growing faster than any other type of fragrance in the prestige space and their combined sales are actually more than double the size of prestige celebrity fragrances.
In addition to niche and jewelry brands experiencing the largest dollar growth, they generate sales at one of the highest average price points in the prestige fragrance market.
While the average price in women's and men's for these fragrances are about $70, selections in this space may be in excess of $350 and leading brands are often in the $200 range.