Fragrances Market

Fragrances Market Outlook (2022 to 2032)

Global demand for fragrances is expected to reach a value of US$ 62.6 Bn in 2021. As per Fact.MR, overall market value is expected to reach US$ 99.2 Bn by 2031, rising at a CAGR of 4.7% for 2021 to 2031.

Over the decade, the B2B segment is set to proliferate at a CAGR of 9.6%.

Demand Analysis of Fragrances from 2016 to 2020 in Comparison to Market Outlook for 2021 to 2031

Increasing preference for hygiene products and growing awareness of fitness are key driving factors for growth in the sales of fragrances. Increase in the number of gym-goers to build immunity to fight against the pandemic has increased usage of deodorants and perfumes to control body odour.

Fragrance ingredients are also commonly used in products such as soaps and detergents, daily use household products such as shampoos, shower gels, shaving creams, and body care products such as lotions, scrubbers, in addition to candles, sprays, and cosmetics.

Development of these fragrance products has further expanded industry size. An increase in spending capacity and trends such as aromatherapy have amplified the visibility of fragrance products.

Improvements in standard of living and increase in spending capacity are driving the global fragrance market. Perfumes are now considered everyday products due to the growing preference for cosmetics and personal care.

Manufacturers are focusing on product diversification as consumers are preferring innovative products with natural ingredients that do not contain chemical synthetic fragrance material

Key players are heavily investing in R&D and advertising to influence consumer buying behavior. Companies are spending more on developing their digital footprint (uploading videos & photos regularly and interacting with clients online), hosting social media campaigns, and celebrity endorsements. Some retailers are offering the facility to get customized fragrances and perfumes and creative packaging to lure in more customers.

COVID 19 affected the fragrance market enormously. Sales of fragrance products dropped due to closure of department stores, airport stores, specialty stores, and unavailability of products due to transportation bans. Offline sales observed a major drop as people were paranoid of getting out of their houses even to buy daily essentials.

Consumers shifted to online distributors and e-Commerce sites to purchase fragrance products, and, as such, online sales are estimated to rise rapidly even in the months ahead.

As per the comparison by Fact.MR, a market research and competitive intelligence provider, the study reveals that sales of fragrances increased at a CAGR of 3.9% from 2016 to 2020, and over the next ten years, they are expected to rise faster at 4.7% CAGR.

What are the Trends Regarding Organic and Synthetic Perfumes?

Perfumes are formed both organically and chemically by natural ingredients collected from plants and animals, and synthetic chemicals created artificially in labs utilizing various oils and fats. Perfumers create perfume formulas by combining specified amounts of scent compounds. They are used to add scent to cosmetics, toiletries, and cleaning products, as well as baked goods, chocolates, alcoholic and non-alcoholic beverages.

Consumers are now more concerned about their health and prevalent fear of allergies, which has led to demand for natural fragrances in the global fragrances product market.

Natural perfumes easily blend with the skin, are more suitable for sensitive skin, and are a vital product in the skincare routine of females across the globe. They are made by using distilled or normal water and flowers, fruits, saps, seeds, or from the barks, leaves, roots, resins, or wood of trees.

The main drawback is scarcity of resources, long process of preparation, and low shelf-life. As a result, they are expensive as compared to chemical alternatives, and there is a limitation to the flavour and consistency of smell. On the other hand, synthetic perfumes are cheaper to produce than natural perfumes because as they can be produced at scale.

What Strategies are Fragrance Manufacturers Using to Stay Relevant in This Aggressive Market?

The market is fiercely competitive, with both, global and regional players vying for market domination. Critical business decisions such as acquisitions, expansions, and product releases have helped key competitors hold a majority share in the market.

Small firms specialise in the production of various personal care and cosmetics items. To achieve a competitive advantage in the current market for fragrances, companies are offering different product types, prices, ingredients, and using marketing gimmicks. To drive consumption for fragrance products, businesses are increasingly focused on incorporating different online distribution channels to be more accessible to consumers.

The European cosmetics market is witnessing growing demand for specific essential oils. European consumers are emphasizing on high-quality natural products. Imports of essential oil have increased over the years, and the trend is likely to continue.

Germany has a rising market share of organic cosmetics. France has a large fragrance industry that imports essential oil and exports exotic, luxury perfumes substantially. Growing demand for safer and healthier products such as natural phthalate-free fragrances and potential allergens, and the lookup for perfumes that are free of animal-derived products and do not harm the environment are expected to drive the Brazilian fragrance market.

Country-wise Insights

What Opportunities Await Fragrance Suppliers in North America?

Fact.MR forecasts the North American fragrance industry to grow from US$ 15.3 Bn in 2021 to US$ 26.4 Bn by 2031. This represents a compound annual growth rate (CAGR) of 5.5% from 2021 to 2031.

Several factors are now driving the North American perfume market, specifically in countries such as the U.S. and Canada, Rise in consumer spending on beauty and personal care items in the region and accelerated demand in the U.S. fragrance product market are being witnessed.

Availability of different varieties of scents and perfumes specifically customized for consumers has resulted in higher demand for fragrance products for men in Canada. This trend is observed in millennials who are ready to spend on premium fragrance products as they are considered a status symbol among their peers.

Furthermore, increased demand for natural and multi-purpose products is responsible for market expansion. Mexico and its neighboring Latin American countries present an opportunity for fragrance manufacturers as economies stabilize and grow, and they will source and sell finished goods in these regions.

The appeal for luxury perfumes among millennials in addition to the availability of products in creative packaging is expected to drive luxury perfume sales. Premiumization is playing a key part in the luxury perfume space.

Why Does the Indian Market for Fragrances Have a Promising Future?

Fact.MR forecasts the market in India to increase from US$ 2.8 Bn in 2021 to US$ 6.3 by 2031. This represents a compound annual growth rate (CAGR) of 8.1% from 2021 to 2031.

India is an exporter of mint, jasmine, and sandalwood. The country offers all types of materials for perfumery, from florals such as geranium, spices such as pepper, woods such as agar, and grasses such as vetiver.

However, changing regulations and lack of planning are key challenges for the industry. The fragrance industry in India was hit due to the disruption of logistics. Emergence of middle-class families and consumer willingness to spend more, growing concerns about personal care products, and cultural inclination to use scented soaps, incense sticks, detergents and deodorants will provide huge boost to the fragrance Industry in India.

Why are Fragrance Suppliers Eyeing China in Asia Pacific?

According to Fact.MR analysis, China is estimated to account for 16% revenue share of the global market during the forecasted time frame.

China's beauty and skincare industries are seeing growth, which, in turn, will result in increased demand for fragrances. With its high population and increase in number of working women, there is plenty of untapped potential in the Chinese perfume market.

A huge market exists between high-end premium products offered by established brands and specialized perfumes offered by expert players. Local firms are depending on cost-effective commodities to acquire a stronghold and are complementing local tales that brings them closer to the consumers.

Cultural value and importance of fragrances in a new generation coupled with increase in disposable income are major factors responsible for the growing popularity of fragrance products in the country.

Will Focus on Consumer Engagement Continue Driving Sales of Perfumes & Deodorants across the U.K.?

The largest share is contributed by the B2B segment in the U.K. fragrances market. This represented US$ 5.2 Bn in 2021, and is projected to reach US$ 8.7 Bn by 2031, representing a CAGR of 5.5%.

Fragrance companies in the U.K. are incorporating learnings from other beauty-related cosmetic industries such as lipstick and foundation. Not long ago, purchasing these products online was not preferred by consumers, but beauty firms raised customer comfort with online purchases.

Fragrance companies are using influencers and coming up with celebrity-inspired fragrances to provide them personalized experiences through different online channels. Demand for natural fragrances is on the rise across the U.K.

Category-wise Insights

Which is the Preferred Distribution Channel for Fragrances?

People are consuming content differently while viewing information online. Key players are changing their content strategies accordingly. Video-based content is applauded more by consumers as it makes it easier to learn about the functioning and utility of products.

Companies have capitalized on the storytelling trend. By allowing consumers to purchase from the comfort of their homes, the Internet makes it exceedingly easy for organizations to maximize their profits. Brands that are well-established in the domestic market are open to exploring the untapped potential in global markets.

The largest share is contributed by the European region in B2B sales. This represented US$4.5 Bn, or 26% of the market in 2016, and is set to reach US$ 15.3 Bn by 2031, or 35%, representing a CAGR of 9.6%.

Which Fragrance Products Have Been Increasingly Preferred During the Pandemic?

Home fragrances (candles, room mists, and essential fragrance oil diffusers) are being increasingly purchased to induce a sense of serenity in home spaces. The market skyrocketed as aroma and candle containers played a critical role in self-care during the COVID-19 pandemic. Fine fragrances were used as stress relievers for mental well-being, and, as a result, there was a surge in demand for fragrances.

During lockdowns, customer demand for large-sized scented fragrant candles and perfumes soared, as they spent a majority of their time at home.

Competitive Landscape

Fragrance products have developed from a non-essential to an essential product in today's environment. Due to extended working hours and the need to smell good, millennials are willing to spend more on these products.

Manufacturers have crafted fragrance products specific to men and women. Economic growth in emerging countries as well as rising demand for youth-oriented fragrances are expected to propel the global fragrance sector.

• Kim Kardashian West's KKW Fragrance, a collaboration with celebrity florist Jeff Leatham comprising three flower-inspired smells; Michelle Pfeiffer's light and floral Windows Down; and Tom Ford's Tubéreuse Nue, with notes of tuberose and jasmine, are some of the new fragrance releases.
• A beauty cult favourite - The Ordinary - released its first home fragrance - Shop, a spicy peppery aroma with warm cedar overtones. The fragrance encapsulates the feeling of "happy and joy with a sense of peace," according to Azzi Glasser, an award-winning perfume designer who assisted in the creation of Shop.

Key Segments Covered in Fragrance Industry Survey

• Product:

  • Cosmetics & Toiletries
  • Fine Fragrances
  • Soap & Detergents
  • Household Products
  • Other Fragrances

• Distribution Channel:

  • Conventional Retail
  • Online Sales
  • B2B
  • B2B - TP