How China’s New Love Affair With Perfume Is Changing the Market | China Decoded, BoF Professional
China dominates almost every aspect of the consumer market: it is the world’s biggest apparel market; the biggest luxury market; the biggest source of growth for fashion and beauty brands the world over.
But fragrance has remained an anomaly. As of 2017, only one percent of worldwide perfume sales happened in China, and less than one percent of Chinese consumers used perfume daily, according to market research firm Mintel. But that’s changing fast, thanks to a new generation of consumers, who are adopting perfume as a way to express their personal style.
Now it’s obvious that the ones who aren’t using fragrance, just aren’t using it yet.
“The youngsters are all so much about wanting to tell who they are and why they are unique. Fragrance is the ideal way to convey who you want to be in a really subtle way,” said Dao Nguyen, founder of Essenzia, a boutique creative strategy agency specialised in fragrance and beauty. “Now it’s obvious that the ones who aren’t using fragrance, just aren’t using it yet.”
China’s fragrance market was valued at 10.9 billion yuan ($1.7 billion) in 2020, according to data from Euromonitor International, around 5 percent of the global market. It’s expected to surge past 30 billion yuan ($4.7 billion) by 2025.
The Perfume Boom
Nguyen noticed a change in the way young Chinese women were talking about fragrance as early as 2014.
Where earlier in the decade many viewed perfume as a pragmatic tool to mask body odour (largely viewed as a Western problem in China), suddenly the conversation shifted to fragrance as a means to express identity, Nguyen said. She knew a major disruption was on the horizon.
“I was knocking on doors and telling people they should prepare for this,” she said. “At first people were unsure, but now we have reached a point where no one can say that China is not important to the fragrance market.”
In a sign of just how much demand is growing, Tmall Global and its logistics partner, Cainiao, even launched a “perfume route” — a dedicated daily flight to transport fragrances between Europe and China.
But while the market’s growth has proved explosive, so has the proliferation of brands jostling for a slice. Western players that are complacent will miss out, according to Dao.
“What I have observed in China blows my mind,” she said. Almost overnight “they revolutionised how they relate to fragrance, use fragrance, speak about fragrance … and 90 percent of Western brands don’t understand how fierce the competition in this market is going to be.”
To be sure, established luxury giants like Chanel and Dior top the fragrance market in China too, but the most impressive growth is being driven by younger consumers, who are seeking out new brands.
“Generation-Z doesn’t like to follow trends, or to be told what they should purchase,” said Chen Ye, a research analyst at market intelligence firm, ChemLinked. “They are more inclined to take the initiative to try and form their own judgements, they are the main driver pursuing niche perfumes.”
According to data from Tmall Global, the gross merchandise value (or GMV, a measure of total sales volume) of its niche fragrance category witnessed a year-on-year increase of more than 300 percent in fiscal year 2021.
After last August’s Qixi festival (one of China’s multiple version’s of Valentine’s Day), Tmall released a report showing its most searched for fragrance brands included Penhaligon, Maison Margiela, Byredo and Juliette Has a Gun. This week, many are expecting these smaller brands to enjoy a similar bump in sales thanks to 520, another shopping event that falls on May 20 each year and has romantic connotations because the numbers sound much like the phrase “I love you” in Mandarin when said aloud.
Chinese businesses with a lot of firepower are paying attention. In 2019, Chinese brand accelerator Ushopal invested in Juliette Has a Gun (the size of the investment and Ushopal’s stake in the company remain undisclosed), propelling the brand, the brainchild of Nina Ricci’s great-grandson Romano Ricci, to substantial growth.
“When we started working with Juliette Has a Gun, the brand only had 20 posts on Xiaohongshu and there were no parallel sellers on Taobao,” said William Lau, vice president of brands at Ushopal and chief executive of its multi-brand beauty chain, Bonnie & Clyde. In the space of a little over 12 months, the brand surged to snag one of the top three spots in the fragrance category during Tmall’s Double 11 shopping festival. GMV surpassed 70 million yuan ($10.8 million) in 2020, Lau said.
Capturing the Market
Lau attributes the brand’s success to targeted marketing for a youthful audience willing to experiment. He says Juliette Has a Gun’s consumer in China is on average between the age of 22 to 25, almost a decade younger than its key demographic in Europe. The brand has focused on targeting groups often overlooked by conventional campaigns in China.
You have to find the right emotions, storytelling, design, to capture their attention and capture their hearts.
In particular, Juliette Has a Gun has focused on marketing to the LGBTQI community (still a relative rarity in the Chinese market). It’s also engaged with artistic and creative communities, working with tattoo artists in campaigns for the brand’s Lady Vengeance fragrance, for example.
“You have to find the right emotions, storytelling, design, to capture their attention and capture their hearts,” Dao says of capturing market share in China’s increasingly crowded fragrance field.
Crucially, brands must meet consumers where they’re at, rather than making assumptions based on tired tropes or preferences in other, more established fragrance markets in East Asia, such as Japan. How consumers respond to a scent is deeply rooted in culture and experience; the way a scent is perceived in China is likely to be different to its reception in Japan or France.
For instance, while it’s true that many Chinese consumers show a preference for “lighter” scents, the market has also proven fertile sales ground for Yves Saint Laurent’s Black Opium, which would rarely be described as “light” by a Western nose.
Nguyen uses the scent of tuberose as case in point. It’s considered a strong fragrance and used in a lot of “sexy” perfumes in the West. But in China, tuberose is considered a “clean” scent because it has been used in soaps in the country for a long time. That association has lead to the popularity of scents like Gucci Bloom, which features both tuberose and jasmine, two floral scents that conjure nostalgia from a Chinese perspective.
Another interesting trend observed by Tmall Global has been the rise in demand for unisex fragrances among younger Chinese consumers. Products marketed to men, like Bulgari Pour Homme, CK One, and niche fragrance brands like Acca Kappa and Creed have seen proved popular among women, according to Tmall.
“Gen-Z are especially less confined by traditions,” a spokesperson said. “We’ve noticed that they particularly prefer products with woody notes, marine woody notes and rose woody notes.”
Local Competitors Rising
A native nose for how a specific scent will resonate is an undoubted advantage for local brands. These have proliferated in recent years, attracting a growing audience and investment.
“Domestic brands have the advantage of being able to use these traditional scents to create emotional bonds with consumers, and most of them are more affordable,” ChemLinked’s Chen said, pointing to local player Scent Library as an example. The brand had a blockbuster fragrance with a scent that recalled water boiling in an aluminium pot. The unlikely hit reminded young consumers of their childhood, and sold millions of bottles.
To be sure, international brands still dominate the Chinese market. Nearly 87 percent of respondents said they prefer buying perfumes from international players because of their “experience and professionalism,” according to a survey conducted by ChemLinked published this week.
Still, if anything’s certain about China’s young consumers, it’s that they’re a fickle bunch.
“You have to work on your strategy in a way that makes people feel like they are getting novelty, even if you stick with your franchise,” Nguyen said. “Chinese brands are rising and they launch so fast.”
“My advice to brands is not to focus on loyalty, focus on recruiting first,” she added. “Right now your job is to stand out and make people attracted to you and like you and want to buy you. And then, once that’s done, you can figure out how to make yourself a classic.”
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