In 2021, can Fragrance return to the 'top tier'?

Personal care market went through a turbulent time when the country was hit hard by the pandemic. Fragrance market was no exception. Nevertheless, consumers’ demand to smell good and “wear” perfume remain strong. And we can find some clues to how the fragrance market will rebound in 2021 and beyond by tracing back to the history its development.

2017 to 2019: fragrance market initially showed potential

Before the pandemic, personal care market was booming, and fragrance was one of the fastest-growing categories.

In 2018 and 2019, both sales value and penetration achieved double-digit growth for the two consecutive years. Although the penetration rate was still low, fragrance products quickly made their way into consumers’ everyday life.

In addition to numerical growth, two trends pointed to the potential of fragrance-related products.

Outside the fragrance market, the love for "fragrance" became apparent in other categories. In categories like shower gel, shampoo and laundry, products that highlighted their fragrance appeal or of scent booster function are continuously outperforming the total category.  These products are anchored around the consumers’ need for sensorial stimulation in daily life, which is the fundamental cornerstone of the fragrance category.

Within the fragrance market, consumers' brand choice have been concentrated to top, well-known brands for a long time. The top 10 brands accounted for more than 60% of the market share in 2019, which is much higher than that in the skin care and makeup market; and naturally, most of the consumer education about the category is dominated by these brands. Most of the category new buyers pick their first bottle from a top brand. However, niche brands, both imported and local, started to expand its presence, primarily through online channel in 2019.  This diversification of the market is an indication of growing consumer sophistication.

Through 2020, "fragrance" demand remains strong despite the macroeconomic challenges

In 2020, the fragrance market sales and penetration dropped significantly compared to the year ago, and this is due to its usage relying very much on going-out occasions and acquisition on gifting /oversea travel purchases. Nevertheless, we are still optimistic about the prospects of the fragrance market. In the long-run, the compound annual growth rate for the three-year period from 2018 to 2020 is still positive. Moreover, by the third and fourth quarters of 2020, the market performance has improved significantly, once again, surpassing the level from 2018.

In addition, the trends we observed in previous years have stayed, and even accelerated. Consumers' demand for a variety of "fragrance" products still exits. The big brands in the fragrance market continue to lead, while a number of local brands are catching up faster, especially through their strong voice in the online channel.

In the new year of 2021, what are the concerns?

For manufacturers, fragrance it is still a category worth investing in despite of the market stagnation in 2020. And its growth primarily relies on capturing the attention of and attracting more new consumers by tapping into their needs for sensorial “dress-up.” Contact us at Kantar Worldpanel to learn more about what new trends have emerged amid the post COVID-19 new normal and who might be the highest potential consumers for you to tap into.

Note:

Definition of fragrance: It includes liquid and solid products that are used on human body and hair, and are used for adding fragrance, such as cologne, eau de toilette, eau de parfum, and solid perfume. It does not include products for the environment and objects, such as fragranced incent, scented candle, fragrance for cars, home, and clothing; nor does it include products for the human body but are not used primarily for adding fragrance, such as Insect Repellent

Definition of mass fragrance: Excluding international high-end brands, and product price less than RMB 200 per 50ml.