LVMH Dives into the Chinese Luxury Perfume Market
- Chaileedo Press
- Aug 19, 2022
- 4 min read
Updated: Aug 25, 2022
Abstract: LVMH's high-end fragrance brand Maison Francis Kurkdjian officially entered the Chinese market with its first store at Deji Plaza on August 18, 2022(China Standard Time).
Founded by Francis Kurkdjian and Marc Chaya in Paris in 2009, Maison Francis Kurkdjian is a contemporary high-end fragrance brand with over 700 stores in more than 50 countries and regions around the world. It was acquired by LVMH in 2017.
This time, Maison Francis Kurkdjian enters the mainland China market and will bring its fragrance products including three series: fragrance series, home fragrance series and travel portable set with 17 fragrances and 8 scented candles. Online whereabouts at the same time, Maison Francis Kurkdjian also stationed in the e-commerce channel and it opened the official flagship store on Chinese e-commerce platform Tmall.
It is worth noting that as it is a fact that known to us the Chinese perfume market has a broad prospect. According to the 2021 China Perfume Industry Research White Paper, China's fragrance market size is expected to exceed $2.5 billion in 2022 and is expected to exceed $4.4 billion by 2026. Among them, high-end perfume has become the main driver of market growth in China. The market share of high-end fragrances is increasing year by year from 70% in 2015 to 91% in 2020, while high-end unisex fragrances are the segment with the highest compound annual growth rate.
CHAILEEDO found that in the recent financial reports of major groups, the contribution made by perfume to the group was mentioned. Hermes' first-half 2022 financial results showed strong growth across the board with resilient growth in the Asia-Pacific market despite the impact of the China epidemic. In particular, revenue in the perfume and beauty category rose 25% to $1.59 billion.
The fragrance business also brought strong growth to Estée Lauder. Estee Lauder reported in the first quarter of fiscal year 2022 during which group revenue rose 23% year-on-year to $4.39 billion and net profit jumped nearly 30%. Among them, the fragrance division saw the strongest increase, reaching nearly 50%.
In LVMH's latest half-year earnings report, the overall revenue soared, far exceeding expectations. The various segments also grew in varying degrees over the same period with perfume and beauty sections up 20% compared to the same period last year. LVMH mentioned in its earnings report that the perfume and cosmetics business group has shown good momentum. Taking the Chinese market as an example, Maison Margiela's performance recovered following the slowdown caused by pandemic-related restrictions at the beginning of the second quarter. The Dior Sauvage series remained the world's best-selling fragrance in that half-year earnings report and the Miss Dior line also achieved better results.
Therefore, multiple Group's positive perfume business coupled with the vast Chinese perfume market, international brands have been waiting for the opportunity to move.
The 2021 China Perfume Industry Research White Paper jointly released by Eternal Group and Kantar shows that in the past three years, four international cosmetic groups, namely L'Oreal, Shiseido, Estee Lauder and PUIG Puig, have introduced at least nine perfume brands into the Chinese market including Serge Lutens, a perfume brand of Shiseido, and two major salon brands of Puig perfume brands Penhaligon's and L'Artisan Parfumeu. In 2020, Estee Lauder Group introduced KILIAN, Frederic Malle. In 2021, L'Oreal Group's Valentino beauty with a full line of fragrance makeup products landed in the Chinese market. In July this year, L'Oréal Group also brought PRADA perfume debut in the second China International Consumer Products Expo.
According to Eternal data, in the second quarter of 2022, the Top 10 perfume on whole Alibaba system, Hermes, Mason Margiela to maintain high growth and Mason Margiela performance is the most bright with year-on-year growth rate of 87%. L'Artisan Parfumeur, Ralph Lauren drove high growth with distribution on Alibaba platform and official flagship store on Tmall. International niche brands such as Byredo, Penhaligons and Diptyque also performed better in their official flagship stores on the Tmall platform.
Chinese perfume brands are not far behind with a buzz of new Chinese fragrance brands such as Scent Library, To Summer, Young Beast, Scentooze, etc. They are at an emerging and developing speed in recent years. According to "Fragrance aromatherapy - store sales ranking on Tmall" during the Chinese 618 Shopping Festival this year shows that the Chinese brand Beast topped the list.
According to Euromonitor International's data, the top 10 fragrance market shares in China in the past three years are all international brands. However, the market share of a single brand does not exceed 10%. The market share of Top 10 brands is about 42%. This means that although most of the Chinese perfume market share is ruled by international brands, there is still room for Chinese perfume brands to grasp the opportunity. Jiemian Fashion has reported that there have been many Chinese perfume fragrance brands gaining attention and reaping financing in recent years. According to Cantar's measurement of the volume of perfume brands in the Chinese market online, although the highest online volume in recent years is still the international brands, the Chinese brand Scent Library ranked in the top 10 for the first time in 2021.
Driven by "self-pleasing consumption" and fragrance economy, fragrance has become the dark horse of beauty industry growth in recent years. In the major brands to increase the pocket and high-end perfume brands accurate reach of the middle class consumer demand, it is expected that the perfume category will continue to maintain a high degree of attention.
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