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The Big Business of China’s Growing Niche Perfumes

BEIJING — For Ulrich Lang, the boutique perfume maker, last summer was a pivotal moment for the company.The young brand had just started shipping to the Chinese market via a local partner, sending stock that the former L’Oréal executive described as pretty “normal quantities.” Then August arrived and the sales for one of his scents, called “Apsu,” suddenly went through the roof.” exploded over the summer of 2017,” Lang recalled. His Chinese partner, ScentPage — whose name has since been changed to Perexpo — told him that they were moving several hundred bottles a day of the green, watery fragrance, priced at 1,170 renminbi, or $159 at current exchange.It wasn’t a one-off spike either. Ever since, the small independently run business, launched in 2002, has struggled to keep up with the continued demand. The Chinese have even become his biggest overall customer.While perfumes do not have the popularity or ubiquity of makeup, fragrance success cases like Lang’s are becoming more common in the Chinese market. Due to its more discreet and less social-media friendly nature, fragrance has been slower to gain traction. But in the same way that the Chinese have flexed their power as dominant customers in nearly every luxury segment from accessories, apparel and jewelry, the tide is turning for fragrances, too.As a category, its price point is accessible enough for the rapidly expanding middle class to indulge in. And for companies without the resources of a large luxury conglomerate behind them, the world of perfumes in China is young enough to still offer a relatively open playing field.It’s not just foreign players either teeing themselves up for this opportunity. Chinese fragrance companies including the salon-like Reclassified and Scent Library to the above mentioned Perexpo have established themselves as powerful national players in a short amount of time.For example, Perexpo only started up in 2017 but counts 100,000 people in their fragrance subscription service which is growing each quarter by 20 percent. The group focuses only on independent fragrances such as Liquides Imaginaires, Miya Shinma, Nicolaï and Room 1015, and sends their subscribers 5-ml. scent samples monthly using a combination of customer-provided preferences and artificial intelligence predictions. Its business also includes Minorite, a boutique O2O retailer, and fragrance distribution business, Shaode.In 2017, Euromonitor estimated that the size of the total fragrance market in mainland China to be $910.7 million. In Hong Kong, where many mainland Chinese visit to shop, it was $196 million, and many believe there remains yet a significant amount of sales conducted elsewhere overseas that’s not reflected here.”When we develop fragrances for international brands, we’re asked to focus on certain markets to make sure these are the priority markets,” said Felix Mayr-Harting, global head of fine fragrances at Givaudan, the Swiss fragrance manufacturer. “More and more, we see really top international brands saying we want to make sure this is good for the Chinese market, both in China and Chinese travelers.”Between 2011 and 2016, the compound annual growth rate for fragrances in China was 4.9 percent overall. Further segmented, premium outpaced the mass growing 6 percent compared to 2.2 percent for the latter.”One would think that the mass fragrances might be growing faster because it’s more affordable and so on, but what I project is that China is hungry for luxury,” said Celestine Tan, fine fragrance marketing manager Asia-Pacific manager at Givaudan.Lang agreed with this assessment saying, “It all makes sense to me — China is light years ahead when it comes to buying luxury.”Tom Ford Beauty, for instance, entered China only in 2015 and has doubled the size of the business every year, said its president Guillaume Jesel. In early May, the brand held a three-day immersive private blend exhibition opened to the public.It was there at the event that Chinese model Ju Xiaowen said she typically goes through a 50-ml. bottle every month.”I feel like I’m drinking the perfume, seriously. I carry a huge bottle with me all the time,” Ju said, although she later reflected that in contrast to her heavy use, she “never saw mom wear perfume.”A member of the post-Nineties generation, those like Ju are the main target for brands due to their openness to pick up new lifestyle and grooming habits. Not that fragrance wasn’t traditionally embedded in the culture. Dior Parfums has sponsored an ongoing exhibition called “Perfumes of China” at the Cernuschi Museum in Paris exploring the relationship as far back as the third century B.C.”They don’t have any cultural references for it because of Communism, so now it is almost like an age of discovery for them — which is exciting,” Roja Dove, the nose behind the bespoke luxury scents, Roja Parfums.It’s only logical, then, that brands need to do a bit of handholding in the initial stages. Providing educational guides such as a detailed diagram on places to apply perfume, as in the case of the Coty shop on Redbook, is fundamental to converting customers, said Liz Flora, Asia-Pacific editor at the consultancy L2.Reclassified, a Chinese niche perfume salon retailer and fragrance maker, educates their customer set by involving them in the blending process. While the Estée Lauder-owned brand Le Labo allows store staff to mix the fragrance in front of the customer, Reclassified takes it further, modularizing the many blending techniques, and offers 11 DIY blending styles to the public. That kind of interactive opportunity has helped propel it from its launch in Shanghai only five years ago to nearly 100 stores now.Victoire de Taillac-Touhami, who was behind the reinvention of the French apothecary brand Buly 1803, said Chinese customers need a longer period on average to experience each fragrance and learn about them.”When they smell perfumes, they like to take their time between each when they smell them. Selection of a perfume is a slow process,” she said.At the same time, Buly 1803’s Hong Kong manager Arnault Castel pointed out that the fact they know the brand at all is already demonstrating a certain level of sophistication. While the name dates back to 1803, it was a dormant house revived only four years ago, and yet the Chinese are their second-biggest demographic in multiple markets such as France and Hong Kong.Castel shared that Buly’s bestsellers are the rose-infused products, which is in line with the general market. In broad strokes, florals are popular in China, as are watery scents.”A lot of the stories about perfume are about Provence, Grasse, all these flowers. That is the first image,” said Castel. “It’s still very closely associated, especially for French perfume.”But Castel believes that it’s also very driven by marketing and could change depending on where brands choose to deploy their efforts.”The brands have chosen to tell that story but the world of perfume is so rich. I think when the brands tell other stories, other kinds of fragrance will start growing,” he said.Dove of Roja Parfums, cautions that scent is by and large a personal thing and built on memories, so it’s not possible to put everybody into one box.”I think the latest market reports will tell you that Chinese consumers do not favor heavy, strong scents,” he said, “and there may be some truth to that–but fragrance is all about expressing yourself, in whatever makes you feel a little more fabulous.”Nosetime, an online Chinese fragrance resource similar to Fragrantica, keeps a ranking of the most popular scents among local consumers, and the list is not lacking in bold or darker products. Among the big commercial brands, Hermès Terre d’Hermès is number one, followed by Tom Ford Grey Vetiver, and Guerlain Vol de Nuit. While among independent labels, Frederic Malle Une Rose is ranked first, Amouage Epic Woman second, and Creed Aventus third.The Beijing-born Scent Library has been able to capitalize well on the emotional connection unique to the local consumer mind-set. Launched in 2009 by Rosaline Lou and Evelyn Chou, the retailer has 60 locations across China and has plans to double that number by the end of 2019.The brand is best known for its scent called “LBK Water”, a reference to “liangbaikai” meaning cold boiled water. Most Chinese have grown up with the habit of boiling their water to make it drinkable, explained John Han, Scent Library vice president and husband to Lou. Its slightly metallic and floral notes immediately strikes a chord with customers, reminding them of their childhood.”If you talk about the whole perfume or bath products market, the floral family is always 60 percent plus of the demand,” Han said, “but for our consumers it happens to be more watery or ocean notes, which are the bestsellers like ‘LBQ Water,’ ‘Wet Garden’ and ‘Atlantic Sea.’ For some reason, our consumer likes that.”As for Ulrich Lang, he’s hoping China will repeat its market magic again this summer, choosing Shanghai for the worldwide unveiling of his brand’s new fragrance. ” global debut in China in summer 2018,” Lang said, “then we will bring it to other markets.”

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