The demand for luxury perfumes is anticipated to witness a steady demand during the forecast period on account of rising brand presence in emerging economies. Increasing purchasing power of consumers, strengthening economic condition of the emerging economies and increasing penchant towards luxurious products are some of the key factors driving growth of the luxury perfumes market.
Furthermore, increasing inclination of population towards online mode of purchasing is another factor boosting growth of the luxury perfumes market. Consumers are easily attracted towards online shopping due to the convenience it offers in the form of easy delivery, continuous offers and discounts, promotional activities, and various others. Furthermore, emergence of several e-commerce companies over the past few years have increased the competition among market players due to which they are focused on several promotional and marketing activities, price competency, which in turn is acting as a boon to the consumers.
According to Coherent Market Insights, strengthening economic condition of developing countries has resulted in an increasing consumer base for premium products, which has paved the way for the entry of luxury products, including luxury perfumes in several emerging economies which includes India, China, Brazil and Russia among others.
However, high price of luxury perfumes and wide availability of mass perfumes are some of the key factors restraining growth of the luxury perfumes market. According to Coherent Market Insights, the global perfume industry recorded revenue of US$ 25.33 billion in 2015, out of which luxury perfumes accounted for around 40% in the same year.
The demand for luxury perfumes in the online segment is witnessing a significant growth at present and the same is expected to surge further during the forecast period. Consumer inclination towards online purchases, rapid emergence of several e-commerce companies coupled with aggressive marketing and promotional activities are some of the factors responsible for the significant growth of the online segment. Supermarkets accounted for the dominant share in 2016 and is expected to lose demand during the forecast period due to shift in consumer preference towards online purchases.
North America accounted for the dominant share in the global luxury perfumes market in 2016 and is predicted to retain its dominance throughout the forecast period. Fair presence of luxury perfume brands across the economy, high purchasing power of consumers backed by strong economy of the country are some of the factors boosting the demand for luxury perfumes in the region. According to the U.S. Census Bureau, the median household income of the country rose to 5.2% in 2016. Elizabeth Taylor was ranked as the number one brand of luxury perfume, recording sales of more than US$ 20 billion in 2016, which is more than double of the second leading brand of perfume by Juicy Couture. In 2017, Brittney Spears launched a new perfume called Sunset Fantasy in collaboration with Elizabeth Arden, thus expanding her portfolio. Her perfume portfolio recorded revenue of more than US$ 4.5 billion in 2015.
Asia Pacific is anticipated to exhibit the fastest growth during the forecast period. In 2015, the Government of India had approved 51% Foreign Direct Investment (FDI) in multi brand retail and 100% FDI in single brand retail to strengthen the economic condition of India. This brought around an important revolution in the area of luxury brands, inclusive of luxury perfume brands in India, which in turn has positively affected the growth of the luxury perfumes market in the country and is expected to exhibit similar trend throughout the forecast period. Moet Hennessy Louis Vuitton (LVMH), one of the leading players operating in this market recorded profit of approximately 50% in 2017.
Some of the major companies operating in the luxury perfumes market include the Estee Lauder Companies Inc., Chanel Inc., Hermes Europe GmbH, Ralf Lauren Corp, Kering S.A., Gianni Versace S.p.A., Christian Dior S.A., Prada S.p.A, and Moet Hennessy Louis Vuitton S.A. (LVMH).
Mergers and acquisitions, joint ventures and partnerships, product innovation and geographical expansion are some of the key strategies adopted by leading market players in order to maintain market position. In 2017, Moet Hennessy Louis Vuitton (LVMH) brought a majority stake in Maison Francis Kurkdjian to further expand its position in the luxury perfumes market.