The sales of beauty and personal care products have been on the rise in China as consumers, especially the young, have become more conscious of personal grooming.
Fragrances, in particular, has gained significantly more acceptance. Bill Brace, VP of Global Market Development Operations at P&G Prestige, told WWD that the fragrance market has started on the back foot in China, due to an historical absence of perfumes and colognes in the Middle Kingdom, but it is now on the rise.
According to a recent report by market research firm Euromonitor, fragrances sales in China saw a 12 percent increase in 2011 compared to an 8 percent increase in 2010.
“We do see growing interest from [Chinese] consumers, especially younger ones as education on the category grows and knowledge on fragrance usage increases,” says Brace. “We see young Chinese consumers start to adopt cosmetics and fragrance in their daily routine. These young consumers tend to see fragrance as ‘affordable luxury’, an entry point of luxury products they can afford and show off among their peers.”
Another reason for growth is gifting. “It’s quite common for men to buy fragrances and give to women, but not as common for women to buy fragrances as a gift. Women are more likely to buy for themselves, and men are more likely to buy for their girlfriends or partners. Gifting is also a way to trigger consumers to start using fragrances,” Lui Meng Chow of Mintel said.
However, the use of fragrances is in its infancy. Phillippe Paris-Paparella, a Shanghai-based fragrance expert for Symrise, a major international producer of flavors and fragrances, points out that cosmetics were actually illegal throughout the Cultural Revolution. “Fragrance is not part of the habit or the history of China. So we cannot rely on the emotional attachment consumers have in Europe or the West where they say, ‘My mother wore this perfume,’ or ‘My grandmother always bought this perfume.’ So you are already exposed when you are very young and have an attachment to certain fragrances,” says Paris-Paparella.
Due to this lack of history, China’s fragrance market still has a lot of catching up. Market research firm Mintel projects fragrances sales to reach 4.7 billion RMB, or $754 million at the current exchange rate, in China in 2012. However, that figure translates to per capital spending that’s still 20 times lower than the US, and 60 times lower than the UK.
P&G’s Brace sees potential in the youth market. “Today, less than 1 percent of the Chinese population use fragrances compared to more than 60 percent in Western Europe or the US. What excites us is that the sheer size of the China market, even at the same penetration level as Japan and Korea, would make it a significantly bigger market. So, the market still has plenty of room to grow.”
When it comes to their preferences, the brand-conscious Chinese gravitate towards international luxury brands; the actual scent of the fragrance is secondary. Chanel, Dior and Lancôme were voted the most popular fragrance brands in China based on a research from Mintel in 2011.
Chinese consumers prefer lighter fragrances. Davidoff’s flagship scent for men, Cool Water, is a consistent best-sellers. Prada initially struggled with its signature Prada Eau de Parfum in the East Asian markets as consumers resisted its powerful scent, whereas the light version Prada Tendre was better received.
Men’s fragrance is poised to grow significantly within the next few years. According to Mintel, men’s fragrances grew by 20 percent from 2008 to 2011, compared to a 10 percent increase for women’s fragrances. Chow explains, “The word perfume often has feminine overtones among male consumers in China. However, thanks to the popularity of Japanese and Korean TV dramas, fashions from these countries are shaping Chinese men’s perception of personal grooming. As a result of this trend, younger male consumers are shifting away from their conservative traditions and have been impressed with concepts which promote individual expression. This has caused manufacturers to launch male-specific brands, including toiletries, despite the fact that they were previously associated with being a women’s product.”
The lack of penetration and history of fragrance in China means that education and dynamic marketing campaigns are key to success. Consumers are curious about fragrances, and brands need to drive education into every communication vehicle – PR, marketing, in-store counseling, etc – to maximize category’s exposure and to satisfy the consumers’ desire for knowledge.