local perfume brands are overcoming difficulties along the way, and coty china is in the process of correcting its mistakes
2024-09-15
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the "olfactory economy" has a blue ocean of tens of billions of yuan yet to be explored. data shows that by 2028, the retail market size of china's perfume category will reach 44 billion yuan. at the same time, local perfume brands continue to emerge. since the beginning of this year, 55,100 fragrance-related companies have been registered in china.
faced with competition from fast-growing local brands, international perfume giant coty is struggling to make a profit and has taken a series of corrective measures in the chinese market: on september 13, burberry, a subsidiary of coty, signed tang wei as its spokesperson, and the new general manager of the chinese market was also unveiled not long ago. can these actions help coty regain the favor of chinese consumers?
the "olfactory economy" is booming, and young people pay more attention to personalization and cost-effectiveness
"i only buy big-name perfumes for my friends' birthdays. the exquisite packaging makes them more recognizable." li wanlu, who just walked out of the mall with a burberry bag in her hand, told the beijing news shell finance reporter that if she didn't consider giving gifts, she would no longer follow the mainstream when choosing perfumes, but would pursue a more personalized experience. "some local brands are doing very well now. the smell is very oriental and zen, and they are also unique enough. the key is that they are cheap."
similar to li wanlu's idea, niu mingyu, a judge of the golden osmanthus award and a fragrance blogger, said frankly, "when you want to give someone a gift, compared with the international brand chanel and the domestic brand wenxian at the same price, most people will still choose chanel, although the quality of wenxian is not inferior at all." at the same time, he also pointed out that young people's consumption concept of perfume has changed compared with before, and they will choose products with better cost performance. the mainstream trend of local brands is low price and good quality, so they can "break through the thorns" in the fierce market competition.
according to statistics from consulting firm frost & sullivan, the scale of china's perfume retail market has increased from 11.4 billion yuan in 2018 to 22.9 billion yuan in 2023, and is expected to reach 44 billion yuan in 2028. at the same time, a large number of local perfume brands are constantly pouring in.
according to qichacha data, the number of registered fragrance-related companies in my country has increased year by year in the past decade, and the growth rate has remained above 50% for two consecutive years. the number of registered companies in 2022 and 2023 increased by 60.2% and 53.5% year-on-year to 63,200 and 97,000 respectively. so far this year, 55,100 fragrance-related companies have been registered in china.
it is worth noting that coty group (hereinafter referred to as "coty"), an international perfume giant, has also seen the rise of chinese local brands. sue nabi, ceo of the group, said that in recent years, the competition between international mass brands and chinese local brands has become more intense than ever before, which is a challenge for those companies that rely on mass brands.
international perfume giants are busy transforming as they change leadership in the chinese market and adjust sales channels
according to coty's latest financial data, in fiscal 2024, the company achieved double-digit growth in asia excluding china and regional travel retail channels, driving the asia-pacific region's book net revenue to grow by 9% in fiscal 2024, an increase of 11% year-on-year. in the fourth quarter, its book net revenue fell by 4%, a decrease of 2% year-on-year.
facing pressure, coty has been making frequent moves in china this year. a beijing news reporter from shell finance learned from the wechat public account of "coty china" that in september, coty announced the appointment of mathieu dufresne as the general manager of coty china to accelerate the development of its high-end and mass beauty businesses in china.
prior to this, coty china had been in the fluctuations of structural transformation.
in the first half of last year, coty announced that chen min would serve as chairman and general manager of china. he was also the first chinese "top leader" of coty china. however, not long after taking office, chen min suddenly resigned as the head of coty's china business. coty announced that "from july 20, 2023, chen liyi, executive vice president of coty asia pacific, will temporarily serve as the head of coty's china business. the former general manager of china, chen min, resigned after consultation between the two parties." it is reported that chen min has now joined shanghai jahwa and served as the general manager of the beauty business unit.
photo/screenshot of marc jacobs official flagship store
in addition to the "helmsman", coty china's sales channels have also changed. in june this year, marc jacobs' tmall official flagship store announced that it would end operations on june 30, 2024. as one of coty's iconic brands, the marc jacobs flagship store had 626,000 fans at the time. on june 25, marc jacobs reached an exclusive retail strategic cooperation with sephora, and its products will be sold exclusively in sephora's online and offline retail channels.
perfume consumption is becoming more polarized; international brands cannot ignore chinese culture
through these actions, it is not difficult to see coty's determination to further develop the chinese market. however, when there are more cost-effective local brands in front of them, whether young people will continue to "pay" for big-name perfumes has become the first question.
"young people will not lose interest in international perfume brands, but local brands have higher visibility, higher cost-effectiveness, and have been recognized by some customer groups." in the view of zhou ting, director of the yaoke research institute and luxury goods expert, some young people will be more rational when buying perfume, while others will pursue more product added value and experience. in the future, international brands will serve the high-end market, and local brands will serve the mass market, which will become the main direction of the development of the chinese perfume market.
niu mingyu also told the beijing news shell finance reporter that local brands are indeed competing with international brands for the market, but they do not pose much of a threat at present. "the reason is simple. if local brands cannot control the raw materials of fragrances and perfumers, it will be difficult for them to stand at the top of the pyramid. i have seen that some local brands, such as guanxia, have begun to work on raw materials and start to make their own production areas. this is a good start. i hope local brands can work harder."
turning our attention to international perfume brands, if we want to regain the favor of consumers, "we must not only continue to adhere to the high-end strategy and form a differentiated competition model, but also vigorously develop customized services to meet the personalized needs of high-end consumers based on consumption upgrades," zhou ting said. international brands must continue to improve and enhance their service networks, continuously increase investment in product research and development, and most importantly, pay attention to chinese culture and do a good job of content marketing based on high-end circles.
li zheng, financial reporter of beijing news shell
editor: chen li
proofread by zhao lin
screenshot of coty group’s financial report
