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China’s perfume market: What brands should focus on in 2023

As Chinese consumers become increasingly educated about perfume and self-indulgence, a growing demand has emerged in the perfume market.

SEE ALSO: The Fragrance Edit: Chapter VI – What’s with the exponential growth of the Chinese niche perfume market?

According to iiMedia, the retail sales of the Chinese perfume market was RMB 13.6 billion (USD 2 billion)  in 2021, and is expected to reach RMB 30 billion in 2025 with a compound annual growth rate (CAGR) of 22.5 percent. That CAGR is almost three times that of the global perfume market in the next five years, meaning the Chinese perfume market has great potential to become a driving force of the global perfume market development and growth.

In this context, global research firm ChemLinked has analyzed the market size, latest trends, competitive landscape and consumer preferences in the Chinese perfume market, to be used as tools by brands hoping to capture more of the perfume market in China in 2023.

The potential of the Chinese perfume market is huge, proven by sales and consumption

Although the Chinese perfume market is underdeveloped (around 2.5 percent of the global perfume market), the growth rate is set to further increase from 2022 which recorded 16.9 percent growth, as the market becomes more educated and new commercial concepts are used in the practice.

The Chinese perfume consumers are still a relatively small group compared with the penetration rate of Europe and the U.S. (42 percent, and 50 percent, respectively), with China’s penetration rate at 5 percent.

It will take a long time for perfume to be popularised in China, but a growing demand can be expected with the changing Chinese consumer.

The import value of perfume to China keeps climbing, while France takes up the largest space

In China, an upward trend can be observed in the perfume import value, from USD 262 million in 2017, to USD 1.17 billion in 2022 by estimation. The considerable growth rate indicates ever-increasing and great demands in the Chinese perfume market.

Europe contributes over 90 percent of the importation, in which France is the largest source, accounting for over half of the value, far ahead of the second country of origin, Italy, followed by the UK.

Trends in distribution channels: Diversified channel network is forming

Over the space of a five-year period, the preferred distribution channels in which Chinese consumers shop fragrance has changed over time. Department store’s historically hold the lion-share of perfume sales in China, at 64 percent in 2015. However, sales have been gradually snatched up by online channels, with department store sales dropping to 55 percent in 2020.

Since 2015, e-commerce platforms have grown to become the second most-important distribution channel for perfume in China, overtaking beauty specialty stores in 2018, in terms of sales share. The surge in e-commerce and live-streaming marketing has contributed to the increase in online consumption, with e-commerce platforms (such as TikTok and accounting for 26 percent of fragrance sales in 2020, up from 11 percent in 2015.

While beauty specialty stores such as Sasa, Watsons and Wow Colour, have dropped to third place in the distribution ranks, they still represent 15 percent of total perfume sales in China in 2020. Direct sales represent just 3 percent, while modern retail stores represent just 1 percent of total perfumes in China in 2020.

Trends in positioning: High-end positioning has the dominant advantage in Chinese perfume industry

The high-end perfume market is the most popular in China, while non-high end perfume sales are becoming increasingly less popular. In 2015, high-end perfumes made up approximately 65 percent of total fragrance consumption in China, compared to approximately 90 percent of total consumption in 2020.

Source: ChemLinked