Many have said that the interest in fragrance has been growing rapidly since the pandemic. This phenomenon can be understood as the “lipstick index” – in which people tend to carve out room for small leisures especially during hard times. However, due to the restraints of the pandemic, lipstick is no longer at the top of the list for most. That, to some extent, paved the way for the “takeover” of fragrances. According to a research done by market research firm NPD Group, fragrance sales were up 49% in 2021 versus the year prior in the United States. The global fragrances market size was valued at USD 23.35 billion in 2021, with Asia Pacific dominating the market with more than 30 percent revenue share. Market forecast predicted that Asia’s fragrance market is growing at a CAGR of 6.15 percent over the next 5 years.
Among all markets, the Chinese market is identified as the one that offers the most compelling opportunities for the global fragrance industry, for only a mere 2.5 percent of its 1.4 billion population uses personal fragrances. A report by global market research firm Mintel predicts China’s fragrance market will grow at a compound annual rate of 17 percent over the next five years, doubling its sales from CNY 6.9 billion (USD 1.1 billion) to CNY 15.4 billion (USD 2.4 billion).
Founded in 2016, Sommelier du Parfum is an industry consumer insights expert and AI-powered fragrance discovery platform that provides in-depth analysis over the study of 45,000 perfume compositions with a consistent machine learning framework of perfume recommendation. With a core focus on the Chinese fragrance market, Retail in Asia caught up with brand founder Samuel Fillon to discuss market opportunities in the niche fragrance sector, the mechanism behind their AI machine learning technology, and tremendous opportunity behind the overlooked Chinese fragrance market.
RiA: What sets you apart from other perfume retail platforms?
Samuel: Sommelier du Parfum operates as an online niche fragrance discovery platform. While fragrance discovery most often occurs offline, the goal of our offer is to provide expert scent advisory at a distance while still letting the customer smell scents on their skins before committing to purchase. Our user journey is quite straightforward:
Users enter their preferences that can range from perfumes that they have already worn to smells from everyday’s life that they enjoy.
Our algorithms will proceed to selecting the best matching scents out of our collection of ~30 brands.
Users select the scents that they would like to try at home – they can select any 5 scents in sample size which will come for EUR 20 (USD 25) (worldwide shipping included) with a rebate code of the same value available towards full-bottle purchase.
When a full bottle is purchased on SdP, the order is redirected to the brand’s e-commerce and the brand fulfills the order (we are essentially a marketplace when it comes to full orders and a retailer for samples).
In our view, SdP provides a differentiating experience when it comes to online discovery with both expert advisory and a relevant catalogue – especially for consumers who do not live near niche perfume stores.
RiA: Scent is something highly subjective, how do you ensure your perfume categorization meets consumers’ expectations?
Samuel: Perfume appreciation is highly subjective but is far from random. Also, it is important to consider identification and appreciation separately.
Firstly, when working with fragrance, it is important to have a referential to describe scents. Perfume descriptions issued by brands are not reliable as they are not structured and biased towards a romanticized version of reality (it is more appealing from a branding perspective to put forward white flowers rather than say, civet or grapefruit). This is why we tend to prefer focusing on perfume forums / reviews websites which in turn end up showing the average olfactory description of hundreds or thousands of real-life consumers.
Secondly, appreciation differs from one person to another but preference patterns most often emerge and that is where algorithms can do a much better job than humans at decoding one’s tastes based on a history of perfume consumption or even via other types of olfaction-related input.
RiA: What other initiatives have you achieved with Sommelier du Parfum apart from B2C offering?
Samuel: Aside from our B2C activity, we have been helping brands and insiders over the years in their consumer experience and consumer insights efforts. We have worked with brands such as Jo Malone London (Estée Lauder and Co.), Prada (when it was a Puig license) and LVMH-owned Guerlain on innovative in-store digital experiences. More recently, we have helped Aptar Group and other companies to develop their consumer insights teams with the combined help of social listening and machine learning approaches to extract live consumer feedback. This new business approach is fueled by over 5 years of collecting beauty-related data globally.
RiA: How is consumer insights shaping the development of the perfume industry?
Samuel: The way the perfume industry develops new fragrances has been the same over the past 25 years. Basically, the idea is to iterate on scented developments until a few candidates are empirically considered serious enough to go through consumer testing. The testing phase roughly consists of a few groups of people recruited across key markets – the best performing candidate on average will then be selected for good. The problem with that approach is that it skews perfumes towards the global average of tastes – which is killing uniqueness and progressively losing traditional prestige brands’ appeal in consumers’ eyes. This is no wonder if niche products – which are much more unique and original – end up gaining a lot of traction.
Data has proven that a divise, original scent (such as Angel in the 90’s) can have a much larger business impact than a shy, overly tested one – this is where we can help brands and perfumers identify white spaces that they can leverage to develop tomorrow’s original and unique creations
RiA: Have you observed any interesting shift in consumer’s preferences throughout the pandemic?
Samuel: Western markets are quite stable in terms of tastes but the way perfume is purchased has definitely been shifting towards online services as in-store testing has been considered Covid-prone – in terms of global sales, the perfume market was not yet reaching 2019 sales levels last year but it is expected that it will in 2022.
RiA: Who would you identify to be the core audience for niche perfume brands? Is it highly popular among the younger generation in particular?
Samuel: Our service is quite popular in Germany and among older women – as a whole, we notice that people living outside of big cities (with little to no niche brick-and-mortar alternative) with strong purchase power are the most frequent buyers on our platform. Unsurprisingly, niche fragrance is mostly popular among people with purchase power (so usually people 30 y/o and older).
RiA: How accurate would you say Sommelier du Parfum’s customer olfactive profile is?
Samuel: It is often the case with machine learning approaches, data quality dwarfs the complexity of the models that you work with – with millions of consumer profiles (from retail websites, etc.) analyzed every year, we are confident that our database covers comprehensively (at least key markets i.e. Europe, North America, Russia, Brazil, Middle-East and China).
RiA: Why did you choose to tap into the Chinese fragrances market in particular?
Samuel: China is at the very heart of brand’s considerations and strategy and the reasons are manifold.
The growth of the fine fragrance sector is staggering there so what once was an overlooked market is now essential for brands’ growth prospects.
The market is very hard to navigate with very few authority figures in the domain – consumer preferences are also changing rapidly with market maturity and many new local brands being created overnight.
Testing scents is very expensive in China so any alternative options to assess the market is very appreciated.
RiA: Is there a pattern in terms of preference for fragrance across different countries?
Samuel: Every market has its own features which is not due to fragrance composition but also to distribution. Taking France and Italy for instance: the French market is mainly controlled by 3 historic selective retailers (Sephora, Nocibé, Marionnaud) which all have very dense store networks across the country. Hence, the selective perfumery options is the only one known by most of the population which ends up buying brands from luxury houses almost exclusively. On the other hand, the Italian retail landscape is very different with a large number of independent retailers proposing a mix of prestige and niche scents. In other words, on top of olfactory preferences (Italians are very keen on floral scents for instance), they will also favor a more unique product offering.