The Business of Personalized Fragrances

Over the past years, the cosmetics and personal care sectors have been disrupted by the arrival of new-gen skincare players. B-to-C organic brands — such as Seasonly and Laboté — that purvey made-to-measure products defined by a client's needs and choices have taken the industry by storm.

And the fragrance sector is about to experience the same fate: brands like Unique Fragrance, a Berlin-based company that offers tailor-made fragrances for their clients in order "to reinvent the perfume together with the customers," as the company states on its website, are causing much ink to flow.

In a nutshell, Unique Fragrances's perfume experts develop a scent exclusively for each customer, according to their tastes and desires. In addition, the customer can design his or her product by monitoring every detail — from the perfume bottle, atomizer, and the cap, to the packaging specifications and optional gold or silver stampings.

However, perfumers doubt the actual feasibility of bespoke fragrances on a sustainable and large-scale level.

"A high-quality scent is based on a precise alchemic formula that can only be developed by the best noses. It requires pricey ingredients and a great amount of time to be completed," explained a spokesperson of Le Labo.

"So it is unlikely that high-quality fragrances can be developed just by selecting your ingredient preferences online, like you can do it with certain skincare brands. Creating a personalized fragrance requires precise and complex expertise."

Le Labo's fragrances are all developed in Grasse, South of France, and then sold worldwide via points of sales and flagship stores, like the brand's boutiques in New York and Paris. So far LeLabo's fragrance concept seems to be a regular one. However, the way it produces and sells each scent is quite atypical: the brand aims to create a unique sensorial experience with its "slow" approach to perfumery. In their stores, which Le Labo's founders refer to as "labs," there are no such things as the final, bottled fragrances ready to purchase.

In fact, each fragrance of the 18 available scents is freshly hand-blended by a perfumer once the client purchases a scent. The customer can observe the entire fragrance making process in-store and can also smell the raw materials and scented notes available over the counter in order to explore the notes of each fragrance. Once the chosen fragrance has been mixed in the lab and is ready for final packaging, the customer can choose what to print on the bottle, and the artisan's name (the perfumer who mixes the scent in-store) is also written on the bottle. "Our customers are basically invited to explore our olfactory world, not only the final fragrance, but the process of the perfume making itself."

The core concept of Le Labo's collection — which includes a selection of handcrafted unisex perfumes, hand-poured soy-based wax candles, a range of body formulas, and a grooming line — is based on animal-friendly, natural and synthetic notes, and completely free from toxic chemicals. In addition, Le Labo's low-key marketing approach and sober Japanese wabi-sabi aesthetics — no overly glamorous perfume campaigns or celebrity endorsements — are attractive to customers who are looking for a more raw and human approach to perfumery.

And indeed, Le Labo's more realistic take on a fragrance's storytelling, as well as its penchant for gender-fluid compositions seem to pay off. Millennials are de facto the driving force behind the trends reshaping the fragrance sector, and according to LeLabo they want more transparency when it comes to production, vegan and cruelty-free components only, and more gender-neutral scents in general.

As a matter of fact, gender fluid fragrances have surged in popularity in the past two years, so much so, that 51% of all fragrance launches in 2018 were gender-neutral — up from 17% in 2010 — according to industry figures released by the BBC. Still, according to these industry figures, at Coty, the world's largest fragrance firm, which boasts 77 perfume brands including luxury licenses such as Gucci and Chloé, Millennial trends for more gender-fluid and sustainable fragrances are a top priority.

This focus on the preferences and tastes of the younger generation comes as no surprise, as official data released by trend-forecasters at Grand View Research claim that Millennials will account for 45% of the luxury market by 2025 — a figure which will undoubtedly also impact the perfume sector.

In this context, the global perfume market size was valued at USD 31.4 billion in 2018 and is expected to expand at a CAGR of 3.9% from 2019 to 2025. This significant market growth is attributed to the growing trend of personal grooming, coupled with an increasing demand for luxury and niche fragrances. In addition, product diversification based on a customer's personal taste and needs is further augmenting the sales in the perfume market.

For instance, brands like Le Labo who offer not only fragrance consultations, but also unique personalized packaging and, more importantly, in-store perfume blending based on handcrafted products are winning the sector's ongoing personalization race.

The growing interest for niche perfume brands with personalization options is trending to such an extent that the fragrance sector's leading groups have started to acquire independent fragrance brands that boast a strong identity: in this specific context, Estée Lauder Cos., that owns USD 11 billion stable of beauty brands — including prestigious cosmetics and personal care labels such as Clinique, MAC, Bobbi Brown, Jo Malone, and Bumble and Bumble — has acquired LeLabo in 2014 for an undisclosed amount. "Estée Lauder not only understands and respects the philosophy of LeLabo but also has the resources to help us continue to grow while leaving us our creative freedom," concluded Le Labo's spokesperson. And indeed, since Estée Lauder Cos. has bought the indie fragrance company, Le Labo has been able to develop its outreach without losing the authentic qualities that made it distinctive. As of today, Le Labo has around 50 store-labs worldwide, including retail points and flagships in North America, Europe, and the Middle East, where it brings the personalized process of perfumery to the forefront. "We just opened a new store in Mexico and will have further retail developments in Europe throughout 2020," the spokesperson added. The business of personalized fragrances has undoubtedly some great days ahead.

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