The global perfume market is expected to grow to $69.25 billion by 2030. This promising trend has piqued Richemont’s interest, leading the company to invest more in the luxury fragrance sector and establish a beauty division.
According to Richemont, the company is significantly increasing its investment efforts by establishing a new division known as the “Laboratoire de Haute Parfumerie et Beauté.” The company announced Wednesday (Sept. 6) that this division will be led by Boet Brinkgreve, who previously served as the President of the Ingredients Division and Group Procurement at fragrance manufacturer DSM-Firmenich.
“Boet’s role will be instrumental in enabling our Maisons to reach their full potential in this dynamic market, broadening their clientele base whilst enhancing the Maisons’ capabilities to meet the needs of their highly discerning clientele,” said group chairman Johann Rupert in a statement.
This particular foray into fragrances coincides with similar actions by its competitors, which are also increasing their investments in the expanding beauty industry. In June, Kering acquired the niche fragrance brand Creed for $3.8 billion. Additionally, Puig acquired the artisanal fragrance brand Byredo in the previous year.
The establishment of Richemont’s new division is intended to assist the luxury conglomerate in achieving a significant presence in this fiercely competitive sector.
Despite persistent economic uncertainties and the upward inflation pressure, the luxury fragrance market stands out as a compelling anomaly, as even with the escalating cost of living and increasing financial caution, there remains a robust demand for premium fragrances. Findings from Fortune Business Insights note that in 2022, the global perfume market achieved a value of $45.85 billion. Projections indicate continued growth, with expectations of reaching $69.25 billion by 2030, up from $48.05 billion in 2023.
These findings stem from the fact that luxury fragrances are not just about the scent; they embody prestige and exclusivity. The fragrances’ packaging, branding and aura create an experience transcending the product itself. In times of inflation, consumers may cut back on certain expenditures but are still willing to invest in products that signify luxury and sophistication.
Additionally, fragrances have a unique ability to evoke emotions and memories and consumers are willing to pay a premium for fragrances that make them feel special, confident or nostalgic.
Thus, Richemont’s decision to establish a new beauty division and strengthen its commitment to premium fragrances is evidence of this market segment’s enduring appeal and resilience.
The decision to create a new beauty division and double down on this segment signifies its confidence in its continued growth potential.
Diversifying into beauty and fragrances allows luxury conglomerates like Richemont to hedge against economic volatility. Beauty products, including fragrances, have proven to be more resilient during economic downturns compared to other luxury categories, as aspirational shoppers tend to lean into luxury beauty products to get that sense of luxury even if they can’t afford the most expensive product.
An illustration of this is Hermès, which experienced a 15% rise in beauty and perfume sales in the past year.
Read more: Hermès Brings Scarcity Model to the Beauty Industry
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