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  1. #1

    Default Which Fragrance Companies Will Survive The US Recession?

    Face it: the US is in a recession. And there's signs of it in the fragrance industry. Although fragrance remains strong (in fact, Macy's and Saks say that beauty, including fragrance, is a strong category for them during these tough times) and the "lipstick index" (which includes fragrance) is up, there's signs that some companies and brands may not be doing so hot.

    Recently, I saw IZOD for him on the clearance rack at Macy's. Not exactly the kind of launch that Gemini Cosmetics wanted, given all the money they pumped into the ads. Then, I saw Ralph Lauren Notorious on sale, again at Macy's (on their website, that is). This fragrance has only been in wide-scale distribution for four months, and it's already facing markdowns. Too bad... it's one of the better designer women's releases this year.

    And now, Sephora.com has a bunch of fragrances on sale, too. Clearing out fragrances is nothing new for "the beauty authority", as I've seen them mark down scents in the past, but seeing several Be Delicious variants on the list makes you wonder if the DKNY brand's reign on the best-smeller list is coming to an end...

    My bet: because the US economy is in a recession, it's causing the strong brands and companies (especially "tried-and-true" brands) to get stronger and the weak/weakening brands and companies (including many celebuscents) to get weaker, collapse, or face "strategic alternatives" (corporatespeak for merger or partnership, a la L'Oreal/YSL Beaute).

    Do we want to guess which companies will succeed, fail, or be swallowed up/forced to form partnerships? Here's my predictions:
    Strong Companies:
    -Beaute Prestige International (BPI is owned by cash-rich Shiseido. It wants to grow, and it has strong brands with very loyal followings. Sounds good to me.)
    -Chanel (Not for sale. Period.)
    -Coty Prestige (US fragrance market leader, also is Puig's distributor in USA)
    -Elizabeth Arden (Grown significantly with Riviera and Claiborne acquisitions, wants more licenses)
    -L'Oreal (The world's biggest cosmetics company also happens to own the Armani fragrance license, which in the words of Chandler Burr, is a "license to print money".)
    -LVMH (They own Sephora USA, which sells LVMH's own moneymaking fragrances plus fragrances from a lot of other companies. And Sephora makes money.)
    -P&G (The maker of both Joy dish detergent and Jean Patou's Joy is strong and hungry for more licenses. It's also Inter Parfums' distributor in USA)

    Vulnerable to Takeovers or Alliances:
    -Clarins Group (The Clarins family's private takeover bid was rejected by shareholders. It's been long-rumored that P&G may be looking for an alliance or takeover.)
    -Estee Lauder Companies (Flat growth and lackluster stock performance as of late is depressing shareholders. Lauder could be a good strategic fit for P&G, where Lauder's new CEO came from.)
    -Falic Fashion Group (The maker of Perry Ellis and Daddy Yankee fragrances might find it hard to raise capital for new licenses.)
    -Gemini Cosmetics (The credit crunch and recent flops could hurt planned rollouts or new deals. Coty, who has a partnership deal with Gemini, could be interested.)
    -Inter Parfums (Ripe for an LVMH buyout, as LVMH already owns a stake in the company. But what would LVMH do with the P&G US distribution deal and Inter Parfums' designer impostor unit?)
    -Parlux (Although very successful as of late with the Paris Hilton, Guess, and Jessica Simpson brands, what if one of their cylinders burns out?)

    (Note: To keep the subject on track and honor Grant's rules, please refrain from political talk in the replies. Thank you.)
    Last edited by MFfan310; 28th December 2008 at 11:07 PM.
    Top 5 for Late Summer:
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    2) Aventus - Creed
    3) Flower of Immortality - By Kilian
    4) L'Humaniste - Frapin
    5) Millesime Imperial - Creed

    My mission statement: "I am not afraid to keep on living - I am not afraid to walk this world alone."

  2. #2

    Default Re: Which Fragrance Companies Will Survive The US Recession?

    With the support of the fragrant bunch at this site, probably all of them.

  3. #3

    Default Re: Which Fragrance Companies Will Survive The US Recession?

    This is interesting I always gear the holiday sales by checking out the men's fragrance counters after the holidays.

    My Macy's is usually cleaned out! This year they are still mega stocked up. One case is over over stocked with Dolce & Gabanna The One for men. It looks like this scent did not take off for D&G like they hoped at least not in my area -

  4. #4

    Default Re: Which Fragrance Companies Will Survive The US Recession?

    What's really sad is the small niche lines that don't have any ties to big companies, because of their small range, limited customers, and higher prices than department store brands I don't think that they will fare well in this recession
    [COLOR="Purple"]I am not afraid... I was born to do this.

    -Joan of Arc [/COLOR]

  5. #5
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    Default Re: Which Fragrance Companies Will Survive The US Recession?

    Unless already in financial trouble I think most will survive. When your business depends on disposable income spent on non essential products during bad times obviously you are going to hurt more than most businesses. The niche companies will likely suffer the most so if any will go under they are the most likely.

  6. #6

    Default Re: Which Fragrance Companies Will Survive The US Recession?

    Quote Originally Posted by lightgreen22 View Post
    What's really sad is the small niche lines that don't have any ties to big companies, because of their small range, limited customers, and higher prices than department store brands I don't think that they will fare well in this recession
    I agree, the recession is affecting upper middle class consumers notably and this will hurt smaller niche outfits that have just begun to build a reputation or are not considered top tier.
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  7. #7

    Default Re: Which Fragrance Companies Will Survive The US Recession?

    In my humble opinion, I fully agree about the invulnerability of companies like Chanel. And after all, some great fashion and /or perfume manufacturers actually prospered even more visibly during times of economical recession. Why? Although I don't have the pretense of giving an answer with highly accurate, insightful or scientifically valid answers, I guess that, after the initial panic and the easily explicable reorientation towards the basic needs, recession (oddly or not) can often have the opposite psychological effect and increase the craving for elegant living, high quality goods and luxuries (but the again, since when is a perfume a luxury, even during times of recession, rather than a necessity, to most of the Basenoters?).
    Last edited by Ken_Russell; 7th January 2009 at 07:34 PM.

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