PARIS — The Estée Lauder Cos. Inc. intends to launch a fragrance atelier in Paris the following year in order to expand its expanding luxury and prestige perfume business.
“Fragrance has been a winning category for the company — since the early days, when we established fragrance with the Estée Lauder brand [in 1953],” Stéphane de la Faverie, executive group president at Lauder, told OZIFOX. He also noted that over the past few years the category has been increasingly successful for the group.
Since fiscal year 2019, before the pandemic, reported net sales of the company’s perfume division, which includes the brands Tom Ford, Estée Lauder, Éditions de Parfums Frédéric Malle, Le Labo, Kilian Paris, Clinique, Jo Malone London, Aerin Beauty, and Aramis, have increased by approximately 40%.
With the atelier, Lauder is making an investment in the long-term prospects for the category. The company’s fragrance business has had 10 consecutive quarters of at least double-digit organic net sales growth through the end of fiscal year 2023.
“We have a very strong portfolio of fragrances,” de la Faverie stated. And with this atelier, we genuinely want to continue the success we’ve enjoyed for so long. We must pick up speed and keep going faster than the global fragrance market, which is expanding.
France was chosen as the location for the atelier since it is the birthplace of perfumery and the source of numerous breakthroughs. Lauder’s French offices are in Paris, as are the headquarters of companies like Frédéric Malle and Kilian. The headquarters of Jo Malone are also not far away, in London.
According to de la Faverie, “it is also the location of many of the houses — the perfume houses, partners and ingredient suppliers, packaging suppliers, and manufacturing suppliers.” Therefore, it actually allows us to be close to our long-standing partners, with whom we want to strengthen our partnership.
Additionally, access to the best creative talent is desired in order “to continue to unlock breakthrough product, breakthrough packaging, and conceptual innovation and to make it happen at greater speed,” according to de la Faverie. “Because consumers adore prestige and premium scents and continuously want them to be available sooner. We sincerely hope to maintain this quality at scale.
The atelier is scheduled to begin operations by the end of 2024 and gradually grow.
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Since we want an agile team to collaborate closely with our suppliers, it will start out small, according to de la Faverie.
The CEO emphasized that the atelier’s major goal was to be innovative. Product developers and conceptual marketers will be employed there to support brands within the Estée Lauder group.
The precise location of the atelier in the heart of Paris will be made known later.
“We’re really concentrating on supporting the portfolio of businesses we currently have. De la Faverie summed it up this way: “It’s about breakthrough innovation, speed, agility, and artisanal excellence at scale. This should expand and boost the value of those brands in markets throughout the world.
Future-oriented banking.
According to de la Faverie, “We firmly believe that the category of fragrance will continue to grow.”
Years ago, Lauder noticed the beginnings of what it refers to as “the inversion of the pyramid”—a quick acceleration of high-end and specialized scents.
“Consumers are looking for reinforcement of storytelling and experience, as well as higher quality in fragrances,” the CEO claimed.
Then, during the pandemic, online awareness of high-end and prestige scents skyrocketed. And it didn’t only apply to conventional smells; it also applied to scents from subcategories like home, bath, and body.
According to Euromonitor International, sales of high-end fragrances reached $37.7 billion in 2022, a rise of 8.8% from the previous year.
According to de la Faverie, the top of the pyramid accounts for roughly 15% of all scent sales but is growing at a 2.5–2.6 times higher rate.
Young customers from Generation Z and the Millennial generation are responsible for 80% of the segment’s growth.
New markets are also opening up for scent, including China.
According to de la Faverie, another factor influencing the decision is the possibility of expanding the group’s luxury and prestige fragrance brands’ currently constrained distribution. “We continue to see this acceleration,” de la Faverie added.