When it comes to sniffing out the future, investors are looking Eastward.
Strategics’ venture capital arms are increasingly placing small bets on niche Asian fragrance brands being the next big thing amid changing habits in the region when it comes to the category.
For example, L’Oréal’s BOLD fund and its China Fund, Shanghai Meicifang, invested in Chinese brands Documents and To Summer and South Korea-based Borntostandout, while The Estée Lauder Cos.’ New Incubation Ventures bet on Melt Season, another China-based fragrance brand known for its modern take on Chinese aesthetics.
And through its Beauty&You India entrepreneurship competition in partnership with Indian beauty and lifestyle retailer Nykaa, of which part of the prize is financial support in addition to mentorship, NIV selected fragrance brands Bahut Beauty, Keva and Havah as winners.
Part of the appeal is increased interest in Asia in the fragrance category, with younger generations in China often having around a dozen fragrances.
According to Euromonitor, the premium fragrance market in Asia Pacific was worth $4.9 billion in 2024, versus $3.2 billion in 2019.
In China, it reached $1.96 billion, versus $1.1 billion in 2019, while in South Korea, it hit $811 million, up from $390 million in 2019. In particular, the premium unisex fragrance segment has increased significantly in South Korea by 325 percent in the last five years to $354 million.
In fact, these two markets accounted for 82 percent of the growth between 2019 and 2024 in Asia-Pacific.
“Historically, [Asia] was underpenetrated compared to the west. Now, there are more overarching trends that we’ve been seeing that are creating this opportunity,” said Ryan Piela, executive director of NIV, pointing to the fact that Millennial and Gen Z consumers in the region are using fragrance as a form of discovery and self-expression.
According to Sky Canaves, principal analyst, retail and e-commerce at Emarketer, while older generations in the region often bought fragrance in duty-free as a status symbol or for gifting, the younger generation has a very different approach.
“It’s deeply personal and represents cultural status rather than spending power,” she said. “They strongly prefer scents that help express a sense of individuality over well-known scents that many others may be wearing. They may gravitate towars making purchase decisions based on nonscent factors such as creative bottle or packaging design, or limited-edition products and collaborations.”
This has gone hand in hand with a rise in homegrown brands, especially in China’s burgeoning C-beauty market, with players edging into the prestige sector, which has long been dominated by global giants.
Melt Season, for example, was founded by Lishi Ni, a former music entertainment executive and Gentle Monster alumnus in 2020, and is known for its modern take on Chinese aesthetics.
To Summer, meanwhile, is described as an innovative and modern Chinese fragrance brand rooted in traditional Chinese heritage, while Documents is known for its “chanku,” or “zen and cool” aesthetic and avant-garde store design.
Borntostandout explores olfactory directions that are daring, provocative and unconventional. Its most recent introduction is Extrait Extrême — a perfume collection with a 60 percent oil concentration.
“In the Chinese market, in particular, global beauty conglomerates have been losing ground to local brands that are far more agile in terms of both product innovation and in marketing to the younger consumers that drive demand for new brands,” Canaves continued.
“In China, reviving traditional heritage to narrate the story of ‘Chinese scents’ is gaining strong appeal. In South Korea, fragrance brands tend to align more with fashion trends and pop culture,” said Yang Hu, Asia-Pacific insight manager, health and beauty at Euromonitor.
“At the same time, the boundaries of gender in fragrance are fading. The unisex sector is growing at a faster rate than the overall premium fragrance category. Whether a fragrance is designed for a specific gender or carries gendered scent profiles is no longer a primary concern,” said Hu. “Today’s consumers care more about the scent itself, the cultural narratives it carries and the brand values it represents.”
Another factor at play is social media, especially platforms like Douyin, Tiktok, WeChat, WhatsApp, Instagram and RedNote, which often influence this younger generation’s purchasing decisions when it comes to fragrance.
“Together, we’re seeing a confluence of trends and saying, hey, fragrance is becoming increasingly more mainstream within China and across Asian markets like India and South Korea,” said Piela. “What makes it interesting from our perspective is that those trends exist that are growing this niche category, and that founders have also identified it. Those two together create a really exciting opportunity for us to take action with our programs or investments or partnerships.”
With travel retail channels failing to bounce back post-pandemic, Canaves believes investing in local niche fragrance brands offers global beauty players another way of reaching this growing cohort of consumers.
“Their next best option is to invest in the local brands that are strongly resonating with consumers, hopefully helping them to scale further and eventually perhaps even win the attention of beauty consumers globally.”
