NEW YORK — Is the fragrance effect still in motion?
Sales of fragrance — the surprise hero category for beauty since the coronavirus pandemic began — are definitely showing signs of softening. But by how much is the question.
A raft of companies’ recent first-quarter 2025 earnings are giving a clue, as consumer confidence wanes and purse-strings tighten amid today’s fraught geopolitical and social scene. That is being buffeted by trade wars, military wars and rollercoaster-like stock markets, among other quickly changing, negative phenomena.
LVMH Moët Hennessy Louis Vuitton’s fragrance and cosmetics division, a business that skews largely toward prestige perfumes with brands including Parfums Christian Dior, Guerlain and Parfums Givenchy, saw net sales come in flat in the first quarter compared with a year earlier, and down 1 percent in organic terms to 2.18 billion euros.
Meanwhile, Hermès International’s beauty business — also largely made up of fragrances — saw sales down 0.1 percent on a reported basis and 0.5 percent in like-for-like terms to 129 million euros in the first three months of this year.
In the U.S., the Estée Lauder Cos. said fragrance net sales decreased 1 percent in its third quarter ended March 31, primarily driven by decreases from the Clinique Happy product franchise and Estée Lauder. However, those declines were partially offset by the low-single-digit increase from luxury brands, led by strong double-digit growth from Le Labo.
During the earnings call, Estée Lauder Cos. chief executive officer Stéphane de La Faverie said in the U.S. the company has a lot more work to do on fragrances in regard to market share.
“We have an amazing portfolio of luxury brands, from Jo Malone, Tom Ford, Le Labo and so on, and Le Labo is going from strength to strength, gaining market share in pretty much every market around the world. We want to just make sure that it’s reflected on the total category.”
Marc Puig, chairman and CEO of Puig, noted during an earnings call growth in the U.S., since the group still has a lower market share there than in the rest of the world.
“We think there is the possibility for us to progressively close this gap, and that’s probably one of the reasons that we have seen our growth still faster than others in that market,” said the executive.
Puig added: “For this year, we see the category normalizing, meaning [a] midsingle-digit growth rate is what we’re expecting for the category — fragrance and fashion.” (Puig, the company’s division by that name, is largely made up of perfumes.)
Carolina’s Good Girl women’s fragrance is a bestseller for Puig.
Courtesy of Puig
That chimes with estimates shared by Euromonitor International, which foresees the fragrance industry growing 7 percent between 2024 and 2025 to $77.73 billion.
Coty said that the prestige fragrance category, which had for some time boosted sales, continued to grow, but moderated to a midsingle-digit percentage pace in its third quarter ended March 31 on a comparable basis.
Nevertheless, the company’s CEO Sue Nabi is confident that Coty can navigate the current complex dynamics.
“Beauty has always been a resilient category across economic cycles, precisely because of its aspirational nature and its affordability for consumers looking for a personal indulgence during more difficult times,” she said. “We expect this economic cycle will be no different, with fragrances — both prestige and mass — now positioned to be one of the better performing beauty categories as the ‘fragrance index’ remains at play.
“In fact, even as the U.S. beauty market is now in a moderate decline, the fragrance category continues to grow solidly across price points,” continued Nabi.
Another company to be in the black in the perfume category was L’Oréal, whose fragrance sales posted mid-teen sales gains in the first quarter. That and hair care, registering mid-to-high single-digit sales growth, remained the best-performing categories across all geographies for the group.
During an earnings call, company CEO Nicolas Heironimus was asked about what L’Oréal’s secret sauce was, given that many of L’Oréal’s competitors had registered flat to slightly negative growth for fragrance in the first quarter of 2025. Hieronimus said when it comes to the fragrance category, “you always have to be humble.”
“Of all the categories, it’s the one where it’s as much art and intuition as it is science and consumer research,” he said. “I’m blessed with a team that does a phenomenal work at combining both.
“I am saying we have to be humble, because it’s never guaranteed, and by the way we still have areas of opportunities in the most premium part of the market — the collections and niche fragrances,” said Hieronimus. “There are very exciting launches to come.”
Euromonitor expects the fragrance category will continue to be fueled by several trends, including a stronger focus on sustainability, experiential shopping experiences and a widening definition of luxury to encompass wellness, authenticity and personal value.
“Opportunities abound for fragrance brands to innovate, connect and evolve,” wrote Euromonitor in its recent study called “The Future of Fragrance.” “By prioritizing technology, customization and eco-conscious practices, the fragrance industry is positioned to balance tradition and modernity, while enchanting consumers across the globe.”
