The global fragrance industry is in the midst of a major movement. Despite a huge decline in the popularity of celebrity fragrances, total fragrance revenues are expected to rise from $31.6 billion in 2012 to $38.8 billion by the end of 2017 worldwide. The increasing demand is caused by greater consumer spending power and an increased emphasis on appearance, for both men and women.

Fragrance has become so popular that it’s starting to rival skincare spending. Not only are more consumers starting to purchase fragrances, younger users — those in the 16-to-24 demographic — have amplified their usage by approximately 40 percent, according to research conducted by The NDP Group. This shift is probably causing your cosmetics company to consider investing more in fragrance, and if so, that might be a great idea.

The Skincare Segment Revolution

Consumers will never stop using skincare products, but buying patterns change, and the industry is currently in the midst of a transformation. According to NDP, consumers in the 18-to-24 age group are using fewer skincare products than in the past. This younger demographic prefers products with the endorsement of a doctor and those composed of organic ingredients.

Of course, skincare product purchase rates have not declined for those in the 35-and-up category, and those in the 24-to-34 age group enjoy testing out new products.

Fragrance Offers Huge Profit Margins

High-end fragrances are sold at a hefty price tag (for example a 2.5 fl. oz. bottle of Chanel No. 18 costs $160), but typically are much more affordable to produce. In fact, the NDP group estimates the oil used to create a $100 bottle of perfume costs just $2. Most perfumes have a maximum shelf life of three to five years, but the majority of fragrance consumers own more than one bottle. A survey conducted by Tru Fragrance found that 79 percent of women who buy fragrances own two to 10 bottles, and 8 percent admitted to owning 11 or more bottles.

Trends come and go in the cosmetics industry, but it seems fragrance is a huge force here to stay for the foreseeable future.

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