The Smell of Money

Making scents of the world's perfume industry.

“We had no choice; we just didn’t have enough money.” That’s how Lyn Harris, owner of high-end perfume company Miller Harris in London, describes her decision not to follow the mass-market route of other perfumers. Rather, shortly after setting up shop in 2000, she launched Nouvelles Editions, a range of limited-edition eaux de parfums sold in beautifully crafted bottles, updated every year according to what’s in fashion, and sold only in her shops for £95 (€132) per 100ml, £30 more than her other perfumes. “It was frustrating that it was so costly having to produce new concepts and packaging with each new launch,” recalls Harris from her stylish boutique on Bruton Street in London’s Mayfair. “[The new range] was a turning point for the brand. Now the sky is the limit.”

The new range is just one part of the classically trained perfumer’s global expansion strategy, selling her exclusive fragrances to a niche customer base at shopping hotspots such as London, Paris, New York and Moscow. And along with the limited-run range, the £7m startup now has a bespoke service (with a one-year waiting list) for individually tailored perfumes at £6,000 a bottle. She also recently dabbled in the industry’s hugely popular — some would say too popular — “celebrity” fragrance lines, creating L’air de rien (Air of Nothing) for actress and singer Jane Birkin. “But Jane’s an icon, not a celebrity, right?” asks Harris, almost as if to assure herself that her premium perfumes haven’t crossed the line into the realm of cheaper, mass-market fragrances.

As their businesses languish, multinationals in the $30 billion fragrance industry have reason to be envious of Harris — she keeps a tight grip on launches while others glut the market; she sells fragrances to stylish boutiques and upscale perfume counters, not to discount chains or in the neon glare of drugstores; she foregoes marketing as others spend as much as 50% of sales on flashy ad campaigns; and she blends customer knowledge with technical expertise to create bold new fragrances while others — in the words of John Ayres, chairman of the Fragrance Foundation UK — play it safe and produce “bland, consumer-researched smells that don’t offend anybody.”

But there’s a limit to their envy. The reality is that the major players want “masstige” — brands that capture the benefits of being both exclusive, prestige products and mass market. For CFOs in the industry, this means learning how to use management tactics employed by other parts of the consumer-goods industry to compete in disciplines such as R&D, marketing and distribution, says Luigi Feola, finance chief of P&G Global Prestige Products, the fragrance division of Ohio-based consumer goods company Procter & Gamble.

That is far from straightforward. “The fragrance industry is probably the most difficult part of the consumer-goods sector,” asserts Claudia D’Arpizio, a Rome-based partner at Bain & Company specialising in luxury goods. “It has to follow all the rules of fast-moving consumer goods, but with an intangible twist — attracting consumers to buy something that is not at all linked to real needs.”

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