1.1 Definition and scope of study
The perfume market refers to the market of fragrant liquid typically made from essential oils extracted from flowers and spices, used to give a pleasant smell to one's body. These are often alcohol-based.
Every year around 400 new patented perfumes are put on the global market, which is worth around 43.9 billion euros. It seems the world is hungry for inebriating fragrances and Italy is no different, being the fifth world market for these products (Behind USA, France, Germany and UK). In fact, perfumes represent the third-highest purchase for the Italian family within the ‘body care’ sector (preceded by face and body treatment products)
Up until the COVID-19 pandemic and the economic context that it unleashed this industry was in full growth in years prior (fluctuating between +2-3.5%year-on-year, +2.3% in 2019). The domestic market increased by 1.9% while the export market grew by almost 3%. Despite prices regularly increasing in perfumeries and mass distribution centres, this market continued to grow, making up around 20% of the Italian cosmetics sector. 2020 was the first year of contraction in the market in over a decade with a drop off of 12.8%, with the internal market contracting by 9.8% and exports decreasing by 16.5%.
The perfume sector is markedly segmented in terms of sales with four major types of sellers:
- Perfume shops (individual perfumeries, local franchises and brand stores that sell other products but also perfumes) account for 75% of the market share
- Large retailers (i.e. Sephora) account for 22% of the market
- Pharmacies account for less than 2% of the market
- Supermarkets, hypermarkets and other forms of distribution account for less than 1%
Production is unevenly distributed in a geographic sense, with over 50% of manufacturing centres and companies in the northern region of Lombardy, followed by Emilia Romagna with around 10% and Veneto with almost 8%. The north largely predominates the south in terms of manufacturing with 3 southern regions nor even ranked due to low production levels. Italy has 7 yearly free perfume expos which help to diffuse the new fragrances to the greater public.
There has been a digital revolution in the perfume market. The growth of this market up to 2020 was in part driven by the increase in its e-commerce sector (+22% in 2019, double figure growth in 2018 and 2017). Online sales are projected to equal in-person sales by 2025. Men make up a mere 38% of the Italian perfume market, with women being the big spenders in terms of value and volume, with a growth of 4.4% in 2019.
The last 3 years show a trend that ‘niche perfumeries’ (individual designers) are increasingly attractive to Italian consumers (12.5% of the sector in 2018). Italian have made a shift towards buying house and toilet fragrances in the past few years (4% of the market share).
With the economic downturn of the pandemic the perfume industry in Italy saw a boost during the festive period as perfumes tend to be popular and easy gifts. This was taken as a positive signal by industry insiders for a possible comeback in 2021
1.2 The global market of perfumes
The global fragrance market is a rapidly growing market. As we can see from the graph below, this market was worth nearly $** billion in ****. The good health of this market is expected to continue. According to Trefis' projections, the market is expected to reach nearly $**.* billion by ****.
Thus, these growth forecasts ...
1.3 The Italian domestic market
The Italian cosmetics market was valued at **.* billion euros in **** and grew by *.*% in ****, reaching a value of ** billion euros. It has been growing steadily for a decade and represents a relevant part of the Made in Italy production.
In line with the global trend, the perfume and fragrance market accounts ...
1.4 Exports and imports
The Italian cosmetics market relies heavily on exports: its trend has been growing for more than a decade and although its growth has slightly slowed down in **** an increment of *.*% was registered, accounting for *.* billion euros. The export on turnover ratio was **% in **** and was supported mainly by the middle-east and ...
1.5 The impact of Covid-19 on the perfumes market
The pandemic has had an important impact on the cosmetics market and in particular on the perfumes and fragrances industry, causing several difficulties and important losses on one side, but also accelerating transformations and changes that were already taking place before ****.
The Italian cosmetic market shrunk by *.*%, the combined turnover of ...
2.1 Italians and perfumes
According to Istat's estimation, the Italian average monthly household expenditure on personal care was equal to **.** in **** and rose to **.** euros in ****, showing an incremental trend over the period. In fact, in ****, Italians spent more than *.* billion euros on fragrances and perfume purchases.
The vast majority of perfumes produced are targeting ...
2.2 Italian's favorite brands
The Made in Italy panorama offers a broad choice in terms of perfumes and fragrances. Famous Italian brands such as Gucci, Versace, Dolce & Gabbana, Armani and Bulgari have all invested in the production of premium fragrances, which have been ranked amount the best perfumes by Italians, in terms of sales and ...
2.3 Seasonal demand
Perfumes are often perceived as sophisticated, luxury items and as such, they are often chosen as gifts for special occasions. The Unione Nazionale Consumatori, Italian National Consumers Union, analyzed Istat data for the year ****. Perfumes, along with lotions and similar products are the items most purchased for Christmas, and the trend ...
3.1 The value chain of perfume and fragrances
The value chain of fragrances is synthesized below.
3.2 Suppliers of natural and synthetic materials
Suppliers of base ingredients for perfumes like extracts, essential oils, and absolutes can be specialized industries, which extract scents and oils from cultivated plants (***) or biotech companies, which produce the synthetic components that are needed to produce every perfume.
Fragrant flowers are part of a category of plants called the PAMP ...
3.3 The stages of perfume manufacturing
Once the raw materials have been produced, the perfume is then manufactured in * steps. [***]
The perfumer mixture of different essences (***) to create what is called a scented base; This scented base is diluted in alcohol Depending on the concentration chosen for the type of article (***). Distilled water is also added; This ...
3.4 Distribution channels of the perfume and fragrance industry
After perfumes have been composed and encapsulated, they are distributed through multiple channels of distribution and sold to the consumers.
The main distribution channels for the perfume markets are the following: perfumeries, large distribution, and pharmacies. Supermarkets also play a role but account only for less than *% of the total ...
4.1 Perfume typologies and characteristics
Perfumes differ depending on their composition, which can contain different quantities of fragrance and, thus, alcohol and oils.The fragrance concentration indicates how strong the fragrance used is: the higher it is, the more perfume oils are used in its production and the less alcohol.
The fragrance concentration determine the different ...
4.2 Perfume composition
A perfume can be broken down and analyzed according to what is called the "olfactory pyramid" with three levels. [***] Top Notes These are the smells you smell right after spraying the perfume, but also the ones that fade the fastest. They are often the freshest and greenest notes, like bergamot or ...
4.3 The growth of bio and natural products
The demand for natural and environmentally friendly products is a growing trend in the cosmetics world, as in other industries.
When talking about bio and natural products in the cosmetics and perfume market, we are referring to cosmetics with natural/organic connotations: products that are characterized by graphic or textual elements ...
4.4 The price in perfumes and fragrances
The table below gives an overview of the prices per *** ml of best-selling perfumes in Italy. The fragrances belong to the premium segment and the average price is around *** euros. [***]
5.1 The production of perfumes: Regulation (CE) n.1223/2009
Under Italian Law **/**/****, n. ***, art. **; D.Lgs. **/**/****, n. ** - Regulation (***) n.****/****, art. **; D.M. */*/****; D.Lgs. **/**/****, n. ***.:
"The manufacture of toiletries, soaps, non-alcohol-based perfumes requires the notification of cosmetic products intended for sale on the EU market to be submitted exclusively electronically via the centralized system called Cosmetic Product Notification ...
5.2 The IFRA Code
IFRA is the International Fragrance Association (***). It is mandatory for all IFRA companies to comply with the standards set out in the text. Thus, the fragrance manufacturer can provide an IFRA certificate on its production to ensure that its products comply with the rules laid down in the IFRA Code.
- Salvatore Ferragamo
- Giorgio Armani
- Acqua di Parma
- Dolce & Gabbana Groupe
- Jo Malone
- Gianni Versace
- MARIONNAUD PARFUMERIES ITALIA SRL
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