The performance of the Perfume and Fragrance Manufacturing industry is largely dictated by trends in consumer spending. Perfume is a highly discretionary purchase for most Americans, so as spending power falls, so does demand for the industry's products. "During the recession, unemployment skyrocketed, leading to a decline in per capita disposable income; consequently, industry revenue declined," said IBISWorld industry analyst Nikoleta Panteva. However, as incomes have inched up, so has demand for perfume and fragrance products. Over the five-year period to 2012, industry revenue has grown at an average annual rate of 1.9%, including a strong 6.3% gain expected in 2012 alone, to reach $3.9 billion. Profit has followed a trend similar to that of revenue. As consumer purchasing power waned during the recession, shoppers opted for lower-priced fragrances, which reduced the industry's profit margins. Rebounding spending and consumers' need small luxuries have helped profit rebound strongly over the past three years.
A general consumer trend toward choosing specialty beauty supply stores over department stores has also emerged over the past five years. Specialty stores' customer service and product offerings have generated demand from consumers. Export growth has also been a defining trait of the Perfume and Fragrance Manufacturing industry as players look to expand their markets. Over the five years to 2012, exports have increased at an average annual rate of 5.4% to $1.4 billion, or 36.8% of industry revenue. Exports are projected to continue contributing to industry revenue growth over the five years to 2017. Coupled with rebounding consumer spending power, exports are anticipated to push industry revenue up. With consumer budgets expanding, industry players are likely to benefit from higher-priced purchases, which will ultimately boost profitability as well.
The Perfume and Fragrance Manufacturing industry has a moderate level of market share concentration. IBISWorld estimates that the top four industry companies will hold a combined share of about 45.9% of total industry revenue in 2012. The level of industry concentration is gradually increasing. In the five years to 2012, the number of industry enterprises has fallen at an average annual rate of 1.4% to total 98 companies. According to Panteva, while there are a number of small players in the industry specializing in a small number of product lines to serve niche markets, major players in the industry will continue to expand and gain greater market control. For more information, visit IBISWorld's Perfume & Fragrance Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry manufacture men's and women's perfumes and fragrances. Perfume is a mixture of fragrant essential oils and aroma compounds, fixatives and solvents used to give the human body a pleasant scent.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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