23 October 2000 00:00 [Source: ICB Americas]By Pamela Sauer
A new entry in the women's fine fragrance market is being launched this month by Shiseido Co. Ltd., the large Japanese cosmetics and beauty manufacturer. The product, for which International Flavors & Fragrances Inc. is providing aroma ingredients, is entering a slowing market for women's fine fragrances.
Shiseido has high expectations for its new fragrance, Shiseido Zen. The company expects sales of ¦3 billion ($27.8 million) by March 2001. Shiseido initially launched the product in Japan through Shiseido International Inc. at roughly 50 major department stores. Full-scale placement in roughly 3,000 stores, including cosmetic and other outlets, will occur later this year in 60 countries.
Shiseido is one of the top global makers of fine fragrances for women, a market that is dominated by EstÄe Lauder, which holds a 12.1 percent share, according to Euromonitor International Inc., a Chicago, Ill.-based market research firm. The top 15 companies account for only 52 percent of the global market for premium women fragrances, with only EstÄe Lauder holding more than 10 percent, based on 1999 estimates.
In launching its the new product, Shiseido is going head-to-head with EstÄe Lauder, which had four of the top ten selling premium women's fragrances in the US. These include Clinique Happy with 5.5 percent of the US market in 1999, Pleasures (5.1 percent), Beautiful (5.0 percent) and Tommy Girl (4.3 percent), according to Euromonitor.
Through Cosmair, L'OrÄal had the next leading product, TrÄsor with 3.1 percent of the women's premium fragrance market in the US in 1999, followed by Chanel S.A.'s Chanel Number 5 (2.7 percent), Unilever's (Calvin Klein Cosmetics) Eternity (2.6 percent), EstÄe Lauder's White Linen (2.0 percent), Unilever's (Calvin Klein Cosmetics) Obsession (1.9 percent), and Unilever's (Elizabeth Arden) White Diamonds (1.8 percent).
Although fine fragrances dominate women's fragrances, growth has been slower than in mass fragrances. Between 1995 and 1999, fine fragrances for women in the US increased at a compound average growth rate (CAGR) of only 3.1 percent compared to 5.7 percent for mass fragrances, according to Datamonitor PLC, a New York City-based market research firm. Last year was a particularly poor year for fine fragrances in the US, with market growth of only 1.7 percent compared to 5.5 percent growth in mass fragrances.
Fine fragrances accounted for 65.9 percent of US female fragrances sales in 1999, according to Datamonitor. In 1999, the US market for fine fragrances for women was valued at $3.06 billion. Mass fragrances, which accounted for 34.1 percent of the US market for female fragrances, was valued at $1.58 billion in 1999.
On a volume basis, the US market for fine fragrances was 4 million liters compared to 19.7 million liters for the mass market. Volume growth in fine fragrances for women was 2.6 percent in 1999, in line with average growth from 1995 through 1999 of 2.5 percent. Volume growth in mass fragrances was 4.4 percent in 1999, down from 1998 growth of 7.7 percent and below the five-year average from 1995 through 1999 of 5.2 percent.
The men's market has actually accounted for stronger growth in fine fragrances over the past five years. The US market for men's fine fragrances increased at a CAGR of 5.1 percent through 1995 and 1999, compared to only 2 percent growth for mass fragrances, according to Datamonitor. Last year, the men's fine fragrance market in the US increased 4.6 percent over 1998 to reach $1.16 billion, while mass fragrances increased only 1.7 percent to reach $419.4 million.
On a volume basis, men's fine fragrances increased by 4 percent in 1999 to reach 1.7 million liters, according to Datamonitor, which is consistent with average growth of 4.1 percent between 1995 and 1999. In contrast, men's mass fragrances increased only 2.1 percent last year to 5.5 million liters. This was consistent with growth rates achieved in 1998 and above recent growth of 0.8 percent in 1997 and 0.3 percent in 1996.
In launching its new fragrance, Shiseido hopes to appeal to product trends for soothing or "zen-like" properties. IFF is providing what is calls a "space rose note" for the new Shiseido fragrance, which IFF says had not been previously used in a fine fragrance. Shiseido's new fragrance is described as a floral, spiritual, woody scent, which contains "earthy" fragrance notes. These notes include mousouchiku, a particular strain of bamboo that grows in Japan; hair cup moss, a Shiseido-original scent ingredient developed to evoke moss gardens made wet by the rain; and kyara wood and modified valerian, designed to enhance mood and promote well-being. The modified valerian was developed as an aroma ingredient from valerian oil. Kyara is a variety of a Jinko, a resin produced when a certain strain of bacteria attaches itself to the older wood of the Aquilaria agallocha tree.
ESTâE LAUDER has agreed to form a jointly-owned company with Ekas S.A. to distribute and market its brands in Greece, Romania and Bulgaria with other markets in the Balkans set to be added in the future. The new company will distribute the Estee Lauder, Clinique, Aramis and La Mer brands and Tommy Hilfiger and Donna Karan fragrances, and begin with the M.A.C. brand in the next quarter.
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