Fragrance biz in China gives off sweet scent

China will see double-digit compound annual growth in its perfume and fragrances market in the coming five years, according to industry experts and reports.

Given China's massive population, consumption rebound and economic recovery in the post-COVID-19 era, perfume and fragrance consumption will be greatly extended, boosting the sector's growth, said a recent white paper jointly published by Hong Kong-based beauty and eyewear company Eternal Group, dsm-fir-menich and Ipsos.

China's perfume market is expected to expand from 22.9 billion yuan in 2023 to 44 billion yuan ($6.25 billion) in 2028, with a compound annual growth rate (CAGR) of 14 percent over the next five years, outpacing the global average of 3.7 percent, said the report.

Despite a complex business environment, the Chinese perfume market shows vitality and unlimited potential, added the report, which predicts the global perfume retail market to grow from 709.6 billion yuan in 2023 to 841.1 billion yuan by 2028.

China will be the only major economy to see its perfume market achieve double-digit growth in the coming five years, said Chole Lam, CEO of Eternal Group, adding that the CAGR projection for the United States is 5.5 percent, and for South Korea 5.8 percent.

There is huge growth potential in China's perfume market as currently the Chinese people spend much less on perfume per capita than their peers in developed countries, Lam said.

The report expects China's perfume consumption per person will increase from 16 yuan in 2023 to 31 yuan in 2028 — still way lower than other global major markets like the US and the United Kingdom, indicating great potential.

Global market research company Euromonitor International also said the Chinese retail fragrance market is expected to grow faster than global peers, and surge from $2.38 billion in 2024 to $3.67 billion in 2028.

"In comparison with the global market, the Chinese fragrance market is still in its infancy with low per capita consumption and a smaller market size. As an emerging market, it naturally contains higher potential," said Zhu Yanrui, a senior research analyst with Euromonitor International.

"Companies have shown great interest in the Chinese market, as many new brands are poised to build a presence here, and brands entering China a few years ago still maintain good performance by exploring their brand value, emotional value and consumer preferences," Zhu said.

In the future, fragrance products will shift from luxury goods to common commodities used in daily life scenarios, including personal care and household products, which ensures rapid structural growth in the fragrance market, said the white paper.

"The amount of consumers with an interest in fragrances keeps growing, and their requirements are evolving and upgrading, such as seeking better value, more refined emotional satisfaction, cultural elements and overall enjoyment," said Chen Lei, head of advisory at Ipsos, adding that brands should carry out more thorough research of target groups.

"Chinese consumers are more and more seeking fragrances with more complex and personalized requirements. As they are seeking emotional needs, higher cultural requirements and diversified consumption preferences, fragrances are consumed by broader gender and age groups of Chinese people," said Olivier Viejo, vice-president of Fine Fragrance Asia with dsm-fir-menich, a Swiss-Dutch company engaged in health, nutrition and beauty innovation.