'Fragrance economy' set for heady expansion

The perfume market in the country is entering a phase of rapid expansion, reshaping what was once a niche category into one of the most closely watched growth areas in beauty.

Foreign luxury houses including Dior, Chanel and Tom Ford Beauty are doubling down, rolling out flagship fragrances. Domestic brands are also attracting more investors.

Homegrown brands such as To Summer, Wenxian Documents and Melt Season — known for packaging and narratives rooted in Eastern aesthetics — have drawn strategic investments from multinational players including LVMH and the Estee Lauder Companies.

A rising number of cosmetics, fashion and lifestyle companies are racing to secure a foothold in what many executives describe as the rise of China's "fragrance economy".

Chinese beauty companies such as Proya, Kans and Maogeping have entered the category this year.

The momentum is underpinned by strong sales growth.

The category of fragrance has been maintaining growth over the last five fiscal years (FY21-25), emerging as one of the group's most resilient engines, according to the Estee Lauder Companies.

In China, the category's growth has outpaced many other beauty segments, reflecting changing consumer priorities among younger shoppers.

Recent results highlight the payoff. TOM FORD, Jo Malone London, along with Le Labo, all posted double-digit growth on the Chinese mainland.

To sustain growth, Estee Lauder has intensified investments in innovation infrastructure. The company's Fragrance Atelier — an internal innovation hub — serves as a shared engine supporting brands including Jo Malone London, Tom Ford, Le Labo, Kilian Paris and Editions de Parfums Frederic Malle. The goal is to balance global consistency with local relevance, said the group.

Paris-based Fragrance Atelier is being integrated into Estee Lauder's global innovation network, working alongside innovation centers in China, the United States, Belgium and Canada.

The company aims to create what it calls a "global intelligence, regional complementarity" model — allowing cultural inspiration and consumer feedback from different markets including China to be translated more quickly into new fragrances.

Technology is central to the effort.

The Estee Lauder Companies has begun incorporating artificial intelligence across the fragrance development process, from olfactory research and patent analysis to regulatory compliance. The company estimates that digitalization could shorten development cycles by 30 to 50 percent.

The underlying driver is a deep shift in consumer attitudes. Fragrance in China is moving away from functional use — such as masking odors — toward emotional value and self-expression, said the group.

"Scents are increasingly viewed as tools for mood regulation, individuality and lifestyle signaling, particularly among Gen Z and millennial consumers," said the group. This shift has fueled demand for niche, premium and story-driven fragrances. Consumers are paying closer attention to originality, depth and exclusivity, while also expecting immersive retail experiences that extend beyond test strips.