China’s fragrance frenzy goes in two directions: luxury or local

Subscribe to our Jing Beauty to get the latest on China's world of beauty and wellness. While global beauty markets face a slowdown, China’s fragrance sector is emerging as a new growth driver, sparking fierce competition among leading brands. The country’s fragrance market hit 20.7 billion RMB ($2.9 billion) in 2023, reported iiMedia Research, exhibiting a remarkable growth rate of 22.5%, with the market set to expand to 51.5 billion RMB ($7.2 billion) by 2029. Over the past six months, fragrance usage patterns have shifted significantly: entry-level domestic fragrances increased their market share from 18% to 21%, while international niche fragrances declined by 4%. These insights come from iResearch, through a survey of 600 respondents conducted across mainland China between May 22 and May 28, 2024. High-end fragrances, priced at 500 RMB ($70) and above, continue to dominate, capturing 55% market share. This underscores their strong appeal among consumers who value quality. Fragrances in the 10 RMB to 99 RMB ($1.4-$140) range meanwhile, represent the core consumer choice, with cumulative sales of 1.14 million units, highlighting their high cost-performance advantage. These developments reflect a polarized consumer market: one side favors luxury international brands, while the other embraces entry-level domestic fragrances incorporating Chinese cultural elements. “The polarization in the market stems from both a learning curve and increasing rationality,” says Dao Nguyen, founder of boutique strategic marketing agency Essenzia ByDao and author of the Sinorama’s 2024 report on Chinese fragrance brands. “Over the past decade, Chinese consumers have become well-versed in luxury fragrances, with brands like Jo Malone and Diptyque entering the market in 2014. This extensive exposure has made consumers highly informed about sought-after niche and high-end collections. “At the same time, in today’s economically challenging environment, they are also focusing on getting the best value for their money. Since 2022, the domestic fragrance market has expanded significantly, offering not only replicas, but also original scents that deliver excellent value.” This dual market trend offers fragrance brands diverse opportunities to target multiple market segments and unlock growth. Major players double down on high-end fragrance China’s fragrance market exhibits two key characteristics: low penetration rates and high average transaction values. While the US and European markets boast penetration rates of 50% and 42%, respectively, China’s market lags at just 5%. But despite this, Chinese consumers outpace global counterparts in fragrance spending, with average transactions ranging between 500 RMB to 800 RMB. On major e-commerce platforms, luxury powerhouses Chanel and Dior are strengthening their market dominance, while niche overseas fragrance brands struggle to maintain their foothold. “Global luxury fragrances leverage an extensive creative and olfactory expertise. They also maintain their desirability by preserving their value over time, a result of patience and maturation,” says Nguyen. “What they can learn from Chinese brands is agility and a forward-looking approach. Adapting to platforms like Douyin, especially with the recent surge in its popularity, and integrating livestreaming are crucial strategies.” Content-driven e-commerce platforms such as Douyin are becoming significant growth drivers for the industry, with the market share of the top 10 brands continuing to rise rapidly, thanks to Douyin. As international luxury brands such as Dior and Versace intensify their livestreaming e-commerce efforts, both mainstream commercial and niche overseas fragrances are gaining market share, indicating a competitive balance between the two. By all appearances, luxury brands across the board are positioning themselves to capture a slice of the burgeoning fragrance market. Coty Group, whose portfolio includes fragrance lines from Gucci, Burberry, Marc Jacobs and numerous others, reported a 10% YoY net revenue increase to $6.12 billion for the fiscal year ending June 30, 2024, marking the company’s fourth consecutive year of growth. The report highlighted high-end fragrances as one of the fastest-growing beauty categories in multiple markets, including the US and China, with 15% growth in 2024. Kering Group meanwhile, recently unveiled its fragrance strategy. It plans to release a Bottega Veneta scent line this year followed by Balenciaga and Alexander McQueen fragrances in 2025, signaling a relaunch of its in-house fragrance business. And last year, Brunello Cucinelli, Ann Demeulemeester, and century-old French jewelry brand Mellerio each launched their first fragrances, while Louis Vuitton collaborated with Pharell Williams and perfumer Jacques Cavallier Belletrud on LV Lovers. “Driven by consumer behavior and psychological factors, high-end international brands often create a strong sense of value through their brand legacy, market investment, and flagship products,” says Xiaoping, a beauty analyst with over two decades of experience in the industry, including tenures at P&G and Jurlique. “This substantial market presence reinforces their appeal, making them worthy of continued consumer investment.” Local players emphasize affordability and Chinese heritage Chinese fragrance brands are increasingly rivaling international competitors in the domestic market. Nearly 300 new domestic fragrance companies emerged annually from 2018 to 2021, reports CBNData, with over 200 new entrants joining the market each year from 2022. Douyin’s rapid growth in the fragrance category highlights its strategic importance for brands, especially domestic ones. The platform primarily showcases local white label and emerging brands, with transactions concentrated in the entry-level price bracket of 100 RMB ($14). Monthly fragrance sales on Douyin exhibit a fluctuating upward trend, driven by seasonal gift-giving demand and major promotional events. “Packaging, particularly for lower-priced gift sets, often features exceptionally well-designed boxes that offer high value for money and are better suited for platforms like Douyin,” says Xiaoping. “In recent years, new local brands in China have focused on blending brand atmosphere, Chinese cultural elements, and emotional appeals that resonate with local consumers. “Unlike Western consumers, who may prioritize factors like masking body odors, Chinese consumers have distinct preferences. Local startups are addressing these emotional and cultural needs more effectively, incorporating elements like the Five Elements theory and bamboo. Moreover, local brands are rapidly improving in terms of product innovation and cost-effectiveness.” The power of scent, triggering olfactory memories more subtle than visual or auditory, amplifies the value of creating spaces that elevate the fragrance experience while reflecting Chinese culture. Between 2023 and 2024, numerous domestic brands launched offline stores to deepen consumer engagement: Melt Season opened in Hangzhou, Shanghai, and Nanjing; Documents launched in Suzhou and Xi’an; and To Summer expanded to Chengdu, Wuxi and Shanghai. China’s fragrance market remains in its early stages for many domestic brands, with foreign labels commanding 90% market share. As consumer awareness grows, the evolving market presents opportunities and challenges for domestic and international players alike. “Fragrance brands need to integrate aesthetics, lifestyle, and inner emotional appeal into their offerings,” says Xiaoping. “Many local brands have emerged from the unique context of the internet era and employ marketing strategies tailored to specific channels. To effectively convey brand values and continuously engage consumers, these brands must refine their approaches and learn from international brands to establish a stronger brand identity.”

China’s fragrance frenzy goes luxury or local

China’s luxury interlude that never really was

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China’s fragrance frenzy goes luxury or local

China’s luxury interlude that never really was