Unilever’s bold $105M bet on fragrance

What happened Unilever is investing 100 million euros ($105 million) to create a dedicated fragrance house, leveraging AI-driven design and a global team of perfumers. This strategic move mirrors a growing trend among beauty giants and luxury groups to bring fragrance creation in-house, aiming for greater innovation and control. According to Unilever’s chief R&D officer Richard Slater, this initiative will enable the group to develop proprietary scents while strengthening ties with key partners. Under the leadership of Mathieu Lenoir, appointed as global creative director of fragrance, the company is expanding its expertise with hires in the UK, US, and India. Lenoir, a veteran of the fragrance industry, brings over 30 years of experience to the role, signaling Unilever’s serious commitment to competing in this highly lucrative space. The Jing Take Unilever’s investment comes as fragrances have increasingly become a growth engine amid a slowdown in premium beauty. Puig, which recently broke into the global top 10 beauty rankings, reported that its fragrance and fashion divisions accounted for a staggering 73% of its Q3 2024 net revenue. Similarly, L’Oréal’s premium beauty division, powered by its fragrance portfolio, has experienced accelerated growth in recent quarters, even as overall revenue growth slows. Coty, meanwhile, saw a 2% revenue increase in Q1 FY2025, driven by robust performance across all fragrance categories, from mass to luxury, with its high-end lines continuing to outperform. Luxury groups Richemont and Kering are also stepping up their fragrance operations, reclaiming licenses to bring fragrance development in-house for notable brands such as Cartier, Bottega Veneta, and Alexander McQueen. The British multinational’s entry signals a shift in the beauty industry, where fragrances are not only a growing market but increasingly seen as a key differentiator. In 2022, the mainland market recorded $2.5 billion (17 billion RMB) in fragrance sales. That number is forecast by Euromonitor to nearly double in the next year, driven by rising consumer interest in premium and niche perfumes. Givaudan's new fine fragrance hub in Shanghai, aimed at co-creating scents with Chinese brands, further reflects this evolution. As luxury players sharpen their focus on in-house fragrance creation and ultra-luxury offerings, competition will intensify for market leaders like Coty and Interparfums. For Unilever, this investment is more than a diversification play — it’s a strategic move to secure a foothold in the burgeoning global fragrance market, signaling its intention to become a significant player in this space. Whether Unilever’s foray will yield results remains to be seen. However, as the beauty sector evolves, its investment signals a strong ambition to capitalize on the enduring allure of fragrance. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Unilever’s bold $105M bet on fragrance

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Published November 27, 2024

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Unilever’s bold $105M bet on fragrance