Scents Of Change

Stopped by the perfume counter lately? Better set aside more than your lunch hour if you do. Led by the great French houses--Guerlain, Chanel, Christian Dior and Lancome--the perfume industry has become a hothouse of innovation, churning out literally hundreds of new fragrances, some of them designed to blossom and fade in the marketplace in about the same time span as the flowers that provide their essence. Fragrance, says perfume expert Michael Edwards, has become a "fashion accessory. Companies are mining and reinventing their heritage."

Take Philtre d'Amour, for example. Touted by Guerlain as a limited-edition scent for the first year of the millennium, it will be gone at the end of 2000. Like its limited-edition forerunners, Guerlinade, Belle Epoque and Guet-Apens--all released by Guerlain in the past two years--it is unlikely to have a profound effect on the company's bottom line, neither demanding excessive advertising nor generating vast sales.

"We don't do [limited editions] to achieve numbers," says Patrick J. Choel, head of the perfumes and cosmetics division of LVMH, the giant French luxury conglomerate whose brands include Guerlain, Christian Dior and Givenchy. "It's related to the history of the house. It gives a special edge to our business."

Finding a special edge is crucial in the increasingly flooded and fragmented fragrance marketplace. In 1979 Edwards, who produces the annual guide Fragrances of the World, classified 37 new scents, a number that grew to 58 in 1989. By last year, with everybody from clothing designers to celebrities to established houses piling on, the figure had rocketed to 264. Unfortunately, sales in the $7.4 billion European fragrance market have not kept pace. Indeed, over the past five years they have stagnated.

In this hypercompetitive environment, loyalty is no longer taken for granted, the signature scent is considered passe, and consumers are constantly on the lookout for novelty and exclusivity. Large houses battle for market share not only with their traditional competitors but also with niche brands. A place in the consumer's line of vision is paramount, and big houses are using various strategies to stay there. In the old days, the main vehicle was an extravagant launch of a single new scent. But increasingly the weapons of choice are limited-edition perfumes, male versions of female scents and bath-and-body line extensions. "You need to keep fresh, but you cannot constantly do megalaunches," says Karyn Khoury, senior vice president of fragrance development worldwide at Estee Lauder, which produces the Estee Lauder, Clinique and Bobbi Brown brands and holds global fragrance-licensing rights for designers Tommy Hilfiger and Donna Karan. An entirely new fragrance with a full marketing campaign, says Khoury, can take one to five years to develop, requiring significant investment.