UK Fragrance Industry

www.datamonitor.com Datamonitor USA

245 Fifth Avenue

4th Floor

New York, NY 10016

USA

t: +1 212 686 7400

f: +1 212 686 2626

e: [email protected]

Datamonitor Europe

119 Farringdon Road

London EC1R 3DA

United Kingdom

t: +44 20 7551 9000

f: +44 20 7675 7500


Datamonitor Middle East

and North Africa

Datamonitor

PO Box 24893

Dubai, UAE

t: +49 69 9754 4517

f: +49 69 9754 4900

e: datamonitormena@

datamonitor.com

Datamonitor Asia Pacific

Level 46, 2 Park Street

Sydney, NSW 2000

Australia

t: +61 2 8705 6900

f: +61 2 8705 6901


United Kingdom - Fragrances 0183 - 0703 - 2010

© Datamonitor. This profile is a licensed product and is not to be photocopied

INDUSTRY PROFILE

Fragrances in

the United Kingdom

Reference Code: 0183-0703

Publication Date: September 2011

EXECUTIVE SUMMARY



EXECUTIVE SUMMARY

Market value

The United Kingdom fragrances market grew by 7% in 2010 to reach a value of $1,759.6 million.

Market value forecast

In 2015, the United Kingdom fragrances market is forecast to have a value of $2,396.1 million, an

increase of 36.2% since 2010.

Market volume

The United Kingdom fragrances market grew by 6% in 2010 to reach a volume of 44.3 million units.

Market volume forecast

In 2015, the United Kingdom fragrances market is forecast to have a volume of 56.4 million units, an


Market segmentation I

Female fragrances is the largest segment of the fragrances market in the United Kingdom, accounting for

63.4% of the market's total value.

Market segmentation II

The United Kingdom accounts for 10.9% of the European fragrances market value.

Market share

Procter & Gamble Company, The is the leading player in the United Kingdom fragrances market,

generating a 21.1% share of the market's value.

Market rivalry

The UK fragrances market is fairly concentrated, with the top three players accounting for 43.7% of the

market value.

CONTENTS



TABLE OF CONTENTS

EXECUTIVE SUMMARY 2

MARKET OVERVIEW 7

Market definition 7

Research highlights 8

Market analysis 9

MARKET VALUE 10

MARKET VOLUME 11

MARKET SEGMENTATION I 12

MARKET SEGMENTATION II 13

MARKET SHARE 14

FIVE FORCES ANALYSIS 15

Summary 15

Buyer power 17

Supplier power 18

New entrants 19

Substitutes 20

Rivalry 21

LEADING COMPANIES 22

Procter & Gamble Company, The 22

Coty Inc 27

Estée Lauder Companies Inc., The 29

MARKET DISTRIBUTION 33

MARKET FORECASTS 34

Market value forecast 34

Market volume forecast 35

MACROECONOMIC INDICATORS 36

APPENDIX 38

Methodology 38

CONTENTS



Industry associations 39

Related Datamonitor research 39

Disclaimer 41

ABOUT DATAMONITOR 42

Premium Reports 42

Summary Reports 42

Datamonitor consulting 42

CONTENTS



LIST OF TABLES

Table 1: United Kingdom fragrances market value: $ million, 2006–10 10

Table 2: United Kingdom fragrances market volume: million units, 2006–10 11

Table 3: United Kingdom fragrances market segmentation I:% share, by value, 2010 12

Table 4: United Kingdom fragrances market segmentation II: % share, by value, 2010 13

Table 5: United Kingdom fragrances market share: % share, by value, 2010 14

Table 6: Procter & Gamble Company, The: key facts 22

Table 7: Procter & Gamble Company, The: key financials ($) 24

Table 8: Procter & Gamble Company, The: key financial ratios 25

Table 9: Coty Inc: key facts 27

Table 10: Estée Lauder Companies Inc., The: key facts 29

Table 11: Estée Lauder Companies Inc., The: key financials ($) 31

Table 12: Estée Lauder Companies Inc., The: key financial ratios 31

Table 13: United Kingdom fragrances market distribution: % share, by value, 2010 33

Table 14: United Kingdom fragrances market value forecast: $ million, 2010–15 34

Table 15: United Kingdom fragrances market volume forecast: million units, 2010–15 35

Table 16: United Kingdom size of population (million), 2006–10 36

Table 17: United Kingdom gdp (constant 2000 prices, $ billion), 2006–10 36

Table 18: United Kingdom gdp (current prices, $ billion), 2006–10 36

Table 19: United Kingdom inflation, 2006–10 37

Table 20: United Kingdom consumer price index (absolute), 2006–10 37

Table 21: United Kingdom exchange rate, 2006–10 37

CONTENTS



LIST OF FIGURES

Figure 1: United Kingdom fragrances market value: $ million, 2006–10 10

Figure 2: United Kingdom fragrances market volume: million units, 2006–10 11

Figure 3: United Kingdom fragrances market segmentation I:% share, by value, 2010 12

Figure 4: United Kingdom fragrances market segmentation II: % share, by value, 2010 13

Figure 5: United Kingdom fragrances market share: % share, by value, 2010 14

Figure 6: Forces driving competition in the fragrances market in the United Kingdom, 2010 15

Figure 7: Drivers of buyer power in the fragrances market in the United Kingdom, 2010 17

Figure 8: Drivers of supplier power in the fragrances market in the United Kingdom, 2010 18

Figure 9: Factors influencing the likelihood of new entrants in the fragrances market in the United

Kingdom, 2010 19

Figure 10: Factors influencing the threat of substitutes in the fragrances market in the United

Kingdom, 2010 20

Figure 11: Drivers of degree of rivalry in the fragrances market in the United Kingdom, 2010 21

Figure 12: Procter & Gamble Company, The: revenues & profitability 25

Figure 13: Procter & Gamble Company, The: assets & liabilities 26

Figure 14: Estée Lauder Companies Inc., The: revenues & profitability 32

Figure 15: Estée Lauder Companies Inc., The: assets & liabilities 32

Figure 16: United Kingdom fragrances market distribution: % share, by value, 2010 33

Figure 17: United Kingdom fragrances market value forecast: $ million, 2010–15 34

Figure 18: United Kingdom fragrances market volume forecast: million units, 2010–15 35

MARKET OVERVIEW



MARKET OVERVIEW

Market definition

The fragrances market consists of the retail sale of female fragrances, male fragrances and unisex

fragrances. The market is valued according to retail selling price (RSP) and includes any applicable taxes.

Any currency conversions used in the compilation of this report have been calculated using 2010 annual

average exchange rates.

For the purpose of this report Europe comprises Belgium, the Czech Republic, Denmark, France,

Germany, Hungary, Italy, the Netherlands, Norway, Poland, Romania, Russia, Spain, Sweden, Ukraine,

Turkey, Ireland, Greece, Switzerland, Austria, Portugal, Finland, Croatia, Bulgaria, Lithuania, Latvia,

Slovenia, Slovakia, Estonia and the United Kingdom.

MARKET OVERVIEW



Research highlights

The UK fragrances market generated total revenues of $1.8 billion in 2010, representing a compound

annual growth rate (CAGR) of 8.7% for the period spanning 2006-2010.

Female fragrances sales proved the most lucrative for the UK fragrances market in 2010, generating total

revenues of $1.1 billion, equivalent to 63.4% of the market's overall value.

The performance of the market is forecast to decelerate, with an anticipated CAGR of 6.4% for the five-

year period 2010-2015, which is expected to lead the market to a value of $2.4 billion by the end of 2015.

MARKET OVERVIEW



Market analysis

The UK fragrances market grew at a strong rate during the period 2006-2010, as a result of strong sales

growth in the female fragrances category. The overall market growth is expected to decelerate in the

forthcoming five years.

The UK fragrances market generated total revenues of $1.8 billion in 2010, representing a compound

annual growth rate (CAGR) of 8.7% for the period spanning 2006-2010. In comparison, the French and

German markets grew with CAGRs of 1.8% and 0.3% respectively, over the same period, to reach

respective values of $2.8 billion and $2.4 billion in 2010.

Market consumption volumes increased with a CAGR of 7.1% between 2006 and 2010, to reach a total of

44.3 million units in 2010. The market's volume is expected to rise to 56.4 million units by the end of

2015, representing a CAGR of 4.9% for the 2010-2015 period.

Female fragrances sales proved the most lucrative for the UK fragrances market in 2010, generating total

revenues of $1.1 billion, equivalent to 63.4% of the market's overall value. In comparison, sales of male

fragrances generated revenues of $605.4 million in 2010, equating to 34.4% of the market's aggregate

revenues.

The performance of the market is forecast to decelerate, with an anticipated CAGR of 6.4% for the five-

year period 2010-2015, which is expected to lead the market to a value of $2.4 billion by the end of 2015.

Comparatively, the French and German markets will grow with CAGRs of 1.7% and 0.2% respectively,

over the same period, to reach respective values of $3 billion and $2.4 billion in 2015.

MARKET VALUE



MARKET VALUE

The United Kingdom fragrances market grew by 7% in 2010 to reach a value of $1,759.6 million.

The compound annual growth rate of the market in the period 2006–10 was 8.7%.

Table 1: United Kingdom fragrances market value: $ million, 2006–10

Year $ million £ million € million % Growth

2006 1,262.2 817.3 951.6

2007 1,422.8 921.3 1,072.6 12.7%

2008 1,532.6 992.4 1,155.4 7.7%

2009 1,644.4 1,064.8 1,239.7 7.3%

2010 1,759.6 1,139.4 1,326.6 7.0%

CAGR: 2006–10 8.7%

Source: Datamonitor D A T A M O N I T O R

Figure 1: United Kingdom fragrances market value: $ million, 2006–10


MARKET VOLUME



MARKET VOLUME

The United Kingdom fragrances market grew by 6% in 2010 to reach a volume of 44.3 million units.

The compound annual growth rate of the market in the period 2006–10 was 7.1%.

Table 2: United Kingdom fragrances market volume: million units, 2006–10

Year million units % Growth

2006 33.7

2007 36.3 7.7%

2008 39.3 8.3%

2009 41.8 6.4%

2010 44.3 6.0%

CAGR: 2006–10 7.1%


Figure 2: United Kingdom fragrances market volume: million units, 2006–10


MARKET SEGMENTATION I



MARKET SEGMENTATION I

Female fragrances is the largest segment of the fragrances market in the United Kingdom, accounting for

63.4% of the market's total value.

The male fragrances segment accounts for a further 34.4% of the market.

Table 3: United Kingdom fragrances market segmentation I:% share, by value, 2010

Category % Share

Female fragrances 63.4%

Male fragrances 34.4%

Unisex fragrances 2.2%

Total 100%


Figure 3: United Kingdom fragrances market segmentation I:% share, by value, 2010


MARKET SEGMENTATION II



MARKET SEGMENTATION II

The United Kingdom accounts for 10.9% of the European fragrances market value.

France accounts for a further 17.9% of the European market.

Table 4: United Kingdom fragrances market segmentation II: % share, by value, 2010

Category % Share

France 17.9%

Germany 15.2%

United Kingdom 10.9%

Italy 8.9%

Rest of Europe 47.2%

Total 100%


Figure 4: United Kingdom fragrances market segmentation II: % share, by value, 2010


MARKET SHARE



MARKET SHARE

Procter & Gamble Company, The is the leading player in the United Kingdom fragrances market,

generating a 21.1% share of the market's value.

Coty Inc accounts for a further 14.2% of the market.

Table 5: United Kingdom fragrances market share: % share, by value, 2010

Company % Share

Procter & Gamble Company, The 21.1%

Coty Inc 14.2%

Estée Lauder Companies Inc., The 8.4%

Others 56.3%

Total 100%


Figure 5: United Kingdom fragrances market share: % share, by value, 2010


FIVE FORCES ANALYSIS




The fragrances market will be analyzed taking personal care products manufacturers and large fashion

houses as players. The key buyers will be taken as retailers, and manufacturers of chemicals, packaging,

and manufacturing equipment as the key suppliers.

Summary

Figure 6: Forces driving competition in the fragrances market in the United Kingdom, 2010


The UK fragrances market is fairly concentrated, with the top three players accounting for 43.7% of the

market value.

Department stores are the main buyers in the UK fragrances market and often occupy a strong position in

the supply chain, which allows them to negotiate favorable contracts with manufacturers, thereby

enhancing buyer power. However, major manufacturers tend to advertise in order to build brand loyalty.

This reduces buyer power, as most retailers must stock popular brands in order to maintain their own

sales volumes, with little option for alternatives. The raw materials (such as chemicals) used in

manufacturing of fragrances should be of high quality and for some ingredients there are no substitutes

available, which increases supplier power. A small number of brands, some globally recognized, have a

strong position in this market. The major companies are large firms whose economies of scale allow them

to compete more effectively on price, and invest in their own business and therefore small scale

companies entering the market may find it difficult to compete. Many of the leading players are either




manufacturers of personal care products or large fashion houses. Such business diversification of the

market players eases competitive pressure in any given market, which is assessed as moderate.




Buyer power

Figure 7: Drivers of buyer power in the fragrances market in the United Kingdom, 2010


The major buyers within the UK fragrances market are considered to be department stores (incl. duty-free

shops) (about 35.5% of the total distribution) who offer fragrances products to their customers.

Advertising plays a crucial role in this market as strong brand and building customer loyalty may provide

the buyers and manufacturers with brand loyal customers. This factor becomes even more important in

the market where end users have no switching costs and do tend to switch brands. In order to boost

sales, marketing companies often use celebrity endorsements for promoting brands as the majority of

people are swayed by a celebrity's image. This reduces buyer power, as most retailers must stock

popular brands in order to maintain their own sales volumes, with little option for alternatives. However,

retailers often occupy a strong position in the supply chain, which allows them to negotiate favorable

contracts with manufacturers, thereby enhancing buyer power. Direct selling is also possible in the

fragrances market: for example, manufacturer Avon avoids the conventional retail distribution network, by

using a direct sales force. Overall, buyer power in the fragrances market is assessed as moderate.




Supplier power

Figure 8: Drivers of supplier power in the fragrances market in the United Kingdom, 2010


Suppliers in the fragrances market include suppliers and manufacturers of raw materials such as

chemicals, packaging, and manufacturing equipment. The quality of raw materials is of core importance in

the fragrances market. Chemicals used for manufacturing consumer products must be of a suitable

standard, although for some ingredients there are no substitutes, a factor which increases supplier power.

Suppliers are often small in scale compared to the large manufacturers, lacking the price negotiating

power and consequently their power is reduced. However, this factor is counterbalanced by the fact that

chemical producers generate revenues from a wide variety of sources, reducing their dependence on

fragrance product manufacturers. Overall the supplier power is assessed as moderate.




New entrants

Figure 9: Factors influencing the likelihood of new entrants in the fragrances market in the

United Kingdom, 2010


The fragrances products market is primarily regulated by the International Fragrance Association (IFRA)

which is mainly responsible for regulating the worldwide legislatives trends and keeping a check on health

problems related to fragrance usage such as allergies or asthma. Additionally, the EU regulations

pertaining to cosmetic products require companies to notify about cosmetics containing nanomaterials.

The regulations also forbid companies from using substances in cosmetics that are carcinogenic,

mutagenic, or toxic for reproduction. Nevertheless fragrance formulas are treated as "trade secrets" and

manufactures are not obliged to reveal them to anyone, including regulatory agencies. . The European

Commission announced its decision on Feb, 2011to ban the fragrance material musk xylene under the

new European Chemicals Legislation REACH because of its potential effects on the environment. The UK

fragrances product market has presence of large players such as Procter & Gamble and Coty. These

companies have developed and acquired extensive product portfolios, and built brands with large

marketing and advertising budgets. A small scale company would find it difficult to enter this market as it

will have to compete with the established brands. Additionally, substantial funds are needed to start up a

business in this market, with capital required for investment in production, distribution, and also

advertising which is crucial to succeed in this market. One of the methods of establishing its brand is

celebrity endorsements but it can become very costly for new players. Overall, the threat of new entrants

with respect to the fragrance market is moderate.




Substitutes

Figure 10: Factors influencing the threat of substitutes in the fragrances market in the United

Kingdom, 2010


Fragrances, perfumes in particular, used to be considered luxury products. However, this trend is

changing with these products being sold at prices affordable for the mass public. Many personal hygiene

products such as soaps, body wash products and even talcum powders to a certain extent provide a

fragrance, and those products are often used by manufacturers to differentiate their product lines. The low

price of such products compared to that of fine fragrances also increases the threat of substitute. Overall,

the threat of substitute is moderate.




Rivalry

Figure 11: Drivers of degree of rivalry in the fragrances market in the United Kingdom, 2010


The UK fragrances products market is fairly concentrated, with the top three players accounting for 43.7%

of the market value. Many of the leading players are either large manufacturers of personal care products

or large fashion houses. Such business diversification of the market players eases competitive pressure

in any given market. Fixed costs are high in this market, as most companies own large production

facilities. Therefore the need to divest such assets on exiting the UK market constitutes an exit barrier.

Such factors tend to enhance rivalry. Most of these companies are geographically diversified which

weakens rivalry to some extent. Overall, rivalry in the fragrances market is moderate.

LEADING COMPANIES



LEADING COMPANIES

Procter & Gamble Company, The

Table 6: Procter & Gamble Company, The: key facts

Head office: 1 Procter & Gamble Plaza, Cincinnati, Ohio 45202, USA

Telephone: 1 513 983 1100

Fax: 1 513 983 4381

Local office: The Heights, Brooklands, Weybridge, Surrey, KT13 0XP, GBR

Telephone: 44 1932 896 000

Fax: 44 1932 896 200

Website: www.pg.com

Financial year-end: June

Ticker: PG

Stock exchange: NYSE

Source: company website D A T A M O N I T O R

Procter & Gamble Company (P&G) is engaged in the manufacture and marketing of consumer products.

The company markets more than 300 brands in over 180 countries spanning the Americas, Europe, the

Middle East and Africa (EMEA), and Asian region. It is headquartered in Cincinnati, Ohio and employs

about 129,000 people.

P&G sells its products through mass merchandisers, grocery stores, membership club stores, drug stores

and in high-frequency stores. P&G is organized into two global business units (GBUs): beauty & grooming

and household care.

The GBUs identify common consumer needs, develop new products and build its brands. The business

units comprising the GBUs are aggregated into six reportable segments: beauty; grooming; health care;

snacks and pet care; fabric care and home care; and baby care and family care. The beauty and

grooming comprises of the beauty, grooming and healthcare businesses while household care GBU

consists of snacks and pet care; fabric care and home care; baby care and family care businesses.

The beauty segment includes cosmetics, deodorants, hair care, skin care, prestige fragrances and

personal cleansing. The hair care sub-segment consists of conditioner, hair colorants, salon products,

shampoo and styling agents. The key brands offered by the segment include Head & Shoulders, Olay,

Pantene, Head and Shoulders, Aussie, Fekkai, Nioxin and Wella. The key brands offered in the

deodorant category include Old Spice, Secret and Gillette. Personal cleansing products include brands

LEADING COMPANIES



such as Camay, Gillette, Ivory, Olay, Old spice, and Zest in the body wash category. The key facial care

brand marketed by the company includes Olay.

The grooming segment comprises blades and razors, face and shave preparation products (such as

shaving cream), electric hair removal devices and small household appliances. The key brands marketed

by the grooming segment include Braun, Fusion, Gillette and Mach3. The electric hair removal devices

and small home appliances are marketed under the Braun brand.

The healthcare segment includes feminine care, gastrointestinal, incontinence, rapid diagnostics,

respiratory, toothbrush, toothpaste, water filtration and other oral care. The oral care products are

marketed worldwide under the brands Always, Crest and Oral-B. In December 2008, Panasonic Electric

Works entered into a supply agreement with P&G to supply its Palsonic electric toothbrush, which P&G

introduced in the US and European markets during late 2009 under its own brand name.

The snacks and pet care segment markets its products under the brands lams and Pringles. In the snacks

business, the company sells potato chips through its Pringles brand.

The fabric care and home care segment offers a wide range of fabric care products including laundry

cleaning products and fabric conditioners; and home care products, including dish care, surface cleaners

and air fresheners; and batteries. The segment markets its products under Ace, Ariel, Dawn, Downy,

Duracell, Gain, Tide and Febreze brands.

The baby care and family care segment offers baby wipes,, diapers, tissues, paper towels and paper

tissues under the following brands: Bounty, Charmin and Pampers. The company’s family care business

primarily operates in North America.

The global operations group consists of the market development organization (MDO). The MDO

comprises retail customer, trade channel and country-specific teams. . It is organized along five

geographic regions: North America, Western Europe, Central & Eastern Europe/Middle East/Africa

(CEEMEA), Latin America and Asia (comprises Japan, Greater China and ASEAN/Australia/India/Korea

(AAIK)). The developing markets include CEEMEA, Latin America, AAIK and Greater China while the

developed markets are comprised of North America, Western Europe and Japan.

The global business services (GBS) provides technology, processes and standard data tools to support

the operations of GBUs and the MDO. The GBS organization is responsible for providing world-class

solutions at a low cost and with minimal capital investment..

Corporate functions provide company-level strategy and portfolio analysis, corporate accounting,

treasury, external relations, governance, human resources and legal, as well as other centralized

functional support.

LEADING COMPANIES



In the US, the company operates through 36 manufacturing facilities located in 22 different states or

territories. The company operates other 102 manufacturing facilities in 41 other countries. Beauty

products are manufactured at 39 of these manufacturing facilities, grooming products at 17; fabric care

and home care products at 52; baby care and family care products at 31; snacks and pet care products at

11 and health care products at 35.

On March 2011, Procter and Gamble signed a joint venture with Teva, a producer of generic drugs to

create a new company dealing in over-the-counter drug.

Key Metrics

The company recorded revenues of $82.6 billion in the financial year (FY) ended June 2011, an increase

of 4.6% over FY2010. The net profit of the company was $11.8 billion in FY2011, a decrease of 7.4%

over FY2010.

During FY2011, the beauty division recorded revenues of $20.2 billion, an increase of 3.4% over 2010.

International accounted for 63.1% of the total revenues in FY2011. Revenues from International reached

$52.1 billion in FY2011, an increase of 6.5% over FY2010.

Table 7: Procter & Gamble Company, The: key financials ($)

$ million 2007 2008 2009 2010 2011

Revenues 72,441.0 79,257.0 76,694.0 78,938.0 82,559.0

Net income (loss) 10,340.0 12,075.0 13,436.0 12,736.0 11,797.0

Total assets 138,014.0 143,992.0 134,833.0 128,172.0 138,354.0

Total liabilities 71,254.0 74,208.0 71,451.0 66,733.0 70,353.0

Employees 138,000 138,000 135,000 127,000 129,000

Source: company filings D A T A M O N I T O R

LEADING COMPANIES



Table 8: Procter & Gamble Company, The: key financial ratios

Ratio 2007 2008 2009 2010 2011

Profit margin 14.3% 15.2% 17.5% 16.1% 14.3%

Revenue growth 6.2% 9.4% (3.2%) 2.9% 4.6%

Asset growth 1.7% 4.3% (6.4%) (4.9%) 7.9%

Liabilities growth (2.1%) 4.1% (3.7%) (6.6%) 5.4%

Debt/asset ratio 51.6% 51.5% 53.0% 52.1% 50.8%

Return on assets 7.6% 8.6% 9.6% 9.7% 8.9%

Revenue per employee $524,935 $574,326 $568,104 $621,559 $639,992

Profit per employee $74,928 $87,500 $99,526 $100,283 $91,450


Figure 12: Procter & Gamble Company, The: revenues & profitability


LEADING COMPANIES



Figure 13: Procter & Gamble Company, The: assets & liabilities


LEADING COMPANIES



Coty Inc

Table 9: Coty Inc: key facts

Head office: Two Park Avenue 17th Floor, New York City, New York 10016, USA

Telephone: 1 212 479 4300

Fax: 1 866 336 6064

Local office: Coty UK Ltd., 5 St. George's Road, St. George's House, Wimbledon, London SW19 4DR, GBR

Telephone: 44 208 971 1300

Fax: 44 208 971 1399

Website: www.coty.com



Coty is a privately held company engaged in manufacturing and marketing of fragrances, color cosmetics,

toiletries, skincare, sun care and personal care products. The company operates in more than 30

countries and distributes its products to around 90 countries worldwide. It is headquartered in New York

City, New York and employs more than 8,500 people.

The company is comprised of two divisions: Coty Prestige and Coty Beauty.

Coty Prestige is engaged in manufacturing and marketing of lifestyle and fashionable fragrances products

under the brands Baby Phat, Balcenciaga, Calvin Klein, Cerruti, Chloe, Chopard, Davidoff, Jennifer

Lopez, Jette Joop, Jil Sander, Joop!, Karl Lagerfeld, Kenneth Cole, L.A.M.B. fragrance Gwen Stefani,

Lancaster, Marc Jacobs, Nautica, Nikos, Phat Farm, Sarah Jessica Parker, Vera Wang and Vivienne

Westwood.

In January 2009, JL Morison India Ltd entered into an exclusive distribution agreement with Coty Prestige

Travel Retail and Export, a division of Coty Geneva, Switzerland, for distribution of various deodorant /

fragrance products under brands Playboy, Tonino Lamborghini and Pierre Cardin in India. In Switzerland,

the company launched Davidoff Cool Water Man and Davidoff Cool Water Woman fragrance brands in

April 2010.

Coty Beauty manufactures and markets fragrances, toiletries, color cosmetics, skin care, sun care and

personal care products. These products are marketed under the brands such as Adidas, Aspen, Astor,

Celine Dion, Chupa Chups, David & Victoria Beckham, Desperate Housewives, Esprit, ex’cla.ma’tion,

Halle Berry, Isabella Rossellini, Jovan, Kate Moss, Kylie Minogue, Miss Sixty, Miss Sporty, Pierre Cardin,

Playboy, Rimmel, Shania Twain, Stetson, and Vanilla Fields.

LEADING COMPANIES



The company has research and development centers at New Jersey and Monaco; and operates

manufacturing plants in Spain, France, Monaco, North Carolina and the UK. The company’s distribution

channels include department stores, specialty retailer, upscale perfumeries, pharmacies, mass market

retailers and duty free shops in airport and cities.

In January 2011, Coty Inc. acquired a majority stake in Chinese skin-care company TJoy Holdings Ltd to

expand its presence in China.

Key Metrics

Coty recorded revenues of $3.6 billion in the financial year (FY) ended June 2010.

The fragrances product category accounted for 62% of the total revenues during FY2010. Revenues from

fragrances product category reached $2.2 billion in FY2009.

Europe, Coty’s largest geographical market, accounted for 57% of the total revenues during FY2010.

Revenues from Europe reached $2.1 billion in FY2010.

LEADING COMPANIES



Estée Lauder Companies Inc., The

Table 10: Estée Lauder Companies Inc., The: key facts

Head office: 767 Fifth Avenue New York City, New York 10153, USA

Telephone: 1 212 572 4200

Fax: 1 212 572 3941

Website: www.elcompanies.com


Ticker: EL

Stock exchange: New York


The Estee Lauder Companies (Estee Lauder) manufactures and markets makeup, skin care, fragrances

and hair care products in over 150 countries spanning the Americas, Europe, the Middle East, Africa and

Asia Pacific. It has wholly-owned or majority-owned offices in 40 countries and territories. Since its

foundation in 1946, the company has been controlled by the Lauder family. The members of the Lauder

family have approximately 88% of the outstanding voting power in the company's common stock. It is

headquartered in New York City, the US and employs around 31,200 people.

Estee Lauder sells its products through different channels like department stores, specialty retailers,

perfumeries, freestanding stores, direct response TV, travel retail, internet, and pharmacies, prestige hair

salons and spas. The company also sells through freestanding company-owned stores and spas, Estee

Lauder's authorized web sites, stores on cruise ships and direct marketing through television.

Some of the best known brands of the company include Estee Lauder, Aramis, Clinique, Lab Series,

Origins, M.A.C, Bobbi Brown, La Mer, Aveda, Jo Malone, Bumble and Bumble, Darphin and Ojon. The

company is also the global licensee of the Kiton, Tommy Hilfiger, Donna Karan, Michael Kors, Sean John,

Missoni, Tom Ford, Mustang, American Beauty, Flirt!, Good skin, grassroots, and Daisy Fuentes.

Estee Lauder primarily operates through five product categories: makeup, skin care, fragrance, hair care

and other.

The makeup products category offers products such as lipsticks, mascaras, foundations, eyeshadows,

nail polishes and powders. Many of the products are offered in an extensive array of shades and colors.

The company also sells related items such as compacts, brushes and other makeup tools. The

company’s key brands for its makeup products include Estee lauder, Clinique, Origins, MAC, Bobbi

Brown, Aveda, Darphin, American Beauty and Flirt.

LEADING COMPANIES



Estee Lauder's skin care products category markets products for women and men including moisturizers,

creams, lotions, cleansers, sun screens and self-tanning products. The key skin care brands marketed by

the company in Malaysia include Estee Lauder and Clinique. In 2008, Estee Lauder acquired Ojon

Corporation, which markets and sells Ojon hair care and skin care products.

The fragrance products category offers a variety of fragrances for women and men. The fragrances are

sold in various forms including perfume sprays and colognes, as well as lotions, powders, creams and

soaps that are based on a particular fragrance. The company’s fragrances category includes brands like

Beautiful, Beyond Paradise, Celadon and Intuition among others.

The hair care products category offers products primarily used in salons and freestanding retail

stores;these include hair color and styling products, shampoos, conditioners and finishing sprays.

The other products category includes the sales of ancillary products and services other than skin care,

makeup, fragrance, and hair care products.

The company’s key skincare products brands include Lab Series, La Mer, Jo Malone, Darphin, Ojon, and

American Beauty among others.

In 2009 the company acquired Applied Genetics Incorporated Dermatics (AGI), a manufacturer of

cosmetics ingredients.

In April, 2011 Estee Lauder Companies Inc. announced that its Aramis and Designer Fragrances Division

will assume the exclusive worldwide license for the fragrance and grooming business of the Ermenegildo

Zegna Group, a one-hundred year old, billion-dollar Milan-based men's luxury clothing and accessory

business. The license is effective July 1st 2011.

Key Metrics

The company recorded revenues of $8.8 billion in the financial year (FY) ended June 2011, an increase of

13% over FY2010. The net profit of the company was $700.8 million in FY2011, an increase of 46.5%

over FY2010.

The fragrance division recorded revenues of $1.2 billion in FY2011, an increase of 8.7% over 2010.

Europe, the Middle East & Africa accounted for 37% of the total revenues in FY2011. Revenues from

Europe, the Middle East & Africa reached $3.3 billion in FY2011, an increase of 13.9% over FY2010.

LEADING COMPANIES



Table 11: Estée Lauder Companies Inc., The: key financials ($)

$ million 2007 2008 2009 2010 2011

Revenues 7,037.5 7,910.8 7,323.8 7,795.8 8,810.0

Net income (loss) 449.2 473.8 218.4 478.3 700.8

Total assets 4,125.7 5,011.2 5,176.6 5,335.6 6,273.9

Total liabilities 2,905.4 3,331.4 3,512.6 3,370.2 3,626.9

Employees 28,500 32,000 31,300 31,200 32,300


Table 12: Estée Lauder Companies Inc., The: key financial ratios

Ratio 2007 2008 2009 2010 2011

Profit margin 6.4% 6.0% 3.0% 6.1% 8.0%

Revenue growth 8.9% 12.4% (7.4%) 6.4% 13.0%

Asset growth 9.0% 21.5% 3.3% 3.1% 17.6%

Liabilities growth 36.0% 14.7% 5.4% (4.1%) 7.6%

Debt/asset ratio 70.4% 66.5% 67.9% 63.2% 57.8%

Return on assets 11.4% 10.4% 4.3% 9.1% 12.1%

Revenue per employee $246,930 $247,213 $233,987 $249,865 $272,755

Profit per employee $15,761 $14,806 $6,978 $15,330 $21,697


LEADING COMPANIES



Figure 14: Estée Lauder Companies Inc., The: revenues & profitability


Figure 15: Estée Lauder Companies Inc., The: assets & liabilities


DISTRIBUTION



MARKET DISTRIBUTION

Department Stores (incl. Duty-Free Shops) form the leading distribution channel in the United Kingdom

fragrances market, accounting for a 35.5% share of the total market's value.

Specialist Retailers accounts for a further 27.7% of the market.

Table 13: United Kingdom fragrances market distribution: % share, by value, 2010

Channel % Share

Department Stores (incl. Duty-Free Shops) 35.5%

Specialist Retailers 27.7%

Pharmacies / drugstores 22.8%

Others 14.0%

Total 100%


Figure 16: United Kingdom fragrances market distribution: % share, by value, 2010


MARKET FORECASTS



MARKET FORECASTS

Market value forecast

In 2015, the United Kingdom fragrances market is forecast to have a value of $2,396.1 million, an


The compound annual growth rate of the market in the period 2010–15 is predicted to be 6.4%.

Table 14: United Kingdom fragrances market value forecast: $ million, 2010–15

Year $ million £ million € million % Growth

2010 1,759.6 1,139.4 1,326.6 7.0%

2011 1,876.0 1,214.8 1,414.4 6.6%

2012 1,997.3 1,293.3 1,505.7 6.5%

2013 2,124.2 1,375.5 1,601.4 6.4%

2014 2,257.5 1,461.8 1,701.9 6.3%

2015 2,396.1 1,551.6 1,806.5 6.1%

CAGR: 2010–15 6.4%


Figure 17: United Kingdom fragrances market value forecast: $ million, 2010–15


MARKET FORECASTS



Market volume forecast

In 2015, the United Kingdom fragrances market is forecast to have a volume of 56.4 million units, an


The compound annual growth rate of the market in the period 2010–15 is predicted to be 4.9%.

Table 15: United Kingdom fragrances market volume forecast: million units, 2010–15

Year million units % Growth

2010 44.3 6.0%

2011 46.7 5.4%

2012 49.1 5.1%

2013 51.5 4.9%

2014 53.9 4.7%

2015 56.4 4.6%

CAGR: 2010–15 4.9%


Figure 18: United Kingdom fragrances market volume forecast: million units, 2010–15


MACROECONOMIC INDICATORS




Table 16: United Kingdom size of population (million), 2006–10

Year Population (million) % Growth

2006 60.6 0.6%

2007 61.0 0.7%

2008 61.4 0.7%

2009 61.8 0.6%

2010 62.1 0.6%


Table 17: United Kingdom gdp (constant 2000 prices, $ billion), 2006–10

Year Constant 2000 Prices, $ billion % Growth

2006 1,721.6 2.8%

2007 1,767.8 2.7%

2008 1,766.6 (0.1%)

2009 1,680.5 (4.9%)

2010 1,701.5 1.3%


Table 18: United Kingdom gdp (current prices, $ billion), 2006–10

Year Current Prices, $ billion % Growth

2006 2,433.6 7.4%

2007 2,831.1 16.3%

2008 2,714.4 (4.1%)

2009 2,227.1 (18.0%)

2010 2,302.6 3.4%





Table 19: United Kingdom inflation, 2006–10

Year Inflation Rate (%)

2006 3.2%

2007 4.3%

2008 3.6%

2009 2.2%

2010 3.3%


Table 20: United Kingdom consumer price index (absolute), 2006–10

Year Consumer Price Index (2000 = 100)

2006 116.3

2007 121.3

2008 125.7

2009 128.4

2010 132.7


Table 21: United Kingdom exchange rate, 2006–10

Year Exchange rate ($/£) Exchange rate (€/£)

2006 0.5435 0.6820

2007 0.4999 0.6840

2008 0.5449 0.7973

2009 0.6416 0.8921

2010 0.6475 0.8589


APPENDIX



APPENDIX

Methodology

Datamonitor Industry Profiles draw on extensive primary and secondary research, all aggregated,

analyzed, cross-checked and presented in a consistent and accessible style.

Review of in-house databases – Created using 250,000+ industry interviews and consumer surveys

and supported by analysis from industry experts using highly complex modeling & forecasting tools,

Datamonitor’s in-house databases provide the foundation for all related industry profiles

Preparatory research – We also maintain extensive in-house databases of news, analyst

commentary, company profiles and macroeconomic & demographic information, which enable our

researchers to build an accurate market overview

Definitions – Market definitions are standardized to allow comparison from country to country. The

parameters of each definition are carefully reviewed at the start of the research process to ensure they

match the requirements of both the market and our clients

Extensive secondary research activities ensure we are always fully up-to-date with the latest

industry events and trends

Datamonitor aggregates and analyzes a number of secondary information sources, including:

- National/Governmental statistics

- International data (official international sources)

- National and International trade associations

- Broker and analyst reports

- Company Annual Reports

- Business information libraries and databases

Modeling & forecasting tools – Datamonitor has developed powerful tools that allow quantitative

and qualitative data to be combined with related macroeconomic and demographic drivers to create

market models and forecasts, which can then be refined according to specific competitive, regulatory

and demand-related factors

Continuous quality control ensures that our processes and profiles remain focused, accurate and

up-to-date

APPENDIX



Industry associations

British Fragrance Association

PO Box 173 , Cranleigh Surrey GU6 8WU, United Kingdom

Tel.: 44 1483 275 411

Related Datamonitor research

Industry profiles

Fragrances in Europe

Fragrances in Asia-Pacific

Global Fragrances

Fragrances in Spain

Fragrances in Italy

Fragrances in Germany

Fragrances in France

Fragrances in Russia

Fragrances in Australia

Fragrances in Singapore

Fragrances in Japan

Fragrances in India

Fragrances in China

Fragrances in Brazil

Fragrances in United States

Fragrances in Mexico

Fragrances in Canada

Fragrances in Portugal

Fragrances in Ireland

Fragrances in New Zealand

Fragrances in Hong Kong

APPENDIX



Fragrances in South Africa

Fragrances in Switzerland

APPENDIX



Disclaimer

All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form

by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior

permission of the publisher, Datamonitor plc.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed.

Please note that the findings, conclusions and recommendations that Datamonitor delivers will be

based on information gathered in good faith from both primary and secondary sources, whose

accuracy we are not always in a position to guarantee. As such Datamonitor can accept no liability

whatever for actions taken based on any information that may subsequently prove to be incorrect.

ABOUT DATAMONITOR



ABOUT DATAMONITOR

The Datamonitor Group is a world-leading provider of premium global business information, delivering

independent data, analysis and opinion across the Automotive, Consumer Markets, Energy & Utilities,

Financial Services, Logistics & Express, Pharmaceutical & Healthcare, Retail, Technology and

Telecoms industries.

Combining our industry knowledge and experience, we assist over 6,000 of the world’s leading

companies in making better strategic and operational decisions.

Delivered online via our user-friendly web platforms, our market intelligence products and services

ensure that you will achieve your desired commercial goals by giving you the insight you need to best

respond to your competitive environment.

Premium Reports

Datamonitor's premium reports are based on primary research with industry panels and consumers.

We gather information on market segmentation, market growth and pricing, competitors and products.

Our experts then interpret this data to produce detailed forecasts and actionable recommendations,

helping you create new business opportunities and ideas.

Summary Reports

Our series of company, industry and country profiles complements our premium products, providing

top-level information on 30,000 companies, 3,000 industries and 100 countries. While they do not

contain the highly detailed breakdowns found in premium reports, profiles give you the most important

qualitative and quantitative summary information you need - including predictions and forecasts.

Datamonitor consulting

We hope that the data and analysis in this profile will help you make informed and imaginative business

decisions. If you have further requirements, Datamonitor’s consulting team may be able to help you. For

more information about Datamonitor’s consulting capabilities, please contact us directly at

[email protected].

Copyright of Fragrances Industry Profile: United Kingdom is the property of Datamonitor Plc and its content

may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express

written permission. However, users may print, download, or email articles for individual use.

UK Fragrance Industry

Documents

Transcript of UK Fragrance Industry