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Article12 Apr 2021

Changing Trends in Fragrances: From the Impact of COVID to ESG

It probably should come as no surprise that the pandemic has had an impact even on the global fragrance industry. We look at a recent deep-dive report by Citi’s Household and Personal Care Products research analyst, Wendy Nicholson, to learn about how the fragrance category has fared over the last year in different regions and at different price points. We also summarize key industry trends in 2021, including those related to more time spent at home, sustainability, and inclusivity.

The NPD Group reported that sales for the total US prestige beauty market declined 19% in pandemic-ravaged 2020 relative to 2019.  Perhaps not surprisingly, given mask mandates, lockdowns, and work at home, makeup and skincare sales were hit the hardest – down 34% and 11%, respectively. Fragrance sales fared a little better but were also down 8%. Within the fragrance category, we note key trends by region and price point (premium versus mass) as well as other factors and trends affecting the industry in the last year, as outlined in Wendy Nicholson’s deep-dive research report.

Premium Continues to Outpace Mass, but Change Is in the Air

According to Euromonitor, global fragrance industry sales totaled ~$47 billion in 2020.  Excluding 2020, the category has grown at a mid-single-digit rate over the past several years. During this time, the growth rate of premium fragrances has outpaced that of mass fragrances.  Global category sales are now split ~60%/40% for premium/mass price points.  And while Euromonitor expects growth in premium fragrances to continue to outpace that of mass fragrances in the Asia Pacific and Latin American regions, it expects mass fragrance growth to be stronger (high single digits) than premium (mid-single digits) on a global basis over the next four years. This stronger growth should be a function of higher relative growth in the Middle East & Africa and in Western Europe. 

Western Europe and Latin America Remain the Largest Fragrance Markets

In terms of size,

  • Western Europe remains the world’s largest regional market, currently accounting for 27% of global fragrance sales – with sales split ~80%/20% premium/mass.
  • Latin America is the second-largest market, accounting for 24% of global fragrance sales – with sales split almost the reverse in terms of premium/mass at ~15%/85%. 
  • China remains a small market for fragrances, but it is growing quickly.


There’s No Place Like Home: Online and Home Scents Sales Are on the Rise

Perhaps as a result of the pandemic with its stay-at-home orders and changing consumer behavior, the percent of US fragrance sales made online increased to 33% in 2020 from 19% in 2019, according to NPD.  And growth in sales of home scent products (such as candles), which also have been increasing in recent years, accelerated even more last year.  NPD reported that 85% of consumers indicated using home scents in the prior 12 months, with sales growing 9% in 2020. Candles were the most used home scent product, with sales up 17%.

NPD’s 2020 Fragrance Consumer Report also revealed the following:

  • Parfum sales grew by double digits during the year, as consumers’ preference shifted to longer-lasting scents.
  • One in three respondents indicated being influenced by in-store testers or free samples.
  • Gen Z, Millennials, and Gen X are more likely to use fragrance and wear it three to four days per week.
  • 37% of US consumers purchase fragrance for multiple other times/occasions per year, with this behavior most significant among men, Black consumers, Hispanic consumers, Millennials, and Gen X.


A Shift Is Occurring Toward Sustainability, Inclusivity, and Gender-Neutral Fragrances

In a recent interview with Cosmetic Executive Women (CEW), a leading cosmetics company executive noted ongoing changes in the fragrance category, with trends continuing to shift toward “purpose-driven brands, sustainability, and inclusivity.”  As highlighted in the report, there is a growing expectation that fragrance trends will focus on personalization, on who the customer is, and on sourcing of ingredients in a sustainable and eco-friendly manner.  Wendy notes that an example of this trend is a move toward gender-neutral fragrances and the increasing popularity of fragrances that reflect a particular audience or cultural movement.

Nonetheless, as highlighted by Wendy in her report, women’s-branded fragrances still dominate. Euromonitor estimates that the global fragrance market has historically been split about 60%/35%/5% women’s/men’s/unisex fragrances. And that split holds across the premium and mass price points.  Notably, however, Euromonitor expects men’s fragrances to grow marginally faster than women’s over the next four years (see Figure 1).

Euromonitor Forecasts Mid-Single-Digit Sales Growth Over the Next Four Years

In 2021, Euromonitor expects global fragrance category sales to grow 5%, followed by mid-single-digit growth over the next four years.  So despite the pandemic and the changing trends in the industry and among consumers globally, the fragrance market still smells pretty sweet.

Figure 1. Global Fragrance Subcategory Sales

Source: Citi Research, Euromonitor estimates


For more information on this subject, please see US Household/Personal Care Products: How Is Fragrance Faring? Growth in 2021 Should Smell Sweet.

Citi Global Insights (CGI) is Citi’s premier non-independent thought leadership curation.It is not investment research. The comments expressed herein are summaries and/or views on selected thematic content from a Citi Research report. For the full CGI disclosure, click here.

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