CHINA FASHION BUSINESS

▼The following discussion in the Lengyun Fashion Circle revolves around industry issues and summarized insights. These shared ideas are a collective reflection of industry wisdom and do not represent Lengyun’s personal views. The aim is to benefit more industry professionals through this format.

The Current Situation of the Fragrance Industry and Changes in Consumer Habits

1. Fragrance Market Penetration Data

The application of fragrance products is rapidly expanding from traditional perfumes to various other fields. Non-burning fragrances, due to their convenience and safety, have become a daily choice for many households. Private spaces like tea rooms and studios have started paying attention to the arrangement of fragrances, making scent an important element in creating the environment.

In the daily chemical products sector, fragrance products are showing a trend of diversification. Hair care products are featuring concepts like “master-blended scents,” focusing on oceanic and floral notes as the primary fragrances. Car fragrances have evolved from simple odor elimination to quality-focused experience products. In commercial spaces, boutique stores use unique scents to create a specific shopping atmosphere, offering customers emotional value. Innovations in the new retail sector are also surprising, such as milk tea brands launching fragrance strips priced at 9.9 yuan, enabling consumers to experience fragrance products at more affordable prices. In the accessories sector, wearable fragrance beads and similar innovative products are gradually gaining popularity.

The booming development of the fragrance market is closely tied to the rise of the “healing” concept. After the pandemic, people faced emotional confusion, and there has been a significant increase in mental health awareness. The uncertainties of the past have had a profound impact, prompting many to seek spiritual solace by “looking inward.” In this process, pleasant fragrances play an important role in relieving emotions in private spaces.

The Global Health Economy report presents remarkable data: the global healing economy is expected to grow by about 10% annually, with the market size reaching 7 trillion dollars by 2025. Against this backdrop, fragrance, as an important medium connecting the five senses, not only carries the function of scent but also becomes a carrier of identity and emotional expression.

The growth data for the Chinese perfume market is also encouraging: it has grown from 11.4 billion yuan in 2018 to 22.9 billion yuan in 2023, with a compound annual growth rate (CAGR) of 15.0%. The market is expected to expand further to 44 billion yuan by 2028, with a projected CAGR of 14.0% from 2023 to 2028. This indicates that the Chinese fragrance market is still in a developmental stage, with huge growth potential.

However, none of the top 20 fragrances on mainstream e-commerce platforms are from Chinese brands. Compared to the international market, China’s perfume market holds only 5% of the market share, revealing significant development space. In response, local brands have adopted a strategy of circumventing direct competition with international big names by integrating fragrance into various daily life scenarios. Data shows a 27% increase in fragrance concept product filings, with fragrance body wash products being the second most filed category after perfumes, becoming an important direction for the expansion of fragrance products.

Certain scents can evoke specific memories, and this emotional resonance has become an important factor in consumers’ fragrance product choices. Fragrance products have evolved beyond simple scent functions and have become a means of emotional regulation and lifestyle expression. Despite the challenges in the current economic environment, the fragrance industry continues to experience strong growth, driven both by the increased demand for spiritual comfort and the continuous innovation in product forms and usage scenarios.

（SOURCE：弗若斯特沙利文数据）

2. Changes in Consumer Purchasing Behavior

In the competitive landscape of the fragrance market, local brands have adopted unique development strategies. Faced with the difficulty of directly competing with international brands in the mainstream perfume market, domestic brands have chosen to integrate fragrance into everyday essential products and explore new product categories. This strategy is reflected in several aspects: fragrance body wash and fragrance shampoo have become important channels for expansion, even extending into pet shampoo, designed with scents based on human preferences. Daily chemical products like hand creams also attract consumers by imitating the scents of big international brands, positioning themselves with “the same scent as the big brands.”

Regarding consumer purchasing behavior, fragrance products are showing a trend of integrated online and offline development. For professional fragrance enthusiasts, they often have large collections, such as more than 50 bottles of perfume and hundreds of raw materials, and prefer to purchase after an offline experience. This purchasing habit is more common in first-tier cities, where a complete network of offline brand experience stores is available.

However, the situation is quite different in third- and fourth-tier cities. In these areas, offline stores mainly sell commercial perfumes, with fewer offerings of high-end salon perfumes and fragrance candles. Interestingly, the primary consumers of perfume are concentrated in cities below the third tier. Data shows that within just three years, online sales accounted for 54%, according to a joint study by Kantar and Xiaohongshu.

（SOURCE：凯度用户调研）

Xiaohongshu (Little Red Book) has become an important marketing platform for fragrance products, with its functionality being considered “on par with Baidu.” The platform has attracted a large number of well-known fragrance bloggers, focusing on creating a good living atmosphere, and the number of such bloggers has exceeded 10,000. Fragrance is an essential category in the content of lifestyle bloggers. Originally started as a platform to promote mid- to high-end lifestyles, it has now become an important platform for fragrance entrepreneurs.

In live-streaming e-commerce, bloggers of different levels face different opportunities. Most bloggers prefer to promote domestic brands for three reasons: firstly, in line with the trend of national pride (Guochao); secondly, domestic brands offer higher commission rates; thirdly, the barrier to entry for promoting emerging domestic brands is relatively low. In contrast, international brands usually only offer substantial discounts to top influencers like Li Jiaqi, while regular bloggers can only do perfume reviews for international brands.

This phenomenon reflects the overall pattern of the fragrance industry: although domestic brands are still suppressed by international brands, they are gradually expanding their market space through innovative channels and marketing methods. Consumer purchasing behavior is also rapidly changing, with the increasing importance of online channels, especially in lower-tier markets. These trends are driving transformation in the industry and providing new opportunities for the development of domestic brands.

Beyond channels, product innovation is also a key breakthrough point. While large brands focus on the high-end market, domestic brands have found opportunities in the mid- to low-end markets, by incorporating fragrance into daily products. This not only satisfies consumers’ fragrance needs but also avoids direct competition with international big names. This strategy aligns with market trends and demonstrates the innovation capabilities of local brands.

The First Year of Domestic Fragrance and Perfume Industry Exhibitions – Notes Shanghai 2024

1. The Significance of Notes Shanghai for Domestic Fragrance Brands

In 2024, China’s fragrance industry will witness its first official exhibition – Notes Shanghai Perfume and Fragrance Boutique Exhibition, which will open on April 25 at the West Bund Dome Art Center in Shanghai. This event is hosted by Shanghai Jinguai Culture Co., Ltd., with co-organizers including the China Daily Chemical Industry Association, the Jinguai Award Council, and West Bund. It is expected to attract over 100 domestic and international boutique perfume and fragrance brands, along with more than 5,000 professional attendees and fragrance enthusiasts.

The exhibition will take place twice a year, in April and September, each lasting 3 days. The venue, located at the artistic West Bund Art Center in Shanghai, although not large (only 4,000 square meters), is designed with a strong artistic flair. The April 2024 exhibition will feature over 140 brands, with international and domestic brands each accounting for half. This balanced exhibition structure highlights that, with the inclusion of daily chemical fragrance brands, international brands no longer dominate the market.

The Jinguai Award, as the official top honor in China’s fragrance industry, evaluates various aspects including perfume, fragrance, scent, and appearance design. Both the Notes Shanghai exhibition and the Jinguai Award aim to promote the development of local brands, establish industry standards, and enhance product quality. The exhibition will showcase many works from designer brands and cultural creative companies, demonstrating unique artistic qualities.

From a consumer perspective, fragrance product consumption habits are becoming increasingly diversified. For household fragrance products that are used regularly, consumers’ monthly budgets generally range within 1,000 yuan, with a specific range of 500-800 yuan. Some consumers have indicated a willingness to invest a higher budget in incense sticks, but their willingness to spend on non-burning fragrances is comparatively lower. A few consumers used to prefer soy wax products, believing they were healthier. Additionally, some professionals prefer to make their own fragrances, a DIY approach that helps control costs while satisfying personalized needs.

The fragrance industry has transitioned from being an accessory to daily chemical products to an independent category. As the market size expands, the industry is gradually establishing its own standards. Although public awareness of fragrance exhibitions is still limited, promoting the industry through platforms like these exhibitions will help improve the professionalism and influence of the entire sector. In the future, the quality of fragrance products used by consumers is expected to improve further, and the market will become more standardized.

This emerging exhibition platform not only provides the industry with an opportunity to showcase and exchange ideas but also offers consumers a window to explore fragrance culture in depth. Through Vlogs from some exhibitors, it can be seen that the artistic atmosphere at the exhibition is well-executed, with creative booth designs providing a unique sensory experience for the audience. The appearance of such professional exhibitions marks the beginning of a new development phase for the Chinese fragrance market.

2. Analysis of Fragrance Brands Participating in Notes Shanghai

In terms of fragrance usage experience, regular users have shared unique insights. Some users have been using fragrance daily for six months, particularly favoring cool scents like pine and fir, which offer a refreshing aroma that brings a sense of tranquility and comfort. From a safety perspective, products priced above 100 yuan typically do not cause discomfort such as headaches, indicating that their quality is relatively reliable.

Although the fragrance market is still a niche field, competition is already fierce. Some industry professionals lamented, “How has it gotten competitive before anyone even knew about it?” The market shows clear price segmentation: consumers with higher safety requirements tend to choose mid-to-high-end products, while students are more price-conscious. This phenomenon is prevalent across various subcategories.

In terms of brand positioning, international brands still dominate the offline store space. Domestic brands with scale include Beasts, Guanxia, Wenxian, and Songchao, among others. Guanxia, in particular, has shown strong growth and has completed Series B financing. Most brands operate on a “light asset” model, primarily selling through industry exhibitions, official accounts on Xiaohongshu (Little Red Book), and online channels. An industry insider stated, “For enthusiasts, buying fragrance is a bit like buying lipstick.” Consumers often purchase multiple products from different brands to try them out.

What is unique about fragrance products is that the more mainstream a brand becomes, the less popular it is. Consumers are more inclined to try niche brands, hoping to discover unique “hidden gem” products. As one consumer said, “I’m not after the reputation, just trying something new—what if I find a gem?”

Development Directions for Domestic Fragrance Brands

1. Incorporating Chinese Local Elements

In terms of product development, domestic fragrance brands face dual challenges: raw materials and technology. International brands not only monopolize high-quality raw materials but also have a century-long advantage in their perfumer systems. When products are not of high quality, fragrance suppliers typically provide standardized raw materials instead of custom blending services. Few renowned international perfumers are from China, and domestic fragrance companies still mainly imitate international big brands.

Taking rose essential oil as a representative example, the best quality French Damask rose has been monopolized by brands like Dior and Guerlain. As a crop, the quality of fragrance plants is deeply influenced by geographical location, latitude, and climate. The good news is that China has made significant progress in the development and application of local plants such as orange blossom and osmanthus.

There is still room for improvement in the popularization of knowledge about plant raw materials. For example, the Buddha’s hand and bergamot, which are often confused, are two different species: Buddha’s hand is a traditional New Year’s product, while bergamot, also known as fragrant lemon, is one of the core ingredients in men’s cologne.

（SOURCE：小红书@425090541）

Exhibition data shows that the scale of the September 2024 exhibition will further expand: over 180 brands will participate, including more than 60 international brands and over 120 domestic brands, with overall exposure increasing by about two-thirds compared to the April exhibition. The establishment of the Jinguai Award provides a platform for domestic individual perfumers and designers to showcase their work, with recognition across multiple dimensions such as car fragrances, liquid fragrances, scented candles, packaging, and copywriting. From photos at the exhibition, it is evident that domestic brands are creating differentiated advantages by developing new product categories and strengthening appearance design.

2. Pricing to Match the Chinese Consumer Market

According to Douyin e-commerce data, products priced under 300 yuan are the main force, with a focus on creating more cost-effective domestic products to avoid excessive pricing premiums.

PS: The translation is done by AI.