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February 22, 2012

The Price of Luxury Perfume


Last year the weekly French magazine Le Nouvel Observateur published an interesting article about perfume creation called La Guerre des Nez (The War of the Nose). It featured a candid interview with perfumers Dominique Ropion and Anne Flipo and provided a table outlining the price breakdown for an average prestige brand perfume. The revelation is that in a bottle of perfume that costs 100 euros, the value of the fragrance concentrate is only 1-1.50 euros, or about 2-3 dollars. The rest is for marketing and distribution: 19.6 euros for value added taxes, 36 euros for distribution, 25 euros for ads and so on. I know all too well the economics of making a perfume, but seeing this table was still a shock.

On the face of it, why would this be so surprising? Everyone knows about the hefty markups on designer clothing or premium wines. As the fragrance business became the major money maker for fashion houses, it started to follow the logic of profit margins. It would be naïve to expect anything to the contrary. However, it is a rude awakening to realize that the cheapest thing about a bottle of perfume is the element that has any true significance. The ad may attract my attention and the bottle may look pretty on my dresser, but the perfume is what touches my skin, becomes a part of my aura and my own scented signature. The fact that this is worth less than the paper on which the perfume name is printed simply does not go down easily with me.

The topic of prices in the fragrance industry is still one of the most sensitive and confidential. Although reports like those published by Le Nouvel Observateur appear in the press, the conversation is restricted mostly to trade journals and conferences. Professionals decry the current state of affairs, remarking that if in the 1950s a perfume brand would be prepared pay around $300 for a fragrance, today this sum has been whittled down to the single digits. It is a given that the contemporary realities of retailing, distribution and raw material availability prevent most brands from spending hundreds of dollars on perfume. However, is it completely unreasonable for them to allocate enough money so that the fragrance concentrate value in Le Nouvel Observateur’s table registers not $3, but say, $6? If in the past perfume was a precious luxury, today it is as ubiquitous as mouthwash and deodorant. The only issue is that the retail prices keep rising without a commensurate quality increase.

Of course, the price of fragrance concentrate is not the only measure of quality. It is also the creativity, the originality and the uniqueness captured in a drop of liquid. The issue of quality, however defined, is really the crux of the matter. The main problem I have with today’s perfume launches in all areas of the market, niche included, is that every brand tries to pass their product as a fine vintage, whereas most fail miserably. As a consumer, I cannot rely on prices to tell the gems from junk, as the latter is just as likely to be luxuriously priced and exclusively distributed. Criteria such as the newness, a fancy brand name, packaging or advertising do not help much either.

The only way to tell quality in perfume is to smell it. I do not mean for this answer to appear flippant, because it is a fiendishly complex subject. By way of example, why do the perfumers in training study the highest quality aroma materials that their school can afford? Why does a perfumer trainee wishing to work on functional products nevertheless learn the nuances of floral absolutes and sumptuous amber synthetics? The idea is to form the base line and the sensitivity to quality early on. As fragrance consumers, we do not have many opportunities to train our noses by smelling precious essences, but there are other ways to learn about fragrance quality and the ways to tell the wheat from chaff. In the second part to this article, I would like to share my personal guidelines on how to spot a quality perfume.

Part 2: Value for Money, Quality and Other Perfume Musings

Image: Diamonds via 123rf stock images.



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