By and  on April 1, 1994

FRANKFURT, Germany -- Prestige fragrance manufacturers here are wrestling with a tough market.

The high-flying double-digit growth of the late Eighties nose-dived during the last two years into the mid-to-low single digits, as the European recession took hold and Germany shouldered the burden of absorbing the former East Germany, with its 16 million inhabitants and decimated economy.

Individual market forecasts for fragrance business range from flat this year to an average gain of no more than 3 percent annually through 1996.

As consumer spending slackened, gray market discounting began making inroads into a market that has known only price uniformity.

Recession-squeezed consumers are demanding smaller bottles of fragrance -- 20 and 25 mls. -- at lower prices. What was once a trial size is now a regular item, and manufacturers such as market leader Lancaster are trying to limit quantities to avoid cannibalizing the regular-sized business.

Major prestige fragrance manufacturers have come up with a variety of countermeasures, including more focused product launches with more reliance on electronic advertising, more innovative promotion and more emphasis on selling merchandise through to the consumer, rather than merely unloading the goods onto the stores.

Eurocos Cosmetic GmbH, a subsidiary of Procter & Gamble based near here, has scored a series of hot launches in the last two years, including Laura Biagiotti's Venezia and Elements by Hugo Boss last fall. According to P&G, the Eurocos fine fragrance business has been running 25 percent ahead since July 1, the beginning of the fiscal year.

Within the prestige German fragrance market, Eurocos is a player. The market research organization Gesellschaft fuer Konsumforschung (GFK) ranked Biagiotti as the third best-selling women's brand last year through October. The Boss brand ranked second in the men's market.

Now Eurocos is rolling out Roma Uomo, which the company hopes will become Laura Biagiotti's first major men's fragrance. It is being introduced across much of Europe and the Middle East, including Germany, Italy, Switzerland, Australia and Saudi Arabia.

Although Eurocos executives declined to disclose volume figures, sources indicate that Roma Uomo is projected to do $20 million to $25 million worldwide this year. The U.S., France and the U.K. are scheduled for next year.

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