By  on July 13, 2007

The fragrance industry is facing a test of faith.

The sales trend in the U.S. prestige market has provided little cheer. The NPD Group reported that the fragrance market dipped 2 percent, to $2.88 billion, in 2006 and took a steeper dive in unit volume. Moreover, month-by-month reports for this year have remained "tough," according to Karen Grant, senior beauty analyst for the consumer tracking firm.

To make matter worse, the dynamics that have driven the business for the past three years — flanker fragrances and celebrity scents — are showing signs of maturation. "These strong trends are still continuing, but they are not fueling enormous growth," Grant said, noting that the requirements of the game have stiffened. "It's not enough now to have a celebrity name," she continued. The celebrity has to be well-rounded, perhaps with a successful apparel or accessories line, like Gwen Stefani. Grant stressed the importance of keeping a name fresh in the public mind. Pointing to the success of Giorgio Armani, she said, "How do you keep a brand aspirational? You have to have a cool factor."

Fall certainly will be a test of the genre, with Coty introducing Covet Sarah Jessica Parker, its second big launch by the actress; Stefani's first scent; Kate Moss' debut, and a Jennifer Lopez limited edition, as well as a second scent by David and Victoria Beckham. The other power in celebrity marketing, Elizabeth Arden, is rolling out its long-awaited big gun, Mariah Carey, and Britney Spears' Believe. The latter celebrity may prove the resilience of the category. Industry analyst Allan Mottus speculated that Spears' tempestuous personal trials have not seriously eroded her following. He drew a parallel with Elizabeth Taylor's history of tabloid torture and how women ultimately rallied behind her. "She is getting a real dimension," he said of Spears. "It's not the Paris Hilton effect." In addition, Parlux Fragrances Inc. is launching another Hilton fragrance, called Can Can.

Both Mottus and Grant agreed that Avon Products Inc. hit a home run with Derek Jeter's Driven in the direct-selling channel.

While the attention has been on celebrity for the last three years, there seems to be a bit of resurgence in designer scents this season, with major launches by Gucci, Marc Jacobs, Tom Ford, Dolce & Gabbana, Giorgio Armani, Ralph Lauren, Hugo Boss, Jil Sander, Prada, Dior, Givenchy, Kenzo, Thierry Mugler, Azzaro, Lacoste, Donna Karan and Yves Saint Laurent.

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