The American beauty industry’s 13-year love affair with celebrity fragrance is turning sour.
Showbiz perfumery has always been cyclical, with a parade of Hollywood fragrances rising and falling over the years — amid shouts
that “celebrity is dead” — depending on star power and results. But the category now seems to be in a funk resembling a death spiral.
Perhaps the lure of the proposition was too powerful with too many stars flooding the category. Wikipedia lists 55 singers and actors plus former Yankee star Derek Jeter who have launched at least one celebrity scent — and for good reason. A star with her name on a bottle can pack a fragrance department to overflowing. Rihanna drew 1,400 people to a Macy’s branch in downtown Brooklyn on Aug. 31. Then there’s the cash. With royalties averaging 5 to 8 percent — stars such as Jennifer Lopez, who launched 18 fragrances over a decade with a cumulative retail sales total of nearly $2 billion; Paris Hilton, who reportedly racked up $2.1 billion; or sales leader Beyoncé, or Britney Spears, who sold 500 million bottles of Curious since 2004 — can theoretically compile earnings
of upward of $50 million. That’s not even mentioning the mother of all celebrity endorsers, Elizabeth Taylor, whose White Diamonds was launched in 1991 and is still selling. But not everyone makes it to the big payday. “It’s a rare celebrity fragrance that maintains a robust business past the first one,” said product development expert Ann Gottlieb. “Consumers are looking elsewhere for what is next.”
Retailers at every level from department stores to big-box discounters say the celebrity category is in decline. This is particularly true in department stores, where the business has imploded. At its height in 2011, celebrity scents generated $150 million in annual sales, about 4 percent of the U.S. prestige market. Just three years later, the category had lost two-thirds of its volume, plummeting to about $50.6 million in 2014, or less than 2 percent of the $3 billion market, according to the NPD Group, which tracks consumer buying trends.
Karen Grant, NPD’s global beauty industry analyst, attributed the collapse of the celebrity market, at least in part, to what she views as a sea change in consumer sentiment, favoring the classic and higher-end designer brands such as Chanel, Dior, Jimmy Choo and Giorgio Armani, as well as the more rarefied and higher-priced artisanal products like Tom Ford, Jo Malone, Bond No. 9 and Creed. The consumer has moved on, abandoning not only the affordably priced celebrity scents but also some of the big, commercial department store fragrances.
Clearly, the celebrity party is over. “It may have another moment, but right now is not its moment,” Grant observed.
This go-around marked the second binge for the sector, following the Taylor era in the late Eighties and into the Nineties. There are currently reports swirling of studies being made into bringing Cher back with a fragrance, a veteran of that pioneering era. Compared to department stores, the situation is different in the mass market, where the entire fragrance business is depressed. But the celeb scents have the softest sales, according to Larry Levin, executive vice president of new innovation at IRI, which analyzes sales trends at mass. For the last 52 weeks, the overall mass market fragrance business was down 4.7 percent, but the celebrity segment plunged by 17 percent. Year to date, fragrance is off 3.5 percent, while celebrity is down 19 percent. Levin projected that the celebrity category could generate $111 million in sales at mass for this year, including the crucial Christmas period. That total would represent a 16 percent decline over last year with a 15 percent market share, 2 percent off the previous year.
Swimming against this tide of bad news is the slender figure of 22-year-old soaring pop star, Ariana Grande. Other celebrities, such as Rihanna, are launching fragrances this season, but their brands are established. Grande is one of the few new players to enter the circus tent. Her fragrance, dubbed with her nickname Ari, is being produced and marketed by Luxe Brands, a small company led by some veterans who engineered Justin Bieber’s come-from-nowhere $75 million hit in 2011.
Armed with a scent boasting high production standards, plenty of cooperation from the star, a well-financed and finely articulated broadcast TV, print and digital promotional campaign, the company appears to be on a mission to not only become the number-one women’s launch this season — amounting to $30 million to $35 million in retail sales, according to industry sources — but also make an impact on the market. “We are going to transform the category,” declared Tony Bajaj, chief executive officer of Luxe Brands.
Bajaj is not alone in thinking he can make a difference. Parlux Ltd. has a lineup of celebrities making new offers. Rihanna introduced a pillar fragrance, RiRi, her seventh; she is joined with new entries by Hilton, Sofía Vergara, Pitbull and Jessica Simpson.
Danger signals were heard in a recent investors’ call at Coty Inc., the company that triggered the revival of the celebrity category in 2002 with the blockbuster launch of Lopez’s Glow by JLo. That original scent and its followup, Still Jennifer Lopez, reportedly generated combined retail sales of more than $100 million in 2005. That opened the floodgates, seemingly for all of Hollywood.
Bart Becht, chairman and interim chief executive officer of Coty Inc., said, “Celebrity fragrance is largely a phenomenon that is dying out,” a stunning statement considering Coty’s reinvention of the category. With a number of Coty’s brands seeing double-digit declines, Becht also noted that financial support had been shifted from one brand to another. A mass market retailer, who asked not to be named, confirmed Coty had cut advertising, exacerbating already weak demand. At another analysts’ meeting late last month, Becht said that despite continued sales erosion, “It is better to keep it than to divest it.”
Elizabeth Arden, one of Coty’s top competitors in the celebrity fray, is sticking to its guns by whittling down its portfolio and introducing lower pricing and value-driven products such as body sprays.
An influential mass market retailer, speaking not for attribution, cited a real price sensitivity with celeb scents. The solution to appealing to the key Hispanic and Millennial customers is to combine the celebrity and lower-priced personal-care categories, she suggested, noting that Rihanna’s shower gel is selling better than the star’s fragrance.
“I wouldn’t say it’s the death, I would say it’s the murdering of celebrity,” said Donald J. Loftus, president of Parlux Inc. and executive vice president of Perfumania Inc. “It’s not the consumer who is making this decision. We had Rihanna’s Rogue and we were ranking in the top 15 in 50 major stores and the retailers decided they don’t want to be in the celebrity business anymore,” Loftus said, asserting that part of the problem is that stores never got the hang of selling to a 15- to 22-year-old customer base. “You don’t merchandise prom dresses next to couture,” he noted, referring to the habit of locating teen scents next to Dior and Chanel. He reiterated that Parlux is talking to stores about creating leased departments — for all celebrity brands.
There are still some true believers. Joel Ronkin, president of global fragrances at Arden, asserted that celebrity fragrance is evolving into a more global business. “We believe the market is getting healthier, as the marketplace is a bit less crowded, leaving potentially an even greater opportunity for the best celebrity brands,” he said. Prospects are brighter overseas, he noted, adding, “Celebrity plays an important role in a number of key international markets.”
Frederic Pignault, vice president of sales of prestige fragrances at International Flavors & Fragrances, agreed, “there is geographic opportunity to make celebrity fragrance locally relevant in select emerging markets, such as India and Brazil.” His view of the celeb market: “mature but not dead.”
Theo Spilka, global vice president of strategic licensing and business development at Firmenich, has been a pioneer in brokering deals marrying celebrity and scent. He maintains that the industry has to cast a wider net. South America is fertile territory. “We have to address the Latins,” he said, adding that there also has been some evolution in thinking on the business model in terms of how the star is compensated — possibly allowing less well-financed players into the game. In Europe, Real Madrid soccer star Cristiano Ronaldo is set to unveil his fragrance, Legacy, Sept. 9 with Eden Parfums. He previously released ranges of men’s shirts, underwear and footwear under his CR7 label.
Another issue is quality of execution. While some marketers point to individual celebrity scents and say they are of the same caliber as any designer scent, others find them generally wanting.
That and every other criticism of the genre seems to have been heeded by Noreen Dodge, executive vice president of global marketing at Luxe Brands, as she developed the Grande project. Armed with a $15 million promotional war chest, according to industry experts, the launch plan includes a detailed and innovative digital campaign. One feature is an app that allows a consumer to hold her phone up against the bottle and receive new content, perhaps a video clip of the star. This is in addition to spots running on national TV from Thanksgiving through holiday with a possible warm-up in October, and a magazine print campaign, complete with scent impressions. There also is a full gift-with-purchase program of leather backpacks and train cases. The offerings, designed in the spirit of Taylor’s Nineties breakthrough, are engineered to satisfy the department stores and to completely engage the target customer, aged 13 to 24.
As for product quality, the fragrance itself has a concentration of 18 percent, well above the 15 percent standard for an eau de parfum, and was created by a top perfumer from Firmenich, Frank Voelkl.
The ultimate goal is to encourage the customer to buy a second bottle and not fall into the trap that suppliers call “a one-shot deal,” Dodge maintains.
“You still have to give a good-quality fragrance for there to be repurchase,” Dodge said. “You cannot just put out a cheap product and expect them to re-buy because there’s a famous name on it.”