FLORENCE — Being known around the world for beautifully handcrafted shoes is not enough. Salvatore Ferragamo also wants to be respected for its budding fragrance business.
This story first appeared in the June 11, 2003 issue of WWD. Subscribe Today.
During an interview with Ferruccio Ferragamo, chief executive of Ferragamo, in the fresco-painted drawing room of Ferragamo’s headquarters here, Ferragamo revealed that he is determined to push Ferragamo’s fragrance business to break the $117 million (or 100 million euro) mark in the next three years with an aggressive launch plan.
“Yes, OK, that is being optimistic,” Ferragamo admitted, and added, “but we know now that we have a good team who are professional and positive and believe in the company.”
Ferragamo said the company didn’t have the right people in the beginning, and despite the bad economic climate, saw good potential for its fragrance business.
“It’s a good vehicle for communication and, in general, the product gives more brand awareness and image of the company,” he said.
Certain of the company’s future success, Ferragamo said he believes that the sales volume of the fragrance business can be increased to 10 to 15 percent of the company’s sales, which last year totaled $642 million, up from approximately 6 percent now. Dollar figures have been converted from the euro at current exchange rates.
He added Ferragamo’s fragrance arm had a net turnover of $40.9 million worldwide in the past 12 months.
After dissolving a joint-venture contract with Bulgari, Ferragamo Parfums was established in 2001 to control the entire business of Ferragamo and Ungaro fragrances, from the development of the scent to the distribution.
Since the breakup with Bulgari in 2001, Salvatore Ferragamo fragrances increased revenues by 65 to 75 percent in less than a year. Growth of wholesale volume in 2002 was 20 percent over 2001.
“That sounds like a lot but it’s easy to grow when you are young,” Ferragamo said, adding that it was a different situation when they were part of Bulgari.
“It was a different setup with Bulgari — when it was a joint venture and they had their own perfumes. Maybe we didn’t start with the right product, and the team and communication was not very good on licensing.”
Ferragamo dismissed any claims about bad blood between his company and Bulgari.
“We are good friends, there is no problem,” Ferragamo said.
The recent growth of the company is substantial, considering in 2002 there were only tactical launches of the lines, Parfum Subtil and Subtil pour Homme.
Ferragamo Perfumes has mapped out an aggressive launch plan, starting with Incanto this spring-summer. It will be followed next spring-summer by Incanto for men, then an Ungaro women’s release in 2004 and a cologne launch for Ferragamo slated for 2005, as well as an Ungaro men’s fragrance launch.
Ferragamo labeled the new launch lineup as “ambitious.”
“As Ferragamo group, we tend to provide a direct approach to the market and we are confident that sales also will benefit from this decision,” Ferragamo said, adding strongly: “We are convinced that Incanto is destined to seal a new era for Salvatore Ferragamo in the fragrance business.”
In addition to its ambitious launch plan, Ferragamo also has changed nearly half of its world distribution partners —with ITF heading up the Italian market. New distribution partners also are present in the U.S., Japan, Switzerland, Holland, Portugal and Germany to help drive sales.
The U.S. currently accounts for 50 percent of sales — the biggest share of Ferragamo’s fragrance market, followed by Europe and Russia, which Ferragamo believes to be “potentially enormous.”
Ferragamo said that other markets may become more important players in the future.
“The Asian-Pacific market is growing — for example, Japan is a very important market for Ferragamo. But they have a different relationship with perfume — they used to just keep it on the table, but now they are starting to wear it. Korea is another country that has experienced massive growth in turnover — some 40 to 50 percent in the past year,” he said.
ARDEN’S NEW DEAL: Elizabeth Arden announced Tuesday afternoon that it has signed a licensing agreement with Gant to manufacture and distribute men’s fragrances and associated products. The first men’s scent is planned for fall 2004. The products will be distributed to department stores and perfumeries as well as Gant’s 154 freestanding stores worldwide.