NEW YORK — Fragrance supplier Mane and distributor Gary Farn Ltd. are getting into the fragrance marketing game — together.
In what could blaze a new direction for the industry, Mane and Gary Farn have created a 50-50 joint venture, called Pulse Points, a fragrance marketing firm whose first project is to create a scent for accessories firm Leiber, which is set to be launched this fall.
The Pulse Points move reveals a fundamental transformation — and yawning vulnerabilities — now emerging in the $2.9 billion U.S. prestige fragrance industry. The two firms decided to go into business for themselves primarily because of these pressures.
In Mane's case, the adoption of core lists by manufacturers means that only a handful of suppliers are invited to compete for new fragrance projects. Because core lists are seen as a cost-cutting measure, and further economies of scale are often employed, some smaller fragrance suppliers simply fall from the sight of big customers, like L'Oréal, Procter & Gamble and Estée Lauder. As for Gary Farn, the risk that the brands built up by the firm can simply pick up and leave for another distributor is omnipresent.
"Due in particular to core listings," Kip Crennan, president of the fragrance division of Mane USA, said in a statement, "we at Mane believed we were being limited [in] showcasing the creative talents of our perfumery team."
Meanwhile, Alison Farn, chief executive of Gary Farn, acknowledged frankly that distribution can be a tough business proposition these days, especially when one spends years developing a brand in a particular market only to see that brand sign with a new firm after a contract expires.
"It's riskier today," she said during a recent interview, adding, "We've been in distribution for 31 years. Back then, relationships meant a lot; deals were done on a handshake. Times have changed.
"We're thinking long-term," said Farn. "What's best for Gary Farn — distribution, [which] changes, or having an equity relationship with a brand? This is a huge part of building our future."
Pulse points also comes at a time when global marketing behemoths — like Coty, P&G, Lauder and L'Oréal — continue to get larger and the gap between large corporations and smaller niche marketers widens.As market share continues to be gobbled up by massive celebrity and designer projects, and pressures like volume and global viability dictate what types of fragrances deals corporations will undertake, Farn noted, some brands with the potential to create moderately sized fragrance businesses are getting lost in the shuffle.
"Today, results are expected instantaneously, there's volume pressure and financial situations really rule the climate," said Farn. "Does [the current market dynamic] mean niche players have no place to go? No, they can come to us."
And, while "distribution houses haven't been known to create their own fragrances, it was one of those situations where [brands without scents] were knocking on our door enough to say we should look at this. We can set our own goals and realistic expectations."
Pulse Points aims to pair the creative capabilities of Mane with the sales and marketing experience of Farn. It will target the prestige, luxury market currently serviced by Farn.
"Brands that didn't have a fragrance would come to us and say 'We want distribution,'" Farn noted. "The same brand would go to Mane and say 'Can you produce our fragrance?'"
One of these brands, accessories marketer Leiber, did just that. Now, in conjunction with Pulse Points, Leiber has a signature scent — a first for the firm — that's set to be launched in September. Officially, Pulse Points owns the worldwide fragrance license for Leiber.
"If retailers had an up-and-coming brand, they would refer that brand to us. But there's a lot between [a referral] and distribution to market."
That's where Mane fits in.
The fragrance supplier, based in Grasse, France, has created a new division called Perfect Sense, which will handle Pulse Points' related functions. Some of the duties Mane will handle include market research, testing and creation of all products, while Gary Farn, based in Old Greenwich, Conn., will handle, naturally enough, distribution.
Farn contended that Pulse Points combines Mane's "artistic creation of perfume" with Gary Farn's expertise on "what niche [practices] work and what do not."
Pulse Points has a five-member board and, while creative direction will come from a particular brand, Pulse Points will handle functions like product and packaging development (overseen by an executive who was appointed from outside both companies), brand management (overseen by a Mane executive), operations and sales and marketing."We have to be more attuned to the sell-through aspect of the finished fine fragrance as opposed to just the sell-in of the fragrance to a client," stated Crennan, who is also president and ceo of the Perfect Sense division. "The risks are higher but it provides our creative team the ability to showcase their talents. We are committed to raising the bar within the creative aspect of perfumery as we sense there are too many duplications being launched in the marketplace."
Indeed, creative perfumery has experienced a renaissance of its own recently. The likes of Chanel, Tom Ford and Lauder and Thierry Mugler have all done fragrance collections in the past year that emphasize the creativity of perfumery.
Asked if he anticipated other suppliers going into the fragrance business, Crennan stated, "All we know is that the fragrance supply business overall is changing dramatically and will continue to do so. Fragrance suppliers are astute to these changes and are adjusting their business models accordingly."
While the idea of a fragrance supplier going directly to market with its own newly developed scents could be construed as competition by its customers, Mane contends this is not the case.
Crennan insisted the reaction from existing marketer-customers has been positive.
"We have discussed [this] initiative with our client base and they have applauded our decision as they believe we can add additional value, resources and services by being more attuned to the marketplace."
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