FIRST NEW SCENT FOR HERMES IN 9 YEARS
Byline: Sarah Raper and Katherine Weisman
PARIS — After a nine-year hiatus, Hermes is about to launch a new fragrance — and it’s going to do it with a major budget.
The company hasn’t introduced a new scent since Bel Ami for men in 1986, and it’s been just as long since it backed any of its scents with heavy advertising. But now, the company promises it will spend almost $4 million on advertising when it introduces 24 Faubourg, a women’s scent, in mid-April.
Although the house had its reasons for the lack of activity — mainly other priorities, such as diversifying its other product lines and getting listed on the Paris stock exchange — it seemed to industry executives that Hermes just couldn’t keep up in an increasingly high-stakes business.
The fragrance division lost money in 1992 and 1993. The 1994 results have not yet been reported.
The company says that will change with 24 Faubourg. The European distribution of the scent will remain what it is — France has the widest distribution of Hermes fragrances, with 1,200 doors — but the ad budget will get a hefty increase.
Remy Gomez, chairman of Comptoir Nouveau de la Parfumerie, the house’s fragrance subsidiary, said the firm will spend $3.9 million (20 million francs) on media alone, including television, during the eight-month launch period.
Hermes has used TV advertising only twice before, with spots for Amazone and Eau de Cologne just a few years ago.
The promised promotional spending could go a long way toward convincing French retailers that, after some lean years, Hermes is finally shoring up its fragrance business.
“Using TV was a strategic decision. Given our objectives and the confidence we have in the product, it makes sense,” Gomez said.
Hermes projects sales of over $19 million (100 million francs) for Faubourg in its first year on the shelves, and annual sales of around $35 million (180 million francs) once the line is rolled out worldwide.
“Faubourg is not the new perfume of Hermes, it’s the perfume of the new HermAs,” said Gomez.
France, Belgium and Switzerland will have April introductions, while Harrods will have an exclusive in the U.K. until September, when the scent will be rolled out in the rest of that market. The line will be shipped to the rest of Europe in September and rolled out to the U.S. and other markets either late this year or early in 1996.
The name was taken from the address of the company’s flagship, 24 Rue du Faubourg Saint Honore. The scent itself, developed by Maurice Roucel at Quest International here, has an amber and floral base; Gomez said it was in the same family as Beautiful by Estee Lauder.
The line includes two sizes of perfume — a 30-ml. bottle for $225 (1,150 francs) and a 15-ml. version for $147 (750 francs) — along with five sizes of eau de toilette, ranging in price from $314 (1,600 francs) for a huge 600-ml. bottle to $62 (315 francs) for a 50-ml. version.
The outer packaging is in warm, orange tones, and both the bottle and box feature a design reminiscent of an Hermes scarf. The printing on the back of the bottle has the appearance of etching.
Hermes’s entry into fragrance was Eau d’Hermes, which dates from 1950. But the company’s first big push came with Caleche in 1961, when Comptoir Nouveau de la Parfumerie was founded.
Technically, Hermes has continued to expand its product range with ancillary items, but in the past decade, chairman Jean-Louis Dumas kept a deliberately low profile, preferring to develop line extensions like Amazone’s Eau de Fraicheur in 1993 and Soie de Parfum Caleche, rather than launching new brands.
That, coupled with a lack of promotional support, resulted in slow sales growth: In 1992, the fragrance division lost $280,000 (1.4 million francs), and in 1993, losses increased to $5.5 million (27.5 million francs).
In 1993, fragrances accounted for just over 7 percent of the company’s global volume, or $40 million out of $570.2 million (2.85 billion francs at current exchange rates).
But that share could go up.
“We want perfumes to represent roughly 10 to 15 percent of an increased total turnover,” said Patrick Thomas, managing director at Hermes. “That could happen in three to four years, depending on the success of this launch.”
In the U.S., distribution will change significantly, although the company will still not be flooding the market.
“We want to be important but in a very selective number of doors,” explained Hermes’s U.S. president, Laurent Mommeja. “We want to get bigger, but we don’t want to get fat.”
Mommeja said that by the end of this year, distribution could hit 150 doors, from 80 at present, to prepare for the arrival of 24 Faubourg. The number of sales points could grow to between 200 and 300 over the next several years, he said.
That would be achieved by developing more distribution with retailers and by opening more freestanding Hermes stores, some of which the company owns, while others are franchised.
Hermes fragrances distribution is made up of freestanding stores and Hermes accessories counters in specialty stores like Barneys New York, Neiman Marcus and Marshall Field’s.
The firm’s fragrance sales in the U.S last year were roughly $4 million, or 5 percent of its overall volume. This share could rise to between 10 to 15 percent, similar to the worldwide share, Mommeja said.
Historically, fragrances have been a significant part of the company’s sales. In the late Sixties and early Seventies, fragrance represented roughly half of company sales, a proportion that Hermes executives feel was not healthy.
“The perfumes should be part of the Hermes universe,” said Thomas. The company’s products range from men’s and women’s luxury ready-to-wear to crystal and silver table accessories.
“We don’t want to be a Chanel or a Dior,” added Thomas, who believes the fragrance businesses of those companies have become disproportionately big.
Hermes waited until now to bring out a new fragrance for several reasons. At Faubourg’s press preview last month, Dumas explained that about 10 years ago he wanted to change the organization of the company, then family-owned, to allow individual owners to get out of the business if they wanted.
There was also a need to build up the business, to balance international sales, to create harmony among existing products and to develop new ones, he said. At the time, when accessories such as scarves and leather goods were a major part of the Hermes business, it meant putting a new priority on goods like ready-to-wear and jewelry.
At the same time, the fragrance industry was ballooning and its product launch cycle and advertising spending were being accelerated. Dumas decided he could not keep up with other fragrance companies, focus on other parts of the Hermes business and not borrow capital — the group is essentially debt-free — so he put the fragrance division in a holding pattern.
“I hired Jean Paul Lepelley as the gatekeeper and told him to maintain the business, but [I warned] there will be no communications support, no wind in the sails,” he recalled.
In 1991, when Lepelley said he could not continue without more money, Dumas replaced him as chairman of the fragrance division with Marie-Jeannie Chevallereau, who was told to begin preparing a new scent.
The industry, however, had clearly changed, as blockbuster launches had become de rigueur and the need to spend became evident. Dumas replaced Chevallereau with Gomez, who — as did a growing number of cosmetics executives — came from Procter & Gamble.
“I told Chevallereau ‘thank you’ for all that she had done but that now I needed a real captain,” he said, adding that in an industry characterized by consolidation and bigger companies — rival Guerlain, once a small, family-owned company, had already become part of LVMH Moet Hennessey Louis Vuitton — Hermes needed someone who was ready to play in the big leagues.