Although it has been experiencing a slowdown for a few months, the luxury market in China still draws the attention of perfume manufacturers. As a matter of fact, it still has a huge potential.
“In 2023, the fine perfumery market reached 1.95 billion euros, for a penetration rate of 3%. It shows that this market is already pretty big, although 97% of Chinese consumers have not been reached yet. There is a considerable growth margin,” explains Judith Gross, VP Communication & Branding, Scent.
Driven by the Guochao trend, which highlights the promotion of the national origin of products, the country is now undergoing a market transformation. Indeed, if global brands have been experiencing a slowdown, the sector has seen a huge number of local brands emerge. According to the IFF data, in 2024, about a hundred new brands entered the perfume industry.
Through its China Scent Exploration programme, IFF mixed consumer studies, social media learning, and an immersion into history to understand this market with a huge potential and better meet its expectations.
What was the outcome? They obtained a unique analysis of the cultural relationship with raw materials, tastes, uses, and consumer behaviours, which unveiled a complex market in terms of size and economic, social, and cultural diversity across regions.
“It is crucial to take into account the complexity of this market, which counts 200 dialects and 244 million Gen Z members who have grown with the economic growth. Massive digitalisation should also be noted: 27.6% of sales are achieved online, compared to 13% in France,” explains Yanying Cheng, Human & Consumer Insight at IFF.
Cultural differences
The programme is based on several pillars. On the one hand, the historic and cultural footprint contributes to understanding the influence of heritage and analysing old perfumes and their ingredients. On the other hand, sensorial influences help grasp the cultural meaning of ingredients and their history in the collective unconscious.
“It is essential to understand olfactory and language differences when it comes to raw materials,” says Juliette Karagueuzoglou, Senior Perfumer at IFF. “It is also crucial to understand the points of reference: what is a light perfume, for example? What seems strong to us is not necessarily strong in China, and vice versa. Generally speaking, Chinese consumers do not like sweet products, so it is tricky to get the perfect dose of sweetness in a fragrance. Is it addictive or sickening? Traditional Chinese medicine also plays a key role. It is very present on a daily basis,” she adds.
The studies carried out also focused on consumer dynamics, based on the analysis of emerging trends spotted on social media, and on quantitative studies of a large panel of 10,000 people of all generations. This data highlights expectations in terms of customer experience, in particular when it comes to the perfuming gesture, traditionally related to the home world.
Lastly, IFF deciphered ingredient preferences. The highly evocative local raw materials pointed by Juliette Karagueuzoglou include Michelia, in the same family as magnolia, which is very present in the local olfactory memory, Osmanthus, with its leathery autumn smell, and jasmine sambac, in relation to the tradition of very strong tea.
“We will be ready”
IFF strongly believes that the data collected as part of the China Scent Exploration programme, combined with the in-house innovative algorithm, paves the way for creations perfectly adapted to the Chinese market expectations.
“Chinese people have a real passion for perfumes. It should be reminded that a large proportion of raw materials come from this country, which is considered as the other birthplace of perfumery. It is highly likely we will see a Chinese luxury market emerge, driven by many local brands. And with this programme, we will be ready to contribute to these dynamics!” concludes Judith Gross.
