Move expected to bring company closer to the world's fastest growing market
The world's largest privately owned fragrance and taste company, Firmenich, has launched an fine fragrance workshop in downtown Shanghai by offering dedicated models that provide easy access to all fragrance capabilities under one roof.
The firm expects the workshop to bring it closer to the world's fastest growing but under exploited fragrance market.
As the world's second largest economy, China saw the fine fragrance market increase 15 percent last year, according to data from Euromonitor International.
"Fragrance consumers in China are expanding rapidly from women to both men and women, and the market scale is projected to reach 23.3 billion yuan ($3.28 billion) in 2018," said Cai Zhihao, a researcher with the Shenzhen-based Qianzhan Industry Research Institute.
"China is really becoming a dynamic market and both local players and international brands are now beginning to define a unique Chinese fragrance landscape," Luc Berriet, the fragrance development director with Firmenich China, explained.
Fine fragrance products are gaining traction across the country among Chinese consumers looking for quality products. Between 2015 and 2020, the middle-income group in China will have doubled, and by 2025, people born in the 2000s will represent 21 percent, or more than a fifth, of China's population, according to data from the World Bank.
With the rise of the Chinese middle-income, millennium generation and generation Z groups, new domestic fine fragrance brands are booming as a result, providing additional customers for international brands.
"Chinese consumption for fine fragrance is still at its early stage. It may take another five to 10 years for the Chinese market to become mature enough, which in turn provides many opportunities for Chinese and international brands to exploit," Cai said.
Jerry Vittoria, president of Fine Fragrance Worldwide with Firmenich, called the investment move in China came at the right time.
He said the Chinese are dominant luxury customers and perfume and home fragrances are rapidly gaining a significant foothold in the country. At this time, international brands focus more on the China market's tailor-made business strategy, while local brands are becoming conscious of the potency of the Made-in-China label, he explained.
"We established our first office in China over 30 years ago, and after opening our Zhangjiagang manufacturing site earlier this year, this new investment in the heart of the fine fragrance community in Shanghai further reinforces our strong commitment to China, our second largest market worldwide," said Paul Andersson, president of Firmenich China.
Firmenich opened its largest flavor manufacturing plant in the Zhangjiagang Free Trade Zone in Jiangsu province in March, with an initial outlay of $75 million making up the first phase of its investment. The brand looks to offer Chinese consumers a broad range of local flavors in products that include dairy drinks, tea and noodles.
"Firmenich's new Shanghai Fine Fragrance Atelier embodies the passion of perfumery and embraces the growth of Fine Fragrance in China. Our new, one-of-a-kind Fine Fragrance Atelier will help us better collaborate and co-create with our customers to deliver quality, creativity, value and growth," said Vittoria.
The atelier has a cross-functional team that include sales, development, marketing and creation. The creation team has a full-time fine fragrance perfumer, and will leverage global fine fragrance perfumers for all local creations. The marketing team focuses on understanding both local market preferences and consumer insights.
Daisy Shi, marketing manager of Firmenich China said: "We analyze consumer behaviors, and we identify emerging trends, and generate innovative and inspiring ideas."
"When I'm in China, I'm touched by both its tradition and modernity. China is a huge source of inspiration. It is a country of contrasts, with a rich history of perfumery in ceremonies, rituals, performances and cuisine. Yet China also exemplifies innovation through its consumers, cities and culture," the company's Paris-based master perfumer Nathalie Lorson said.
During the opening, Firmenich presented a multi-sensorial, fragrance experience called Aesthetics of China.
The experience showcases Firmenich's imagination and creativity through music (sound), movies (sight), food (taste), fragrance (smell) and textures (touch), across four areas combining traditional Chinese aesthetics with modern Chinese beauty. They are called Serene Utopia, Multifaceted Me, Poetic Data and Root in Five.