The Structure of an International. Fragrance Company DAVID PYBUS

INTRODUCTION

Just as the senses of taste and smell, both chemical senses, are integrally connected, so the large, multinational fragrance suppliers are involved in flavour manufacture as well as that of perfume. Table 5.1 illustrates a near ten billion dollar industry in the provision of fragrance and flavour compositions, whilst Table 5.2 details the fifteen billion dollar market for cosmetics and fragrance on a global basis. Companies such as Quest are the ghostwriters of this industry. Their products, essentially fragrance and flavour concentrates are provided in 50 kilo, 100 kilo and 200 kilo drums, and occasionally in one tonne iso-containers. However, the multinational fragrance houses do not sell to the general

Table 5.1 Estimated world consumption of flavour and fragrance products in 1994 (millions of dollars; adapted from SRI, 1995)

United

States

Western

Europe

Japan

Rest of World

Total

Total

(%)

Fragrance composition

660

1190

250

720

2820

29.2

Essential oils/natural extracts

450

768

158

320

1716

17.5

Aroma chemicals

464

582

182

206

1434

14.8

(Flavour compositions)

820

1060

977

860

3717

38.5

Total

2394

3600

1567

2106

9687

100.00

Total (%)

24.7

37.2

16.4

21.7

100.0

Table 5.2 World consumption of cosmetics and perfumes in 1994 (adapted from SRI, 1995)

Billions of dollars

Percent

Cosmetics

North America

7.4

35

Japan

6.0

29

Western Europe

4.5

22

Rest of the World and duty-free shops

2.9

14

Total

20.8

100.0

Perfumes

Western Europe

7.1

48

North America

5.4

37

Japan and Rest of the World

1.4

10

Duty-free shops

0.8

5

Total

14.7

100.0

public. Their marketplace, through industrial marketing, is the large multinational companies that manufacture the well known branded products, or indeed, the multiple retail chains in any domestic economy that produce own brand products.

The six largest multinational fragrance houses account for some 70% of total fragrance compound sales. Theirs is a legacy of a century of experience and a financial strength that can cope with the tens of millions of dollars expense each year in pure research and development required to keep ahead of the game.

The structure and nature of a fragrance ‘house’ must reflect its link to the consumer via its own multinational clients. It is arguable that the client knows the marketplace best, and certainly invests in much research to ensure this is so, but the fragrance houses must understand sensory consumer perception and be alert to the reflection of fashion in odour terms. The marketeers in a fragrance house must be able to anticipate the effects of social trends on fragrance preferences and focus creative resources accordingly, relating brand values to odour and interpreting market research to understand precisely what is influen­cing consumer purchasing decisions. These companies understand the value of the psychology of scent.

Fragrance houses are fed a daily diet of perfumery briefs. Their survival depends on the successful nurture and assimilation of the brief leading to a winning response. They are thus structured around two main themes, namely:

—The business-getting chain. The proactive work on a client’s brief with creative and technical teams developed to deliver winning products to the marketplace.

—The supply chain. The managed and planned purchasing of raw materials, competitively costed formulae, total quality production techniques and a customer delivery service department second to none.

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