Introduction: Throughout the tumultuous years of the pandemic, perfumes & cosmetics and in particular fragrance have remained especially buoyant. Fragrance retail sales are expected to rise from US$70 billion to US$100 billion by 2027 and no company is better placed to leverage that growth than pure player Interparfums.
In this exclusive interview, Interparfums CEO Jean Madar talks about the fragrance company’s stellar Q2 performance, with sales growing +25% compared to the same period in 2022. He also discusses his approach to mergers & acquisitions, the importance of creating synergies with brands and the start-up mindset that has helped Interparfums achieve US$1 billion in sales in 2022.
Interparfums’ net sales in Q2 reached US$309 million, representing a +25% increase from the same period in 2022. In your view, what are the biggest factors that led to this stellar performance?
We remain a billion-dollar beauty company with a start-up mindset; we place entrepreneurship at the heart of everything we do.
This attitude and agility allow us to move quickly when we spot a strategic opportunity to work with new license partners.
We are fortunate to be the only pure fragrance player in a market that continues to demonstrate strength. A strong line-up of new launches for our world-renowned brands, combined with the recovery of travel retail sales, was crucial to our success.
Roberto Cavalli and Lacoste are the two newest additions to the Interparfums portfolio. How do you go about selecting the right brands to incorporate into the Interparfums family? What values are you looking for? What synergies?
The partnership between the licensor and licensee is truly reciprocal. Brands look to Interparfums for our size and expertise. I already mentioned that we are the only pure fragrance player in the industry. More importantly, we pride ourselves on providing personalised attention to each brand we work with, while also providing the resources needed for global marketing and distribution.
We seek brands that have a story to tell and are desirable for the consumer. When we acquired the Ferragamo license in 2021, we opened IP Italia, based in Florence. This provided a platform for us to expand our presence in Italy and beyond. In keeping with our strategy to develop an Italian brand hub, the Cavalli fragrance business will be managed out of Florence.
Few designers are as synonymous with Italian fashion as Roberto Cavalli. Mr Cavalli himself was born in Florence, bringing the fragrance story full circle, back to Italy.
Like the strength of the Interparfums portfolio, the Cavalli fragrance portfolio is also democratic. It spans from image-building luxury collections to lifestyle pillars across a variety of price points.
Speaking of synergies, Interparfums is a fragrance company with a very interesting structure with Europe and US operations working as two different segments. How do you drive synergies between the two?
When I was attending business school in Paris, I met Philippe Benacin, who became my business partner and close friend. Very early on, we decided to create Interparfums with brands based in Paris and New York City – I would develop the American side by opening an office in NYC, while he would focus on France and form a team in Paris. This approach proved to be successful: about three years later, we completed our initial public offering, which was in fact one of the first IPOs after the October 1987 stock market crash. Fast forward to 2023, we are now a billion-dollar company. And this February, we commemorated our 35th anniversary of listing on the NASDAQ by ringing the closing bell.
Niche fragrances are continuing to grow more and more relevant in the fragrance world – do you think the demand for niche is here to stay? What capabilities does Interparfums have in its portfolio to address this new consumer need?
While niche brands are undoubtedly important in the fragrance category, the majority of fragrance purchases are made up of designer fragrances. With a focus on brand heritage, these fragrances are highly desirable and recognised in the market. Our expertise enables us to capitalise on this long-term trend, as we know that brand heritage will always be a driving force behind desirability.
Guess grew by +30% across all regions in the second quarter of 2023. What do you think are the drivers to the brand’s growth?
We always carefully select brand partners to create the most balanced portfolio; our brands have clear identities and are aspirational for consumers. We don’t like to focus on one single brand as all our brands have exhibited strong growth. Continuous innovation combined with effective marketing & distribution strategies are essential for driving brand growth and, for us, this is a long-term strategy.
Fragrances have and still are experiencing a big boom since the COVID crisis. Why do you think this is?
Fragrance experienced a big boom during COVID. Consumers were unable to go out, so spending money on handbags and shoes wasn’t really an option. They discovered the unique ability of fragrance to elevate their mood and bring joy during an incredibly challenging time. Consumers fell in love with fragrance and the love affair has continued.
Fragrance continues to be the fastest-growing beauty segment, outpacing skincare and colour cosmetics. I have seen a definite shift in the consumer’s overall purchasing habits. Both women and men are now buying more than one fragrance, are more educated on fragrance notes, and are willing to experiment with ‘fragrance wardrobing’, where they can change their fragrance day to day, depending on the mood, occasion, or even the weather.
Do you see travel retail as more of a showcase or sales driver for Interparfums?
We see it as both in connecting to our broader strategies. We are increasing our digital investments in the local market for the brands to be visible – expanding on brand awareness with the target audience in the local market is the same as travel retail. The more shoppers see us, the more they will be likely to buy the products when travelling.
Then we are investing in key airports to increase our brand awareness via media screens. Improving our visibility on retailers’ websites is something we tackle on a daily basis.
We are also collaborating with our retail partners to communicate on our brands through their social media accounts (Facebook, WeChat, Instagram, etc.).
In your view, what are the biggest fragrance trends that will transform the P&C category in the post-pandemic travel retail landscape?
Outside fragrance trends, we are seeing large-scale investment in travel retail, not only in media activations, but also in enhanced visual merchandising, experiential animations and product offering. We see more and more bespoke focus on the channel and we find it encouraging given our own company-wide growth and concentration on this segment of our business.
What role do you think fragrances can play in driving the wider recovery of the travel retail channel?
Fragrance is currently the fastest-growing consumer segment – still outpacing skincare and makeup – and that transcends to the travel retail segment where, through activations and select brand product offerings, we can appeal to this customer segment expanding the global footprint. ✈
Source: The 2023 Business of Fashion (BoF) and McKinsey and Company Fragrance Report
