Hermès Parfums brings quality and craftsmanship to the travel retail offer – 05/12/07

International Director Gilles Droit: “We are not a marketing company. We are a perfumer.”

FRANCE. Hermès Parfums is – most deliberately – not your average fragrance house. There is no conveyor-belt of launches; no celebrity scents or spokespeople; and no skincare or make-up to complement its olfactory offering.

Yet it seems to be a winning formula. In recent years Hermès has slowly but surely managed to build its fragrance presence, both domestically and in travel retail, in a qualitative, controlled – and profitable – way.

“So far we are having an extremely good year,” confirmed International Director Gilles Droit. “In 2006 Hermès Parfums grew by +40% compared with 2005; yet 2007 will still be a very strong year, helped by the launch of Terre d’Hermès (in March 2006), and this year’s introduction of Kelly Calèche.”

This latter fragrance was introduced in Hermès boutiques in August, before rolling out internationally in September. “So it’s still very new,” notes Droit, ” but we can see already the benefits.”

Fragrances account for around 7% of the group’s turnover, a figure considered satisfactory by Droit. “There’s no magic number,” he remarks. “Each métier at Hermès has its own creativity and development plan. We are not driven by a specific objective in terms of mix as part of the group. What is good for the brand is to have a well-balanced activity between silk, leather, accessories, perfume and watches.”

Launch activity too is equally well balanced, in the sense that each new introduction is nurtured well beyond its launch year, to foster maximum longevity. “Our priorities are two-fold,” explains Droit. “Obviously, we want to consolidate Kelly Calèche as a key pillar line for us. And we will continue to look after Terre d’Hermès in year two. It is very important that this fragrance is supported year after year, and not just when it was launched.

“Looking ahead in terms of investment, the three most supported lines will be Terre d’Hermès, Kelly Calèche and Eau des Merveilles.”

We are not driven by a specific objective in terms of mix as part of the group. What is good for the brand is to have a well-balanced activity between silk, leather, accessories, perfume and watches
Gilles Droit, Hermès Parfums

There will be some novelties also. “Next year we will tell a new story within our Garden Collection,” reveals Droit. “We already have Un Jardin sur le Nil and Un Jardin en Méditerranée. We will add to these in May/June 2008.”

Geographically speaking, Hermès Parfums’ strongest market is the group’s homeland and heartland, France, although Droit notes the company’s strength in other European countries too.

“But our growth is fastest in the Americas, Asia Pacific and the Middle East, although the proportion [of sales] overall is smaller,” he remarks.

“Progressively, year by year we become a brand with bigger international exposure. As a group Hermès generates most of its business outside France, notably within Asia Pacific.”

Droit continues: “The brand’s leathergoods perform very strongly in Asia, especially in Japan, and we can capitalise on this, although we will remain very selective.

“We have an ambitious development plan for the US, where the brand is managed by the Hermès affiliates”¦The countries outside France and Europe where we feel we can grow the most are the US, Mexico, the Middle East with Saudi Arabia and the Emirates, and also China and southeast Asia.”

China has of course been earmarked as a key growth market by all the industry’s major players; what then is the extent of Hermès Parfums’ presence to date?

“In China today we have 45 doors, comprising key top-class department stores and the Sephora network,” replies Droit. “We plan to have around 65 doors by the end of 2008.

Talking travel retail
Droit declines to disclose what proportion of sales travel retail accounts for, confirming only that it is “more or less the industry average”, and growing “very quickly” in recent years.

The latest feminine fragrance from Hermès, Kelly Calèche

“The brand expresses itself in two ways in travel retail,” he explains. “First there are the stand-alone Hermès boutiques. We are one of the major players in travel retail with this type of store.

“Then there are the perfumeries, a channel that has been growing strongly for us, particularly thanks to the performance of Terre d’Hermès and Kelly Calèche.”

Droit is bullish about further potential in this sector, and singles out several new locations he believes will significantly boost the business.

“The major developments coming with Heathrow T5, Dubai T3 and Incheon will all help us to grow the business,” he comments. “[Key airports such as these] are a channel we are investing in more and more.”

Hermès delivers – and also expects – a high-quality execution from travel retailers, to preserve its unashamedly luxury positioning.

“What we are trying to explore is retailer partnerships that will enable us to express the premium dimension of perfumery,” Droit explains. “Happily we have found both domestic and travel retailers who are more and more inclined to dedicate space, visibility and service to premium brands such as ours. We have a major role to play in supporting this approach.”

Droit singles out Douglas, World Duty Free and Aelia as retailers keen to promote a high-end offer.

“They try to manage the mainstream brands, with shorter life-cycles, in one way, and also express something different, qualitative and unique for the premium brands,” he remarks.

Promoting the Hermès heritage is absolutely vital, Droit maintains, but an increasingly bigger challenge within a fragrance industry that has become so fast-moving.

“That’s the main challenge for us,” he admits, “to convey the craftsmanship of the products, to express the values and to protect our brands and our position.

Terre d’Hermès, the masculine fragrance launched in March 2006

“That’s why we tend to favour partners who understand this approach. We don’t compete with the huge multi-nationals, and that’s not the objective we have, but we still bring value to the industry,” he continues.

“So we want and deserve the opportunity to express our style and personality in our own way, while highlighting the quality of the creations of Jean-Claude Ellena.”

Ellena is Hermès Parfums’ in-house nose, a rarity in the industry these days.

What is also rare is for a fragrance company to be just that, with no treatment or colour items to complement its scent portfolio. Is such a situation sustainable in the long term, especially with the brand so strong – and keen to grow further – in Asia?

“It would make sense [to expand],” smiles Droit. “But we still have a lot to do with our fragrances. We want to consolidate the stories we tell, which are very different from what the rest of the industry is doing.

“We want to be recognised as a company coming with real quality and creativity, led by Ellena, who makes such a difference, and brings his own personality to everything he does.

“We are trying above all to express our uniqueness as a perfumer, and I think we still have a lot to do in this area, before exploring others. Maybe one day we will expand into other sectors, but each time it will have to be completely consistent with the Hermès values of craftsmanship, quality and luxury.”

Those standards are the cornerstone of an approach that is delivering sales success and support from retailers who understand the vision of the group. “What is interesting is that in the last three to four years we are being recognised more and more by partners as a company that knows how to manage its growth and development, will remaining authentic,” Droit explains.

“This is what we want to be know for in the business. We are not a marketing company,” he concludes firmly. “We are a perfumer.”


Hermès evokes its heritage with new Kelly Calèche – 11/07/07

Hermès Parfums confirms new personnel line-up – 13/11/06

Hermès gets earthy with new men’s fragrance – 17/01/06

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