Coty's CEO, Robert Coty, says the company's growth is booming in the US.
Consumers are still spending on small luxuries, and although the trend has been dubbed the 'lipstick effect, fragrances are also demonstrating resilience.
Coty COTY, a global beauty company, reported strong earnings in the third quarter, partly due to a strong demand for prestige fragrances. Coty's prestige fragrance industry experienced mid-teens growth that accelerated from the previous quarter, Coty said in its earnings release.
This category is booming in the US, said Coty CEO Sue Nabi, Yahoo Finance Live video above, which said it's 60% above the pre-pandemic levels. And now, this fragrance index is globalizing. It's happening now in China and Europe, he said. This phenomenon behind fragrances is globalizing. There are three main factors behind the momentum in fragrances: more consumers are coming to the market, they're opting for more premium fragrances, and they're using fragrances more frequently.
Nabi notes that the strength in the space can be attributed to consumers who are rediscovering the category, such as Gen Zs, men, and the Hispanic community in the US. Nabi said fragrance is not only an escapism product and a mood booster but also a self-expression tool. And in fact, what consumers are doing, they're spraying more and more, especially Gen Z, who use fragrances not only on their skins, they use fragrances on their clothes and outfits, Nabi said. So they spray much more, and it's shortening the lifespan of the product. That's what explains the boom, both in volume and in value, behind this market. In addition, Nabi highlighted that consumers are increasingly buying the more expensive eau de parfum over eau de toilette. The longer the fragrance lasts, the higher the concentration of oils.
The popularity of Coty fragrances benefiting from this premiumization trend, Nabi says, include Burberry's Hero and Her, Gucci Flora Gorgeous Jasmine and Gorgeous Gardenia, Boss Bottled Parfum, and Chloe Atelier des Fleurs.
Nabi said people like these little luxuries. So that's super, super important. And I believe that this category, and, moreover, the beauty category, is clearly one of the most resilient.