BUSINESS/ECONOMY

The sweet smell of success

SHERRI AIKENHEAD May 12 1986
BUSINESS/ECONOMY

The sweet smell of success

SHERRI AIKENHEAD May 12 1986

The sweet smell of success

BUSINESS/ECONOMY

Barbra Streisand and Michael Jackson use it. So do Sylvester Stallone and Jacqueline Bisset. At Bloomingdale’s department store in New York, it is the number 1 seller. Floral, feminine, pricey and exclusive, it is relentlessly promoted to millions of other North Americans and Europeans as “the best-selling fragrance in Beverly Hills.” At $207 an ounce, Giorgio perfume has become the North American fragrance industry’s hottest-selling scent since Revlon introduced Charlie in 1973. And for some of the women who gather each day at the Giorgio counter at the downtown Toronto flagship store of Holt Renfrew—the sole Giorgio distributor in Canada—it is the only scent worth buying. Said Leslie Gural, a 23-year-old market analyst in Toronto: “It’s strong but it’s pleasant—and people know what you are wearing.”

In the crowded and fickle $5.2-billion North American fragrance industry, the message of the Giorgio phenomenon goes far beyond the perfume’s impressive 1985 sales of $100 million. Giorgio’s success proves that clever marketing is the key to making a perfume instantly recognizable. With 700 fragrances currently competing for the

public’s attention, that is a complex and expensive undertaking. Fred Hayman, the 60-year-old owner of the Giorgio boutique on Rodeo Drive in Beverly Hills, launched the perfume five years ago. He also pioneered the use of so-called scent strips in magazines to make his product the number one seller in North America. A more sophisticated version of the “scratch and sniff” cards popularized in the 1970s, scent strips consist of fragrance sealed between two strips of paper. When the seal on the strip is removed, a burst of fragrance is released. Said Hayman: “The full-page ad with

scented insert became our fragrance counter.”

The battle for supremacy in the perfume wars is one sign of the intense competitiveness in the $12-billion cosmetics industry, which includes fragrances and toiletries. Dominated by a handful of large companies—Revlon, Estée Lauder and Charles of the Ritz among them—perfume sales account for $3.8 billion of total cosmetic purchases. But the cosmetics industry has grown by only about one per cent a year since the recession of the early 1980s, compared to a four-per-cent annual growth during the 1970s, when many women entered the workforce.

With so little growth in the market, cosmetics executives are continually looking for new ways to take sales from other manufacturers.

Indeed, the scent strip, still a relatively new phenomenon, has already led to similar innovations. Last January, Mississauga, Ont.-based Lawson Mardon Group started making eye shadow color strips for New Yorkbased Charles of the Ritz. The strips were inserted into account statements for cardholders at selected department stores across the United States.

The fragrance industry has always relied on the mystery of its secret formulas and periodic chemical breakthroughs to attract buyers, but perfume makers are now exploiting other important trends in their drive for sales and profits. To draw the traditional perfume buyers—women between 20 and 40 years old—companies are spending millions of dollars to link their perfumes to top fashion designers and television celebrities.

Two perfumes are based on the popular nighttime soap opera Dynasty. Made for the Canadian market by Montreal-based Herdt & Charton Inc. for Charles of the Ritz, they are named Forever Krystle perfume and Carrington cologne—after Krystle and Blake

Carrington, two of the show’s characters. Said Annette Green, executive director of the 150-member U.S. industry group the Fragrance Foundation: “When people are living in a world where bombs are exploding, they want to surround themselves with the perceived best.”

Fashion designers who develop fragrances to complement their clothes have often used advertising to adopt an image of sensual naughtiness. A master of that method is American fashion designer Calvin Klein, whose provocative ads for jeans featuring actress and model Brooke Shields attracted worldwide attention in 1980.

Last year Klein spent $23 million to introduce the woodyand spicysmelling Obsession fragrance. Magazine advertisements for the new scent, which costs $240 for 30 mL, depicted a tangle of naked male and female bodies. The controversial ads were free of any text—except a designer label in the corner. Toronto-based Limoges Cosmetics Ltd.,

which distributes -

Klein’s perfumes in Canada, defends the designer’s risqué ads. Said Teresa Chan, Limoges’ product manager: “No matter what you do people will complain. So he does what he likes and Klein likes to make waves.”

In March, Klein expanded the Obsession line in the United States, adding lotion, body powder and bath crystals.

The ads for the new products, which show a young man embracing a woman’s naked torso, have already led to complaints in the United States. They are scheduled to run in Canadian magazines next August. Green said that the popularity of the products is largely a result of the fact that women want to be associated with a celebrated designer. Said Green: “Many women want to emulate the designers, and this is a way they can do it.”

But the greatest challenge to the industry is to learn how to sell to the

last large untapped market—men. Cologne and cosmetics for men represent the Canadian industry’s fastest-growing market. In 1984, the latest year for which figures are available, manufacturers sold $42 million worth of fragrances for men, 11.4-per-cent more than the previous year. That compared with a 5.5-per-cent increase in wom-

en’s perfume sales. Said Yvon Lafrenière, a senior vice-president at Herdt & Charton: “We are still just scratching the surface.” According to industry experts, selling to men involves the same principle used in selling to women: creating the right image. Many men’s colognes come in large, solid-looking bottles that are packed in big boxes—in contrast to the women’s scents, which generally come in small, rounded decanters and delicate boxes.

Even men’s skin products, once a small industry, are rapidly becoming more acceptable as men become more conscientious about their looks. Since it was introduced in 1981, Estée Lauder’s Clinique men’s line, including soap, moisturizer and skin scrub, has doubled its sales each year. Clinique now sells about 10 per cent of its products to men. The ingredients of Clinique’s products for men and women are nearly identical—the only difference is that the men’s line is stronger because men “have tougher skin,” said Nathaniel Benson, vice-president of Clinique Canada. He added: “In five years men will use moisturizer as readily as they now brush their teeth.” Still, it is scent strips that have revitalized the perfume industry—while making them has become a $65-million business. A special process allows the scent to be encased in millions of tiny bubbles between strips of paper. Montreal-based Metro-Graphics Inc., which has made the inserts for Giorgio and Chanel, will produce 30 million strips this year alone, at a cost to perfume companies of four to 10 cents each.

Manufacturers have embraced the technique so readily that most magazine publishers have had to limit the number of scent strips to three per issue. Reginald Finlayson, advertising director for the popular women’s magazine Chatelaine, said that there have been g complaints from readers § who say that the small 5 amount of fragrance I that escapes from the £ strips causes allergic I reactions. 5 Marketers will undoubtedly continue to sell glitz and glamor chemical concoctions at Said the FraIt is fun along with the perfume counter, granee Foundation’s Green: to wear perfume in the 1980s. There is a different scent for every mood, every dress.”

-SHERRI AIKENHEAD with THERESA TEDESCO in Toronto

SHERRI AIKENHEAD

THERESA TEDESCO