When a perfume does succeed, the profits are formidable all around. The laboratory sells the juice to the licensee at two and a half times the cost. The licensee sells it at retail for two to four times its cost and earns about 30 to 40 percent in profits. The licensee then pays the luxury brand royalties for use of the name.
— From Deluxe: How Luxury Lost Its Luster by Dana Thomas (p. 163).
Even people with extra money in their wallets aren't buying luxury items these days. Cornell University economics professor Robert Frank, who writes the Wall Street Journal blog called "The Wealth Report" talks to Madeline Brand about the trend.
— Listen to Rich Are Spending Less On Luxury Goods at NPR (less than 4 minutes). They don't talk specifically about perfume, but the implications seem obvious.
Not perfume related, but vaguely apropos of my "luxury" rant inspired by Comme des Garçons Luxe Champaca:
Guerlain introduced KissKiss Gold and Diamonds, the first-ever $62,000 lipstick custom designed in France, adorned with 110g of solid 18-carat yellow gold and paved with a rain of 199 diamonds of 2.2 carats.
Read more at Happi.
Perfume, once a true luxury product, has become, with a few exceptions, a mere commodity in recent years. Now designer and luxury labels and the cosmetics giants are trying to restore fragrance's prestige, notably at the high end of the market.
"Fragrance launches are more like movie releases or record launches," said John Dempsey, the global brand president of Estée Lauder. The Lauder company recently introduced Private Collection Tuberose Gardenia [...] "We felt we had to reinvent and recreate what fragrance is about", Dempsey explained. "When the business gets too big, we need to make it small again, restore the prestige back into the industry and take a more niche, specialty approach."
— from Perfume industry aims to regain prestige, in the International Herald Tribune. My question: can this approach work when everybody is doing it? That is, if the high end market is just as flooded with product as the low end market, isn't even expensive "niche" perfume "a mere commodity"?
