The smell of success may be a classic perfume

Friday, August 25, 2006

By Cheryl Lu-Lien Tan, The Wall Street Journal

Next month, Bulgari SpA is planning its splashiest perfume launch in years. Supermodel Kate Moss will be at the center of a glitzy ad campaign for Pour Femme, a $145 scent that boasts a "harmonious blend of essences," such as jasmine tea and rose.

Pour Femme's other notable feature: It's 12 years old.

In the fragrance industry, old is new again. Amid an explosion of new scents that are getting increasingly more expensive to roll out and harder to push ahead of the pack, some perfume companies are looking to bolster profits and reduce risk by relaunching old fragrances. The perfumes are marketed to appeal to a new generation of perfume-wearers.

The latest rollouts for these fragrances involve big ad campaigns and, in some cases, more prominent displays in department stores.

Coty Inc. is "reinvigorating" ck one, a fragrance that got buzz 12 years ago as one of the first big unisex scents on the market. This fall, in time for the big holiday push, Clinique, owned by Estee Lauder Cos., has scheduled its biggest launch of the year with a multimillion-dollar ad campaign for Happy, a fragrance first introduced in 1997. Prescriptives, another Estee Lauder concern, is planning a big relaunch of Calyx, a citrusy fragrance that has been around since the second Reagan administration.

"The marketplace is challenging right now," says Brenda Lilly, director of global fragrance marketing for Clinique. "We have tremendous brand recognition with Happy and believe that there is still tremendous momentum within this existing brand. We're not finished with it yet."

After slipping in 2001 and continuing to fall until 2004, U.S. retail sales of perfume have been bouncing back a bit with celebrity-driven new brands. Last year, more than 120 new perfumes were launched at department stores, more than twice the number in 2000. Many are introduced by fashion designers; celebrities, from the band Kiss to teen star Hilary Duff; and even car companies.

Bulgari's North American managing director Didier Maine de Biran says consumers' fascination with brands associated with celebrities has replaced the habit of finding a personal favorite and sticking with it. "Previously people would select a product, whether it's sunglasses or fragrance, because it suited them," he says. "Now, they identify themselves with celebrities, and that influences their purchasing decisions. They want to buy into the Hollywood celebrity lifestyle."

Ms. Moss is the first famous model Bulgari has used in a perfume ad campaign, he says.

The glut, however, has made it harder for any single new fragrance to succeed. Newcomers now have an average shelf-life of less than a year, compared with five years or more before 2000, NPD Group, a market-research firm in Port Washington, N.Y., says.

"If you combined all the perfumes that came out from 1970 to 1989, that's still fewer launches than the number of perfumes that came out in 2005," says Karen Grant, senior beauty industry analyst at NPD.

Creating and marketing these original fragrances can take two to three years, at a cost of $20 million or more. Relaunches can be churned out in as little as 18 months, at half the cost.

That's one reason why the perfume industry has also added on brand extensions that reinterpret established fragrances -- known in the industry as "flankers" -- such as Gucci's Envy Me, a more floral version of the Gucci Envy perfume.

Last year, more than 100 perfumes on the market world-wide were flankers, up from 70 in 2000, estimates Virginia Lee, senior research analyst for U.S. cosmetics and toiletries at Euromonitor International, a London-based market-research firm.

Still, some flankers have a hard time because stores typically don't want to stock three versions of a perfume, Euromonitor's Ms. Lee says. When Clinique introduced its first Happy flanker, Happy Heart, in 2003 it racked up $44.7 million in U.S. sales, Euromonitor says. Last year, however, when it rolled out Happy To Be, it sold just $14 million in the U.S.

Clinique says Happy Heart, a floral scent, sold better overall because flowery fragrances tend to have more mass appeal than citrusy ones like Happy To Be.

Relaunching old classics in their original form, on the other hand, may have a greater chance at success. In 2003, after Chanel No. 5 sales began slipping, the company signed Nicole Kidman to star in a new ad campaign. The result: U.S. sales of Chanel No. 5 grew by nearly 26 percent in 2004 to $76.1 million, according to Euromonitor.

Bulgari acknowledges that its goal in relaunching the original Pour Femme (with a new collectible crystal-studded bottle cap) was to get something novel in stores without a lot of investment.

For Clinique and Coty, the larger goal of resuscitating Happy and ck one was to reach younger shoppers. "Happy's been around for a long time and many new customers have come into the marketplace since then," says Jane Lauder, the brand's senior vice president for global marketing.

After extensive market research, Clinique hired R&B singer Ne-Yo to pen a song about the fragrance titled "Just Be Happy." R&B artist Rihanna and country singer Julie Roberts sing versions of the song in the company's $3 million radio ad campaign. Clinique is also creating a Happy Web site, where consumers can download the songs.

At Coty, the Calvin Klein fragrance division recently commissioned new ads for ck one that it plans to roll out this fall in the U.S. The division also sponsored the alternative-music festival Lollapalooza in Chicago, where it created a "One Music Lounge" for celebrities and handed out more than 20,000 perfume samples to concert-goers. In the two weeks since the festival, sales of ck one at Chicago stores have jumped by 25 percent, says Lori Singer, Coty's vice president of global brand marketing for Calvin Klein Fragrances.

Coty is targeting 18- to 24-year-olds. "These consumers were six to 12 years old when ck one first came out," she says. "We're hoping to say to them, 'This is a brand that you may not be aware of, but it's cool.'"