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POWER OF THE NICHE: SNIFFING AROUND PRESTIGE FRAGRANCE

Beauty

Global beauty powerhouse L'Oréal is acquiring Atelier Cologne, a niche fragrance player that’s only found in selected retail outlets. And this isn’t a first – niche fragrance and beauty brands are being snapped up left, right, and centre. Our Creative Director Nick muses on this trend and its impact on brands.

Fragrance is BIG business, and the increasing popularity of personalised scents and niche brands is set to drive a much more diverse fragrance market in the future. According to WGSN’s Fragrance Concepts article in July 2016, the global fragrance market was worth $39.4 billion in 2015 and is projected to be worth around $42.9 billion by 2020. Plus the NPD Group reported a 26% increase of niche fragrances over the past four years. And further highlighting the rising popularity of niche brands, there were some 200 alternative perfume brands at the recent Esxence 2016 trade show in Milan.

So acquiring niche brands is clearly an attractive proposition for the likes of L’Oréal. There's nothing wrong with big players casting their nets to bring these quirky, avant-garde, often more creative, indie brands on board. It works out for both parties – one gets a golden string to its bow, the other gets some fragrance cash in its back pocket.

Niche brand acquisition can also be an amazing staff incentive for the buyer – not only for recruitment, but it's a great way to expand and expose existing staff to new and exciting ways of doing business. Through its purchase of The Body Shop ten years ago, L’Oréal’s marketers and packaging technologists were exposed to sustainability and environmental matters from the former’s brand DNA, that can extend throughout L’Oréal’s business. And it’s not all one sided – let’s not forget the opportunities for the acquired brands to grow with access to resources, materials, and staff.

What happens post-acquisition, especially in terms of branding?

I haven’t noticed any significant impact to the visual look and feel – it’s not in the buyer’s interest to radically change that. But niche brands often need help in brand strengthening. Does the brand proposition really make sense? Is it local market focused? If so, how to widen its appeal to a wider global audience? Would this fragment the brand too much? What opportunities are there for brand extension and innovation?

This reminds me a lot of Aussie Hair Care. Years ago, it too was a tiny niche brand. Then P&G acquired it in 2005, strengthened the brand’s UK positioning which was built on a quirky Aussie attitude, rationalised its range architecture, and continually looked at extensions that remain true to the core brand. Now it’s the UK’s number one treatment brand, with the momentum to expand across Europe.

A niche brand shouldn't grow too fast. This would look fake and risks losing its appeal and cachet. The secret to Aussie Hair Care’s success was that it didn't happen overnight. Comms spend was very low, and P&G was careful to ensure this didn’t become a mass brand that's plastered on every billboard across town. It’s for customers to discover, for them to feel like it's their secret, and no one else's.

So let’s celebrate the acquisitions! But my top caveat is that the niche brand needs to be ring-fenced to ensure success for both sides.

Further reading:
Open Eye 27 – Stretch
The Fragrance Foundation – Marketing a Scent