Global demand uncorks Made in India fragrances

Currently, nearly 85 per cent of the domestic production of fragrance ingredients are exported; This growth has been driven by India’s strong raw material base and sourcing advantage

August 8, 2018

For years now, leading luxury brands such as Lancome, Guerlain, Calvin Klein, Christian Dior have sourced raw materials for their fragrances - flowers, woods, oils, incenses - from India

Driven by economic strengthening, India has come up as a lucrative market for foreign fragrance brands; The firms have also utilised India as a base to service some Asian markets

Opportunities are plenty for foreign investors in the India’s growing fragrance industry; India's luxury market is set to grow to USD 30 billion from USD 23.8 billion by the year-end

Certain home-grown perfumers are mixing India’s best ingredients and traditional culture with techniques from the masters of fine fragrances abroad to create luxury perfumes

India’s vast treasure trove of sweet smelling flowers, herbs, oils, spices, citruses and woods, have been contributing to the creation of some of the world’s most famous fragrances. For years now, leading luxury brands such as Lancome, Guerlain, Calvin Klein, Christian Dior, among others, have been drawing on Indian flowers saturated with fragrance such as jasmine, sambac, tuberose and champak to create their perfumes. On their periodic visits to India to source ingredients, Christian Dior’s perfumers have openly declared Dior’s long-standing love story with jasmine. J’Adore, one of the French brand’s top selling fragrances have been crafted from the extracts of jasmine sambac and tuberose, found in the fields of Tamil Nadu in southern India.

India is strongly positioned as a leading natural flavours and fragrances ingredients supplier in the global market, catering to 60 per cent of the world’s spice oleoresin demand and 80 per cent of the global mint extracts demand. Currently, nearly 85 per cent of the domestic production of fragrance ingredients are exported. This growth has been driven by India’s strong raw material base and sourcing advantage. The blended and finished fragrances space in India is meanwhile dominated by international fragrance and flavour companies such as Givaudan, IFF, Firmenich, Symrise, which constitute 30 per cent of the market. The rest of the market is shared by hundreds of local companies with major Indian players such as SH Kelkar and Ultra International.

Meanwhile, foreign fragrance players have been utilising India as a base to service some of the Southeast Asian markets as well. The region provides the best growth opportunities for luxury brands. In June 2017 for instance, Symrise, a leading German supplier in the fragrance and flavour industry worldwide, inaugurated a new innovation and development centre in Mumbai, to facilitate greater collaboration and connectivity with their customers, consumers and partners in India and in the Asia Pacific, Africa and Middle East region. A company press releases stated that this Centre will allow them “to co-develop amazing fragrances, oral care flavours and cosmetic ingredients.”  The company has an R&D testing and production facility in Chennai as well.

The fragrance industry, which includes deodorants and industrial perfumes (soaps and detergents) in India, is valued at around US$300 million. Growing at a CAGR of 12-15 per cent, this industry is expected to escalate to $510 million by 2020, going by a 2016 report by Euromonitor International.  

Keen to leverage this market, global players are buying up stakes in local Indian companies. Around four years ago, Firmenich, a leading Swiss fragrance and flavour company, bought a 40 per cent stake in Chennai-based supplier of Indian floral and other natural extracts to shore up their “sourcing, innovation and production capacities”. Jasmine Concrete Exports, which operates two manufacturing facilities in Tamil Nadu, is involved in the extraction of jasmine, sambac, tuberose, mimosa which among many others are the most sought after floral extracts in perfumery. The director of the company, Raja Palaniswamy said, “Firmenich’s technology and access to markets combined with Jasmine’s strength in supply chain and production capabilities is the key to success.”  

A growing number of global fragrance and flavour suppliers are tying up with Indian companies to ensure steady supply of natural ingredients in the future, as resources and land are slowly getting scarce, added Palaniswamy, who deals with brands such as Dior, Guerlain and Lush, a British brand and indirectly with Chanel, Hermes, Louis Vuitton, L’Oreal, Estee Lauder, among others, through Firmenich. 

Capturing Indian experiences in a bottle

Historically, India has been renowned from the days of the soul-reviving “Ittar” for their plethora of natural fragrance ingredients. However, we have not had a home-grown luxury perfume brand in all these years. That said, over the past three to four years, a number of home-grown perfumers are uncorking India’s fragrant culture to blend some of India’s best ingredients and traditions with techniques from the masters of fine fragrances from abroad to create indigenous luxury perfumes. Bombay Perfumery, All Good Scents, Perfume Library, Mocemsa, 3003 BC are all Indian-origin perfumers, who are stirring up the global fragrance industry. Until now, the perfume industry in India has been largely dominated by deodorants and global brands.

Manan Gandhi, founder of Bombay Perfumery hails from a family that has been involved in the business of supplying ingredients to prominent perfume brands for the last 40 years. Having worked at Grasse in the south of France for five years, Mr Gandhi felt that India should also start fashioning perfume brands of her own. “I wanted to build a brand that pays homage to the beautiful Indian naturals that have been used in perfumery for generations now, but are not quite given their due. We have not had a homegrown, contemporary, luxury fragrance range that would appeal to the millennial consumer,” Mr Gandhi said.  

The new breed of Indian perfumers are open to collaboration on different fronts including partnerships for sustainable growth, which will help to preserve India’s rich natural ingredients base

In 2016, Mr Gandhi launched Bombay Perfumery, which offers a range of eight scents priced at around US$58 (100 ml, Eau de Parfum), with names such as Calicut or Madurai Talkies. Made in Grasse by a team of international perfumers —the perfumes are bottled in India and target the Indian millennial by using local references in product development and branding. For example, the Mumbai-based company has given a modern twist to the milky sweet tea ubiquitous in India in one of his perfumes called “Chai Musk.”There is plenty of innovation here, and these scents are a combination of Indian and western sensibilities.

All Good Scents is another Indian perfumery brand launched in 2014 in Ahmedabad. The founder and creative director, Rajiv Sheth, has notched up 17 years of experience in the perfumery industry in Grasse and Paris. Mr Sheth, whose objective is to create “international quality fragrances adapted to Indian culture”, has partnered with a French fragrance house to blend and manufacture his fragrances in Grasse. This company has developed a range of 28 fragrances, which are found online and affordably priced. The fragrance companies have created a niche for themselves, and do not compete with luxury players. 

A transition to the fine fragrance segment

In India, the younger generation is more open to experimenting with locally made luxurious fine fragrances, said Mr Sheth. So far, those who could afford to buy luxury perfumes opt for Giorgio Armani, Lancôme, Saint Laurent and so on; which are all widely distributed in India. Today, however consumer awareness and interest in personal grooming, rising disposable income, the expanding gifting and wedding market in India are spurring the growth of this niche, indigenous fine fragrances market.

In the past two years, many players have entered this nascent market. Mocemsa, founded in August 2017, is based out of New Delhi. This company has a range of 12 perfumes, priced between US$40-73 (100 ml, Eau de Parfum). The perfumes are bottled in Italy, assembled in China and imported to India after meeting international safety norms, including a certification from the International Fragrance Association, Geneva. Another player in the space, The Perfume Library, launched in 2015 by Jahnvi Dameron Nandan, works with memories. They joined hands with Bombay perfumery to release a limited edition scent.

Indian luxury beauty and personal care brand Forest Essentials launched perfumes in November 2017. The Parfum Intense range, priced at  US$62 (50 ml), is made with pure grain alcohol with an herb-enriched preparation, fermented according to processes mentioned in Ayurvedic texts and bottled at their factory in Haridwar, Uttarakhand. Forest Essentials takes inputs from Estee Lauder, which holds a stake in the company and is a world leader in luxury fragrances. These perfumers are tying up with fashion houses to come up with new formulations. Mr Sheth of All Good Scents has created Eternal Garden blended from a mixture of rose, musk, jasmine and vetiver extracts.

The challenges are plenty here. Gandhi admits that it will be a long haul for Indian fragrance brands, to capture customer loyalty, overcome production and marketing issues. As an independent perfumer, they have to convince retail outlets to stand up to market leaders and share shelf space. Limited marketing budgets are another obstacle. Selling largely online, and in few retail outlets, these perfumers want to take these perfumes to global markets in the future.

Opportunities are plenty for foreign investors in the growing fragrance industry, say experts. Distribution is a key area in which international partners can invest in. This new breed of perfumers are open for collaboration on different fronts including partnerships for sustainable growth, which will help to preserve India’s rich natural ingredients base.

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