April 8, 2016

Smelling the business through licensing

"A woman who doesn't wear perfume has no future," said Gabrielle 'Coco' Chanel, the famous French fashion designer who introduced the iconic women's perfume, Chanel No. 5 way back in 1921.This bestselling perfume of all times claims of one bottle being sold every 55 seconds! Interestingly, this worth-envy fragrance...

By Licence India Bureau

“A woman who doesn’t wear perfume has no future,” said Gabrielle ‘Coco’ Chanel, the famous French fashion designer who introduced the iconic women’s perfume, Chanel No. 5 way back in 1921.

This bestselling perfume of all times claims of one bottle being sold every 55 seconds! Interestingly, this worth-envy fragrance has nothing to do with the designer label other than the name as  Coty is the name behind getting this fragrance to retail shelves, credits to the licensing agreement between the two.

This kind of licensing deal is particularly important to fragrance manufacturers like Coty because rather than investing hundreds of millions in inventing a new perfume brand and communicating its appeal globally, licensed ones come with pre-built brand equity and a pre-existing fan base. Moreover, this acts as a win-win situation for parent brand as they get to enter new category, with almost zero risks.

Sniffing just the right amount of market potential, brands including designer labels are exploring fragrances as a possible area for brand extension in India, which being a tropical region acts as a potential market.

Sniffing the Indian market potential

Talk about fragrances, and one could easily resonate to the aromatic lanes of heritage cities, however the consumer base has come of ages and moved to brands and designer labels including international brands like Hugo boss, Roberto Cavali, Armani, Burberry etc. Moreover, in India, fragrances especially perfumes as luxury accessory buys are one of the most popular must-have items on the aspirational buyers’ list.

According to industry estimates, the overall size of the perfume industry in India (both organised and unorganised) is estimated at Rs 2,000 crore, which is projected to grow by 50 per cent, to Rs 3000 crore soon. Also, the Rs 148-crore online perfume market is projected to grow by around 120 per cent to Rs 345 crore.

Addressing the growing needs of consumers, brands like Disney and Cartoon Network popular for their TV characters have forayed into the fragrance business. Of late, CN has launched Superman and Batman deodorants Siddharth Jain, SVP and Managing Director – South Asia, Turner International India, said, “Such deals will help us expand the WBCP brands and Superman into new and exciting categories and draw consumer excitement.”

As per ASSOCHAM, though fragrance industry in India is at a nascent stage but its rising demand is largely driven by growing awareness and preferences among the Indian middle class as they do not shy away from splurging on lifestyle products to look and feel good. And deodorants contribute to a major chunk of this market.

In words of Saurabh Gupts, CMO, Vanesa Care, “Fragrances are directly related with brand perception of the consumer hence brand licensing plays a key role in raising the brand imagery. License properties add to the brand saliency and top of mind recall.”

Doing it the right way

Few years ago, Piaggio – the Milan based manufacturer of Vespa scooters diversified into perfume business, which fall flat on the face. Reason…a consumer could not relate to fragrance carrying story of a 2 store petrol engine based brand. Similarly fragrances contribute to Donald Trump’s noteworthy business failures. On contrary, fragrances of Barbie are quite popular among the consumers.

“Developing a fragrance brand is one of the most exciting opportunities experienced in any licensing category, primarily because fragrance is an intimate, highly personal, and emotional category that reinforces brand story to consumers on a daily basis, said Chitra Johri, VP, Bradford License India.

In today’s retail environment, where market is flooded with ‘me too’ products, to create a differentiated brand imagery it is crucial to have differentiated products that’s where Brand Licensing comes in. ‘International superheroes and iconic brands’ are properties which are much in vogue and very popular among the youngsters.

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