'Fragrance economy' set for heady expansion

"I've become obsessed with perfume," said Zhan Lingling, a 28-year-old Beijing resident who bought Le Labo's Santal 33 this year as a gift for herself. "It makes me feel fresh and confident, and puts me in a good mood all day." Despite the brand's premium pricing, she said she plans to gradually collect more of Le Labo's fragrances.

Brand storytelling, spatial design and cultural resonance — often linked to China-chic aesthetics — are now key purchase drivers.

For Estee Lauder, fragrances have become a core pillar of its China business. The group has paired portfolio expansion with a redesign of offline experiences, using localized retail concepts to deepen emotional engagement.

Le Labo's fragrance laboratory in a traditional courtyard in Beijing and Jo Malone London's boutique in Suzhou, Jiangsu province, inspired by classical gardens, are often cited as examples of global brands blending local culture with brand DNA.

Le Labo has gone further by introducing on-site, hand-blended fragrance services at its Sanlitun outlet in Beijing, offering a "made-for-you "experience. The store is only the second in the country to provide such a service, following the brand's Qiantan Taikoo Li site in Shanghai.

Industry analysts say such experiential models not only increase dwell time and conversion, but also strengthen brand loyalty in a crowded market.

The broader market data underscore the opportunity.

According to iiMedia Research, the perfume market in China reached 20.7 billion yuan ($2.9 billion) in 2023, up 22.5 percent year-on-year, and is projected to climb to 51.5 billion yuan by 2029.

Maogeping Cosmetics, best known for its makeup business, launched two fragrance lines in the first half. Its interim report shows fragrance sales of more than 35,000 units, generating 11.4 million yuan in revenue, with a gross margin of 77.6 percent.

Shanghai Shangmei Cosmetics, owner of the Kans brand, plans to debut a fragrance range spanning perfumes, candles and diffusers by year-end.

Fashion and lifestyle brands are also experimenting.

Domestic bag maker Songmont collaborated with Chinese perfumer Yili to launch the Tambacmont fragrance series in November. Cashmere brand Erdos partnered with Wenxian Documents on a home fragrance collection.

Local fragrance brands are also becoming more confident overseas. To Summer opened its first store in the Hong Kong market in September, positioning the city as a gateway for overseas expansion. Melt Season, meanwhile, debuted a store at Tokyo Narita Airport, aiming to boost global awareness through high passenger traffic hubs.

As Chinese consumers continue to prioritize emotional value, personalization and cultural resonance, fragrance is emerging as one of the clearest symbols of new consumption trends — and one of the most competitive battlegrounds in the beauty market.

"Fragrance products combine high added value, strong brand loyalty and cultural significance," industry analyst Wang Chunjuan, a member of the China Community Commerce Committee, told Securities Daily. "By expanding into this sector, companies can not only diversify their profit, but also enhance brand recognition and user loyalty."

Still, challenges remain.

Wang pointed to gaps in perfumery craftsmanship, raw material traceability and upstream supply chains among domestic brands. "Addressing these weaknesses will require sustained investment in R&D, high-end fragrance ingredients and talent development," she said. "Some companies are already moving in that direction by building proprietary supply chains and recruiting experienced perfumers."