Maker of world's most valuable perfume to double sales with push into US and China

Sales of luxury fragrance house Amouage increased 107% in the first six months of 2021

Amouage, an ultra-niche luxury fragrance maker based in Oman, is expanding into the US in partnership with the top five department stores Nordstrom, Neiman Marcus, Bloomingdale’s, Bergdorf Goodman andShow more

Amouage, the Omani maker of what it dubs as the most valuable perfume in the world, plans to double sales by 2025 as the company expands into the US and China, its chief executive said.

“We started turning the corner in the second half of 2020 and will close the 2021 fiscal year well ahead of 2019. The impact of Covid-19 will be behind us with our revenue continuing to grow towards the end of year,” Marco Parsiegla told The National in an interview.

Sales of the company's luxury ultra-niche perfumes increased 107 per cent in the first six months of 2021 compared to the preceding year and by 20 per cent compared to the corresponding period in 2019, Mr Parsiegla said.

Amouage fragrances retail between $225 and $495 for 100ml. The company's most expensive editions are the 100ml Limited Editions (Interlude Man, Reflection Man, Honour Woman, Dia Woman) and Special editions Extraits, which retail at $495, it said.

The global market for fragrances and perfumes is projected to grow to $54.6 billion by 2027 from about $43.6bn this year, growing at a compound annual growth rate of 3.3 per cent, according to a report by Research and Markets.

Amouage has 12 standalone stores and is available in around 1,000 department stores, airports and perfumeries across 80 countries. The company’s line includes more than 50 perfumes, as well as bath and body and home collections. Its perfume is made from frankinsence grown in Salalah.

Strong consumer demand, new talent capabilities and expansion into the US and Chinese markets are driving strong sales for Amouage, Mr Parsiegla said.

The luxury fragrance house which was founded in 1983 is expanding into the US in partnership with the top five department stores Nordstrom, Neiman Marcus, Bloomingdale’s, Bergdorf Goodman and Saks Fifth Avenue. It opened a direct subsidiary in the US called Amouage Americas in June with an office in New York.

Mr Parsiegla would not provide details on the scale of investment in the US but said it “was in the seven digits”.

“The US is the biggest fragrance market and that’s why we want to expand our footprint there. We have an expansion roadmap from New York, to Houston, Atlanta and the West Coast in the upcoming months,” he added.

The move overseas is a logical next step for the company, according to Scott Clarke, vice president of consumer products lead at digital consulting company Publicis Sapient. However, it won’t be an easy one as the US market is notoriously hard to crack and Amouage is a niche brand, he said.

“As the brand goes from strength in the Middle East and now growing internationally, Amouage needs to be mindful not to take their eye off the ball when it comes to delivering a seamless online experience for their customers if they want to continue to increase demand for their products,” Mr Clarke added.

Besides an international sales office in Dubai, Amouage is also expanding towards the East, with a focus on China. The luxury perfume maker already has a presence in online Chinese shopping platforms such as Tmall, WeChat, Weibo and Little Red Book.

“China is a big market for us. At the moment, we are focusing on the digital sphere. We plan to go into leading department stores in the next phase,” the chief executive said.

Currently, 10 markets account for 65 per cent of Amouage’s business. These include Oman and the UAE, China, South Korea and Australia in the East, Russia, the UK and Italy, the US and Nigeria, Mr Parsiegla said.

Channels of expansion for brands have increased with multiple digital channels such as direct-to-consumer apps, conversational commerce, influencer marketing and online marketplaces augmenting the traditional brick-and-mortar business, said Sandeep Ganediwalla, managing partner at Red Seer Consulting. “This has resulted in a significant reduction in the cost of expansion,” he said.

Ruling out an imminent initial public offering for Amouage, Mr Parsiegla said the perfume house, a subsidiary of Oman’s business conglomerate SABCO Group, values the autonomy in the current set-up and helped it to be agile in adapting to market conditions.

Although the Covid-19 pandemic resulted in operational challenges for Amouage such as supply chain delays, longer freight times and doubling or tripling of freight costs, the fragrance house has “come out of the crisis stronger than ever before with a resilient supply chain”, the chief executive said.

The pandemic also helped accelerate consumer behavioural change and e-commerce, he said.

“Consumers are now looking for artisanal and exquisite brands that mirror their values. They look at companies' work ethic and social framework,” Mr Parsiegla said, adding that Amouage strengthened its online presence after Covid-19.

To a question on why Amouage dubs its perfumes the most valuable in the world, Mr Parsiegla attributed it to working with the finest ingredients and creators.

“We have been working with 32 different perfumers across the world for about 40 years, of which 10 are master perfumers,” he said.