Investigators sniff out hidden fragrance industry -Dlight News

Investigators sniff out hidden fragrance industry

Apart from being scented liquids, Gucci’s Flora Gorgeous Gardenia Eau de Parfum and Unilever’s Dove Go Fresh Pomegranate and Lemon Verbena Scented Shower Gel don’t have much in common. One is 100 times more expensive than the other in terms of volume and is sold by a fashion label, not a packaged goods company.

But both were made by the same company, the Swiss fragrance group Firmenich. You’ve probably never heard of it, but the smell it creates permeates thousands of products, from perfume, toothpaste and deodorants to laundry liquid. Unseen and unheralded, it is an ambient presence in homes.

This is a good time for luxurious fragrances. Sales of scented candles and perfumes from brands and celebrities like singer Ariana Grande have soared as people indulge. Firmenich, which quietly produces many of them (including Grande’s REM), has been taken along: selling its beautiful fragrances. rose 33 percent last year.

The ride was rudely interrupted last week when Firmenich and three of its biggest competitors were raided by antitrust investigators from Switzerland, the EU, the US and the UK. They are suspected of raising prices, blocking competitors from supplying their customers, and limiting the production of some fragrances.

Switzerland’s Fermannich, Givaudan, Germany’s Simrise and US group International Flavors and Fragrances have admitted no wrongdoing: they say they are cooperating with the inquiry, which may not lead to charges. It just covers the scent “Fragrance Ingredients”which goes into foods to make them smell good.

We don’t know which products the regulators are eyeing, but I can observe the gap between the prices of luxury scents and shower gels. You don’t have to fight much when customers will happily pay for a label and a small bottle of fragrance. Producing household goods is a struggle that creates a temptation to engage.

The presence of Firmenich and others is the hidden factor behind the luxury industry “Aroma Boom”. Labels realized there was money to be made by adding perfumes to their apparel lines, but few of them had the ability to create Chanel’s own fragrances. They needed partners and fragrance groups were eager to help.

A surge in luxury fragrance sales began during the pandemic and has continued. The US Sue Nabi, chief executive of beauty company Coty, which makes perfumes for brands including Burberry, Chloe and Tiffany, noted last year that shoppers were buying “more and more . . . expensive things” for themselves, not just as gifts.

But while luxury fragrances are growing rapidly, they are only a small part of the industry. Most are less glamorous and more quotidian: air fresheners, deodorants, soaps, gels, washing powders, floor cleaners and all sorts of other products are scented.

The Geneva-based International Fragrance Association is part of the antitrust investigation and told me it conducts all meetings “under strict competition policy guidelines”. that Estimation That in 2017, fine fragrances accounted for 9 percent of fragrance product sales; About 70 percent involved personal care items such as shampoo.

Life is more difficult in the latter profession: there is growth Weak so far And fragrance companies face price hikes from their 3,000 raw material suppliers, including lavender and patchouli farmers. They also have to negotiate with the world’s largest packaged goods companies to sell their fragrances, including Unilever and Procter & Gamble.

The industry produces a wide range of odors and fragrances: Givaudan alone makes 176 “Aroma Molecules”, from benzyl salicylate (“floral, balsamic, sweet”) to alicate (“fruity, rhubarb, aromatic, lilac”). But no matter how sweet the smell, selling chemicals to multinationals is a slog.

The fact that people choose perfumes carefully but care little about the origin of the pine scent in floor cleaner suggests the terms of trade. When Gucci wanted a fragrance with “ultra-dry woody notes”, he consulted a master perfumer from Fermanich, who mixed the formula. When a multinational company manufactures a supermarket product, it has a plethora of supplier choices.

Perhaps the fragrance companies have tampered with this to narrow down the choices: we’ll know when the inquiry is over. Meanwhile, the raid tells the story of making money in fragrances or other products. Get as close as possible to price-insensitive shoppers and stay away from industrial supply chains.

My second observation is: One legal way to limit competition is to merge. When managers agree on prices within a company, it is called strategy, not collusion. Like others, the industry is consolidating: Firmenich is merging with Dutch biosciences group DSM: a €41bn deal approved by EU competition authorities last month.

Expect more mergers after this. And when you next spray perfume or wash your hair, examine the small print on the back as well as the labels on the front. The smell can drift all the way from Switzerland.

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