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Oman fragrance maker Amouage says on the lookout for acquisitions

Published
today Apr 7, 2017
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Amouage, one of Gulf’s oldest perfume brands, is regularly approached by big groups seeking to tap the fast-growing niche perfume brand market and is itself scouting for potential targets, its chief executive told FashionNetwork in an interview.


Amouage


The perfume maker, founded in 1983 by the Sultan of Oman’s personal adviser, sells 250-euro bottles using traditional ingredients such as Oud, incense and musk.

Bottled in Oman, its fragrances are designed by “noses” in Europe and the brand now generates annual sales of sales of just under $100 million, up from $100,000 some 11 years ago when former fashion industry boss David Crickmore took the helm.

Amouage is owned by the family of the son’s founder, Sayyid Badr bin Hamad bin Hamood Albusaidi, Oman’s secretary general for the foreign ministry who is a distant relative of the Sultan of Oman.  

“We are approached by groups,” Amouage Chief Executive David Crickmore said in an interview on the fringes of the Conde Nast International luxury conference in Muscat, Oman.

“But we have been looking ourselves at several targets and we are on the lookout for other niche perfume brands.”

Amouage is part of Oman company Sabco Group, created during the country’s early renaissance in the 1970s and which today has interests ranging from real-estate, malls to banking and advertising.

Crickmore said Amouage, whose No.1 market was Oman and No.3 was Britain, aimed to expand in Europe and open shops in “key opinion forming” cities such as Paris, Berlin, Munich and Moscow.

Crickmore said he was concerned about the appearance of new perfume brands every other month. “I am worried that if there are too many brands, consumers might start getting really confused and reject the fragrance category altogether.”

Crickmore said that in spite of its large size, 10 times more bigger what industry specialists called niche perfume brands, Amouage deserved to be considered a niche brand as well.  

“The reason is that we do not want to sell to everybody, we do not do focus groups and we do not follow trends,” Crickmore said.
 
Consolidation among niche perfume brands has intensified in recent years with America’s Estée Lauder, Spain’s Puig and France’s L’Oréal and recently LVMH, gobbling up small perfume brands to boost their own growth and widen their consumer base.

Niche brands accept being bought up by big groups because it allows them to quickly increase their sales volumes by using their wider retail network and gain access to deeper pockets for investments in advertising, digital communications and product development. 

In the past three years, Estée Lauder, which already owned the once-small brand Jo Malone, has been among most active in terms of buying small brands such as Editions de parfums Frédéric Malle and Le Labo. In 2016, L’Oréal acquired Atelier Cologne and Puig purchased Penhaligon’s and L’Artisan Parfumeur, while this year LVMH snapped up Francis Kurkdjian, created in 2009, said to generate sales of around 10 million euros. Until then, LVMH was in the high-end fragrance market through its brands Givenchy and Guerlain which had developed exclusive, pricey collections only sold at a limited number of stores.  
 
Regarding the price tag, financial advisers say big groups have generally been paying from two to five times the niche brand’s annual sales.

Consolidation among niche perfume brands is expected to continue in the years to come, according to industry executives such as Frédéric Malle, founder and chairman of the eponymous brand. Malle warned that the trend was likely to make it more difficult for young, small niche brands to gain market share on their own.

“How will small brands compete with those that now have the financial might of big groups is really the key question,” Malle told Fashion Network at the luxury conference in Oman. He pointed out that integrating small brands into their internal systems represented significant investments for big perfume groups.

The market for niche perfume brands, which barely existed a decade ago, is now estimated by analysts to represent 10 percent already of the global market, generating more than 1 billion euros in annual sales. The market is pulled mainly by consumers in United States, England, Italy, France, the Middle East and Russia.

Sales growth of high-end niche perfume brands was around 15 percent in 2015, several times higher than the global market’s growth of just under 3 percent.

Demand for niche perfumes has been driven by consumers tired of mass, celebrity and fashion perfume brands that tend to resemble one another. Consumers increasingly crave fragrances that are not widely distributed, that are natural and will allow them to stand out.  
 
 

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