A study conducted PwC on behalf of the International Fragrance Association (IFRA) reveals that fragrance boosts the value of consumer goods. In perfumes, cosmetics and cleaning products, it can boost their value by up to ten times.
Entitled The Value of Fragrance, the report shows the manufacturing of fragrance ingredients alone contributes €7.2 billion in economic value. These ingredients are responsible for between €48 billion and €72 billion in value added for 25 consumer product categories.
Small industry makes a big impact
In 2017, the fragrance industry generated sales worth €7.3 billion, contributing to €357 billion in global sales generated by consumer product manufacturing and retailing.
IFRA chairman, Michael Carlos, comments: ‘The fragrance industry may be relatively small, but it makes a big impression. This report shows how we add significant economic value to our suppliers and customers, as well as consumers, for whom fragrance is a major factor in purchasing decisions.’
The report also shows the social value of the industry. It supports 26 000 highly skilled jobs and nearly 400 000 jobs at supplier level in more than 50 countries. This helps to sustain and give back to communities around the world.
‘Fragrance has the power to make the difference – in every sense,’ adds Carlos.
Mapping the value chain
As there is no public definition of the fragrance industry – and no clear indication of where it starts and ends – one of the innovations of the PwC report is the mapping of the complex global fragrance value chain.
This chain begins with 3 000 suppliers of natural and synthetic raw materials, from smallholder farms to synthetics manufacturers. It continues with an innovative fragrance industry (represented globally by IFRA), which delivers ingredients for use in fine fragrance, cosmetics and personal care products, as well as household products and detergents.
Manufacturers of these products use a wide range of retail channels to bring them to market, meeting the emotional and functional needs of consumers.
Invested in employees and R&D
Martina Bianchini, IFRA president, says: ‘This report highlights how the fragrance industry is sophisticated, global and innovative. As an industry, we invest eight percent of net sales in R&D – higher than all sectors in the European Union other than pharmaceuticals and technology hardware. Per employee, the value added is €135 000 – higher than in the automotive sector and which underlines how much talent and creativity we have in our industry.’
The report, which covers Europe, the Middle East and Africa, Asia-Pacific and Latin America, is based on data gathered and analysed by PwC for the year 2017. The report is available for download on the IFRA website. You can also connect with IFRA on social media, using the following handle @ifrafragrance.