Fragrance Sales Fall in Germany

German fragrance sales fell 1.6% to $3 billion at current exchange rates, while unit sales declined 3.2%, according to the German Perfumery Association. The GPA called the results“less than hoped [for] but better than expected.”

More specifically, sales of women’s fragrances were down for the third consecutive year, slipping 1%. The men’s beauty sector had the largest decline of 4.3% followed by skin care sales, which were down 1.4%. Makeup sales, on the other hand, were stable, declining 0.3%.

Price increases, coupled with a heightened price sensitivity among consumers of all classes, put Germany’s perfumeries under pressure last year. Classic beauty gift-giving occasions such as Valentine’s Day, Mother’s Day, Father’s Day and Easter are losing their significance for the sector, the association said, and the Christmas business was disappointing.

Also having a negative affect: a continued oversupply from the producer side, leading to expanded distribution, sales space, discounts and a growing gray market. All of this eats into margins and is contributing to a further concentration in Germany’s beauty retail market.

Extremely cold and snowy weather got 2010 off to a restrained start, and widespread concerns about rising unemployment plus shrinking disposable income do not bode well for the year ahead. The association pointed to one positive factor in 2010: two additional sales days compared with 2009, which suggest that 2010 results “should at least be nominally better than the previous year.”