Perfume and France from 80’s to 90’s Competition

Perfume and France

from 80’s to 90’s

Competition

Internationalization

Competition in France

 Definition of a competitive market:

 A competitive market is one where no one firm has a dominant position and where the consumer has plenty of choice when buying goods or services. Firms in a competitive market each have a small market share. There are few barriers to the entry of new firms which allows new businesses to enter the market if they believe they can make sufficient profits. -www.tutor2u.net

 Benefits of a competitive market:

 Lower costs

 Lower prices for consumers

 More innovation

 Driver for productivity growth

Competition in France

 Variability in perfume market shares over years

 Transfer of fragrance house names in second half of 1980s

 Changes of fashion

 Launch of new brands

 For Example:

 Lauder’s market share fell 40%

 Chanel’s rose

 More Recently:

 LVMH’s market share has held strong in USA, Asia, and Europe, despite economic climate

Competition In France

 Exports

 French cosmetic industry is world’s fourth largest exporter. 53% of 2003 production exported. Sold in 202 Countries. Represents $8.57 billion in sales

The 80s Market in France!!

Main features

 Marked decline in national saving fund (SICAV)- 

 1993- it accounted for 3000 billion Francs of total GNP (7000 billion Francs)

 Sustained economic growth- 

 Retained good standard of living for French

 also state protection

 High levels of exports- 6.1% of world exports behind Japan and Germany [1st] France [2nd]

More features of the 80s market……!!

 France had some biggest countries e.g. Danome, Elf, Sodexho, Michelin.

 Shift from national systems to privatisation- 

 1982- major banks nationalised and state took over control therefore control over money!

 Problematic; people made redundant

 Employment figures in 1983 as % of working population; 

 Britain ~ 10%

 France ~ 8.3%

 Germany ~ 7.7%

 HOWEVER advantage; promotion of enterprises

The 90s market in France

 Shift from state ownership to private business

 The French economy opened up to world markets making France the world’s fourth largest exporter of goods and third largest exporter of services

 But opening up markets always gives rise to fears of competition for French businesses and constraints placed on economic policy

The perfume industry and    foreign trade

 In comparison to other industries, perfumes have remained a niche in the market but they have had to evolve to compete on the world market

 French perfumes account for a substantial share of world exports and 4 of the 8 major groups in the sector are French

 An industry with an ancient tradition- once family run firms, now major corporations.

The perfume industry and foreign trade

 Grasse on the French Riviera  has been the capital since the 18th century and perfumes are luxury goods important to the French reputation. Brands such as Guerlain refuse to hear of anything but highly selective distribution.

 However, with stiffer competition from abroad perfume is more widely distributed  :

 “Perfume. like Champagne will soon be sold in all supermarkets” – Cartier

Chanel and Production

At the height of her fame in 1935 Chanel employed 4,000 workers and sold 28,000 models world-wide every year. 

Dior Perfumes

 1947-Miss Dior

1949-Diorama

1957-Diorissimo

1963-Diorling

1963-Eau Fraiche (W)

1966-Eau Sauvage

1972-Diorella

1976-Dior Dior

1979-Dioressence

1980-Jules for men

1984-Eau Sauvage Extreme

1985-Poison

1988-Fahrenheit for men

1991-Dune (W)

1994-Dolce Vita

1994-Tendre Poison

1995-Eau Svelte (W)

1997-Dune for Men

1998-Eau de Dolce Vita

1999-Hypnotic Poison (W)

1999-J'Adore (W)

1999-Lily (W)

2000-Eau de Dior Coloressence

2000-Eau de Dior Energizing

2000-Eau de Dior Relaxing

 2000-Diorever

2000-Remember Me (W)

2001-Fahrenheit Summer (M)

2001-Higher (M)

2002-Forever and Ever (W)

2002-Addict (W)

2002-Dune Sun (W)

2002-J'Adore Eau d'Ete (W)

2003-ILove Dior (W)

2003-Chris 1947 (W)

2003-L'Or J'Adore (W)

2003-Fahrenheit O Degree (M)

2003-J'Adore New Eau de Toilette (W)

2003-J'Adore So Dior (W)

2003 -Higher Energy (M)

2003 -Addict (W)

2003 -Lily Dior (W)

2004 -Addict Eau Fraiche (W)

2004 -Fahrenheit Fresh (M)

2004 -Eau Noire (M)

2004 -Cologne Blanche(M)

2004 -Boise d'Argent (M)

2004 -Pure Poison (M)

2004 -Dior Me, Dior Me Not (W)

2005 -Miss Dior Cherie(W)

Summary of important events:

 1947-Christian Dior perfume company set up

 Many well-known designers take over the house over the years (after Dior’s death in 1957).

 1985- Bernalt Arnault becomes chairman (# 40 on World's Richest People 2003) 

 1987-company is bought and becomes part of LVMH group

 1991- Group becomes privatised and enters the stockmarket

 Perfumes and cosmetics form the biggest part of sales and increase the group’s revenue

 More emphasis placed on perfume industry in last few years