KEY FINDING 1
Fragrance is an important link in the economy
The fragrance industry is a central link in a fragrance value chain that runs from ingredient suppliers to consumer product manufacturers and retailers.
Our industry alone generates sales of €7.3bn globally1, with downstream consumer goods producers generating €357bn in sales from manufacturing and retailing (23% in home care/cleaning, 68% personal care/cosmetics and 9% fine fragrance).
Value in the fragrance industry is driven by revenue gains but enabled by success operating across this complex value chain.
€7.3bn | €357bn | |
Global1 sales generated by the fragrance industry | Global1 sales generated by consumer product manufacturing and retailing2,3 |
KEY FINDING 2
Fragrance delivers economic and social value
Through activities such as manufacturing, blending and R&D the fragrance industry supports value generation and job creation.
Our industry's global activities1 create €2.5bn of Value Added and support more than 15,000 full-time jobs.
An additional value of €0.3bn is created from the spending of our employees. Their spending in the economy also supports another 11,000 full-time jobs. When added up, the Value Added of €2.8bn represents 39% of the total Value Added generated by the fragrance industry (€7.2bn).
€2.8bn | 26,000 | |
Value added from global activities1 of the fragrance industry and from the spending of our employees | Full-time jobs supported by the fragrance industry1 |
KEY FINDING 3
Fragrance means innovation
The fragrance industry invests significantly in R&D – using our creativity and expertise to deliver fragrances that are valued by consumers for meeting both emotional and functional needs.
Fragrance manufacturers invest around 8%5 of net sales in R&D – double the European Union average for large global companies and higher than all sectors other than pharmaceuticals and technology hardware.6
Consumer product manufacturers and retailers often rely on innovation from our industry to provide differentiation through technology, understanding of consumer trends, and sustainable production.
8% | ||
Proportion of net sales invested in R&D by fragrance manufacturers – higher than all sectors other than pharmaceuticals and technology hardware in the European Union6 |
KEY FINDING 4
Fragrance nurtures skills
Jobs in the fragrance industry are high-skilled, high-value and R&D-focused.
Success demands highly skilled employees in sourcing, R&D, creation, evaluation, sales and manufacturing, thereby generating high Value Added.
The fragrance industry generates €135,000 of Value Added per employee.
Considering the industry in UK, Germany and Switzerland only, this is more pronounced and increases to €148,000 per employee, which is significantly more than the automotive sector, with €115,000.
€135,000 | ||
Value added per employee in the fragrance industry globally1 |
KEY FINDING 5
Fragrance manufacturing is at the heart of a sophisticated value chain
The fragrance industry unlocks benefits for our suppliers and our customers – generating value and supporting jobs for farmers, the chemicals sector, consumer goods manufacturers and retailers.
The fragrance value chain defined in this report is a simplified overview of a complex and diverse network of actors involved in sourcing, producing, manufacturing and selling fragrances and fragrance-based consumer products.
3,000 | 162 | |
Raw material suppliers to global fragrance and flavor companies (based on public data available for Givaudan and IFF) | Customer markets for global fragrance and flavor companies (based on public data available for Symrise and IFF) |
KEY FINDING 6
Fragrance benefits suppliers and the communities in which they operate
The fragrance industry’s upstream supply chain is diverse and global, supporting value generation, employment and wider community benefits.
Through our own operations and employment of people, suppliers to the fragrance industry contribute €4.4bn4 of Value Added and support about 389,000 full-time employees globally3, as well as the wider economic and community contributions associated with the suppliers’ activities.
€4.4bn4 | 389,000 | |
Value added generated by suppliers to the fragrance industry (Naturals: €1.2bn; Synthetics: €2.3bn; Indirect Materials: €1.0bn) | Full-time jobs supported by suppliers to the fragrance industry (Naturals: 218,000; Synthetics: 139,500; Indirect Materials: 31,500) |
KEY FINDING 7
Fragrance benefits consumer product manufacturers
As a ‘platform technology’, fragrance enables innovation and value generation downstream – supporting growth and job creation among consumer product manufacturers and retailers.
Despite being only a small fraction of the overall product cost, for 25 consumer product categories the Value Added that can be attributed to fragrance is estimated at between €48bn and €72bn, based on a total market size of €357bn. This estimate is based on a range of academic studies and product expert opinions.
Fragrance is usually a relatively small element in the finished product cost chain but can be a major factor that influences consumers’ purchasing decisions for some products.
€48bn - €72bn | ||
Value added for 25 consumer product categories that can be attributed to fragrance (based on a total market size of €357bn)2 |
KEY FINDING 8
Fragrance is global
The fragrance industry supports job creation and economic value around the world. It includes international, regional and local businesses to deliver fragrance-based products to the final consumer.
Our industry sources ingredients and materials from suppliers based worldwide. Our customers are manufacturers and retailers across the globe, serving global consumer markets.
Data from fragrance manufacturers and industry associations shows that our industry sources from more than 50 countries.
45+ | 50+ | |
Manufacturing countries of fragrance and flavor companies (Based on public data available for Givaudan and IFF) | Sourcing countries |
KEY FINDING 9
Fragrance is complex and diverse
Using natural and synthetic raw materials sourced from around the world, our industry creates fragrance ingredients that satisfy people’s emotional needs and solve functional problems.
Suppliers to the fragrance industry generate €1.2bn of Value Added from producing and selling natural raw materials, supporting 218,000 FTEs. For synthetics, €2.3bn of Value Added is generated, supporting 139,500 FTEs. The supply of natural ingredients to the fragrance industry supports 250 FTEs per €m of spend and 34 FTEs per €m of spend for synthetic materials.
€1.2bn | €2.3bn | |
Value added from producing and selling natural raw materials to the fragrance industry, supporting 218,000 jobs. (Suppliers of indirect materials generate another €1.0bn of Value Added and support 31,500 FTEs) | Value added from producing and selling synthetic raw materials to the fragrance industry, supporting 139,500 jobs. |
KEY FINDING 10
Fragrance is a key differentiator
For consumers, fragrance can meet both emotional and functional needs and can be one of the key drivers of purchase. The fragrance industry unlocks value for fine fragrance, home care/cleaning and personal care (including cosmetics) product manufacturers and retailers as well as for the people who buy their products.
Looking at more than 25 product categories and hundreds of products that use fragrance, from floor polish to laundry care as well as fine fragrance, our research shows that for products such as perfumes and air care, the percentage of price that the consumer is willing to pay for the fragrance element can be as high as 88% and 86% respectively.
Up to 88% | ||
Percentage of price that the consumer is willing to pay for the fragrance element, according to industry experts and academic research. |
Footnotes
1 Excluding the fragrance industry’s operations and purchasing in the US and Canada. The US and Canada are excluded from the scope of this study as the Fragrance Creators Association is currently conducting a socio-economic contribution study for fragrance manufacturers in the US and Canada.
2 Due to the scale and complexity of consumer markets, estimating the exact Value Added attributable to fragrances is challenging.
3 Across products that use fragrances in 25 product categories.
4 Due to rounding, the sum of the individual numbers may not add up to the total.
5 Average number, based on 2017 figures for their flavors and fragrances business, published by IFF, Givaudan, Symrise and Firmenich.
6 The 2018 EU Industrial R&D Investment Scoreboard.
