PPage 54age 54 DCF and valuation pIndustry oaramevervieterws I Points of view from EY global sector Recent transactions in the perfume industry: the price of and other industry professionals scarcity For decades, the perfume market has proven As depicted in the next page, the fragrances market extremely attractive for luxury brands and fashion has so far mainly been led by two types of industry designers, oho identified it as a imicc oaq to earn plaqers2 ). dinersified lmxmrq gromps and *. incremental revenues while improving brand specialized cosmetics and fragrance manufacturers awareness. Perfume and cosmetics specialists also that partner with luxury, fashion or other premium benefited from this incremental Öoo of demand and brands (“haute couture,” fashion, accessories, etc.) Arnaud Cohen tooc adnantage of the significant price differential through fragrance deals. between very high selling prices and their own Brands, such as Guerlain and Lancôme, which have Partner, TAS (limited) costs. been exclusively involved in the cosmetics sector, and Paris, Ernst & Young Advisory These golden years appear to have ended. In order to smaller brands engaged in the haute parfumerie continue being successful in an increasingly niche market are the few exceptions that prove the competitive market, the main industry players have rules, as illustrated on the chart on page 55. In all explored alternative or complementary strategies other instances, the sale of fragrances mainly relies that are currently driving the industry, including: 1) on a brand created outside of the perfume industry, the lamnch of neo fragrances or Öancers for brands which plays a considerable role in increasing product that are already successful on the market, 2) the attractiveness and is a key differentiator in the entry into new market segments, such as the “haute market. Benjamin Msika parfmmerieÊ niche, primarilq thromgh acimisitions, and 3) the purchase of rights over existing brands. Senior Manager, TAS Following a brief overview of the current state of the Paris, Ernst & Young Advisory market, we will explore in more depth the last two options and ansoer the imestion marcet participants are asking themselves: is the price for continued growth still worth it? *** The luxury and cosmetics financial factbook 2016