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Knowing what’s hot in the world of luxury fragrances

Interview with Philippe Santi, Executive Vice President of Interparfums SA

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European Business: You just published extremely promising growth forecasts for 2019 alongside excellent results for this year. What do you expect will be the drivers of growth for the company in 2019?

Philippe Santi: We have a number of major initiatives lined up for 2019, which will ensure that growth will accelerate compared with 2018. The early part of the year will see the launch of Montblanc Explorer, the third men’s perfume line from the brand after Montblanc Legend in 2011 and Montblanc Emblem in 2013. A summer launch is planned for a new Mediterranean island themed women’s fragrance initiative under the Lanvin brand. Finally, autumn will see the introduction of Jimmy Choo’s second men’s line, a street art themed men’s fragrance, after Jimmy Choo Man in 2014. We also have new fragrances under our Rochas and Coach brands in the pipeline. Our confidence in these new launches means that we expect consolidated sales to reach between 460 and 470 million EUR in 2019, representing an increase of around 8% over 2018.

European Business: How easy is it to launch a new fragrance in such a crowded market?

Philippe Santi: That is, of course, the million-dollar question and it is one that no one can answer with absolute certainty. But that is what makes the business so exciting to work in. The most important thing that we always bear in mind when creating a new fragrance for a particular brand is that brand’s unique DNA. The fragrance, together with the packaging and marketing, has to fit the brand or it won’t be successful.

European Business: You currently manage fragrances for eleven distinct brands in your portfolio, all of them household names. Can you tell us a little about them?

Philippe Santi: Our portfolio comprises of a mix of brands that we own and brands that we manage under license. Of our own brands, Lanvin is probably the best known and the most successful. We have been creating, producing and distributing perfumes under the Lanvin name since 2004 and bought the rights to the brand and trademark for fragrances and make-up in 2007. Most recently, we acquired the Rochas trademark and brand name for class 3 (perfumes, make-up) and class 25 (fashion) products. Its acquisition culminates a busy decade and a half for us in which we added Van Cleef & Arpels, Jimmy Choo, Montblanc, Boucheron, Balmain and Repetto to the portfolio and extended our agreements with S.T. Dupont and Paul Smith. They join our other activities for the Coach and Karl Lagerfeld brands.

European Business: You have a reputation for breathing new life into tired brands. How do you select which brands to adopt and how do you maximize the revenues they generate?

Philippe Santi: One of the first brands we took on was the traditional British clothing manufacturer Burberry in 1990. At the time, it was considered somewhat dusty and old-fashioned although it still enjoyed widespread brand recognition. We developed a fragrance under the Burberry brand that went on to become very successful and part of a general reinvention of the brand. In 2012, Burberry decided to take the management of its branded perfumes back in house. Based on how much we had built up Burberry’s fragrance business, they paid Interparfums 181 million EUR to buy back the contract. Although the loss of Burberry resulted in a steep drop in turnover in the immediate aftermath, the reputation we built up with our success with Burberry led other companies to entrust us with their luxury brands. Over the past six years, we have more than made up for the lost ground.

European Business: What is it that sets Interparfums apart in this market?

Philippe Santi: We work extremely closely together with the license owners. We also have a profound expertise in translating a luxury brand’s DNA into a complementary fragrance. We manage and direct the entire fragrance lifecycle from creation to distribution in France and international markets. Although the actual fragrance is developed on our behalf by specialist perfumiers, they work according to a very specific brief provided by us. We are also heavily involved in other key factors such as bottle and packaging design and the choice of promotional tools and communication media. All of this done with the utmost respect for each brand’s core values and identity.

European Business: Interparfums started in France but is headquartered in the US. How is it organized in the various markets in which it is active?

Philippe Santi: We are an international company and sell our products in more than 100 countries worldwide. Interparfums SA is listed on the EuroNext market in Paris and is part of Interparfums Inc. which is listed on the Nasdaq in New York. Company founders Philippe Bénacin and Jean Madar have a significant stake in our parent company. Our international activities are coordinated through subsidiary companies in the US, Singapore, Italy, Switzerland, Spain and Germany. Here in France we employ 260 people and generate turnover of 445 million EUR.

European Business: The luxury sector has proved surprisingly resilient in the face of financial crises and other upheavals. Why do you think that is?

Philippe Santi: The luxury market is home to some of the biggest brand names in the world. These are brands that have built their reputations on exclusivity. Perfume is actually a relatively inexpensive way to buy into these brands. While not everyone can afford to buy from Karl Lagerfeld’s couture collections, the brand’s fragrance collection is much more accessible. This is why perfume sales remain buoyant despite market downturns. The figures show that the perfume market is extremely dynamic.

European Business: It seems that every second celebrity is bringing out their own perfume these days. Does this have an impact on your sales?

Philippe Santi: The volume of new fragrance launches has certainly increased in recent years and it would not be inaccurate to speak of an inflationary development in the perfume sector. However, consumer behaviour has also changed. Consumers are no longer as loyal to a single fragrance. They change perfumes according to the seasons, their mood or the occasion. This means that there is still plenty of room in the market for new fragrances. On the other hand, our existing products have extremely long lifecycles. For example, the first fragrances we created in 1995 for Burberry continued to generate significant revenue 17 years later.

European Business: How do you expect the market and also the company to develop in the future?

Philippe Santi: We are always on the look-out for interesting new brands to add to our existing portfolio. We have the financial liquidity and capital to take on new licenses and are looking for brands that will be a good fit for our current portfolio. We will also continue to build the brands we currently work with. We see great potential in our Montblanc, Jimmy Choo and Coach brands. Our goal for the coming years is to increase significantly the turnover.