There is a smell of Russia here – Newspaper Kommersant No. 9 (7454) of 01/19/2023

The high demand for perfumes last spring, due to fears that some foreign brands would leave, weighed on the category’s sales for the whole year. The segment’s turnover increased by about 30% to 85.5 million bottles with a total value of over RUB 140 billion. And the growing interest in inexpensive products has led to an increase in the share of perfumes from Russia and Poland. In 2023, market dynamics will be more modest, experts say.

At the end of 2022, sales of perfumes in Russia in pieces increased by 27.6%, to 85.5 million bottles, and by 30.1%, to 142.9 billion rubles, in money year-on-year. Such data is provided by the operator of the TsRPT marking system. Kirill Volkov, head of the Perfume commodity group of the Central Regional Development Center, says that 60.7% of sales came from Russian products, whose share has grown by 2.5 percentage points since 2021. In addition, according to the CRPT, the share of perfumes from Poland increased from 2.1% to 5.8%. And the share of suppliers from France decreased from 21% to 15.9%, Spain – from 8.5% to 7.3%, Germany – from 3.5% to 2.4% relative to 2021.

Petr Bobrovsky, Executive Director of the Association of Manufacturers of Perfumes, Cosmetics, Household Chemicals and Hygiene Products, says that the increase in sales can be considered a consequence of the rush demand for perfumes in the spring of 2022, when, against the backdrop of general economic instability, Russians bought perfumes in reserve, fearing a shortage.

The suspension of work in March, in particular, was reported by the Sephora chain (part of LVMH), which then transferred the business in the Russian Federation to local top management. In the spring, the Ministry of Industry and Trade included perfumes and toilet water in the list of goods allowed for parallel import, with the exception of a number of brands for which import without the permission of the copyright holder is prohibited. This list has changed throughout the year. In the first two weeks of March, sales of perfumes jumped by 55%, to 4.6 million bottles, in units, and by 172%, to 10.2 billion rubles, in the first two weeks of March compared to the previous month.

As Kommersant’s interlocutors in the market noted, large networks have basically already adjusted their supply routes. And the sellers themselves said that they were expanding the number of positions due to suppliers from Russia, Europe, Korea, Japan, China, the USA, Australia, and the United Arab Emirates. According to the CRPT, as of January 9, 2023, there were more than 136 million bottles of perfume in circulation, which should be enough to meet demand in Russia for more than a year. The L’Etoile network declined to comment. Representatives of “Rive Gauche”, “Ile de Beaute” and “Golden Apple” “Kommersant” did not answer.

Mikhail Burmistrov, CEO of Infoline-Analytics, says that the main perfume sales in 2022 came in the first half of the year, and the restriction of import supplies affected the share of Russian manufacturers. Executive Director of the Russian Perfumery and Cosmetic Association Alexandra Skorobogatova notes that inexpensive Russian perfumery has always been in demand, and now demand is generally shifting to a cheaper price segment.

The growth in the share of sales of perfumes produced in Poland, Piotr Bobrovsky explains by the fact that the country produces mainly products of the middle price segment, the demand for which is relatively stable. In addition, some retail chains placed orders in Poland for the production of products under their own trademarks (PL), which could also lead to an increase in the supply of Polish perfumes to Russia, the expert says. But, adds Mr. Bobrovsky, in 2023, the supply of perfumery and cosmetic products from Poland will be seriously constrained by an import duty of 35%.

The interlocutors of Kommersant do not expect the preservation of the high dynamics of perfume sales in 2023. According to Petr Bobrovsky, a positive result for the market will be the preservation of demand at the level of 2020-2021. The National Council for Perfumery, Cosmetics and Household Chemistry (includes Faberlic, Arnest, MIXIT, ROCS) says that Russian manufacturers find the necessary components from “friendly” countries and arrange supplies, which has a positive effect on demand. But changes in the structure of supplying countries in the market are possible only with the introduction of restrictions by “unfriendly” countries, the association believes.

Alina Savitskaya