The Russian perfume market is shrinking
From：Taiwan Trade Center, Moscow
The Russian perfume market, which faced rush demand in 2022, began to reduce activity. According to the results of the first quarter, the production and sales of perfumes decreased by 9% and 6.2%, respectively, only imports from the EAEU ( //eaeunion.org) countries are growing, which may be due to the intensification of parallel imports. There are no prerequisites for a full recovery of demand in the market yet.
According to the results of the first quarter of 2023, the volume of perfume supply in Russia decreased by 2.4% year-on-year, to 34.1 million bottles. In particular, perfume production decreased by 9%, to 18.9 million bottles, and imports from countries outside the EAEU — by 3%, to 12.6 million bottles. Deliveries from the EAEU countries almost tripled, to 2 million bottles.
Perfume sales during this period decreased by 6.2% to 26.5 million bottles.
The Executive Director of the Russian Perfume and Cosmetic Association, Alexandra Skorobogatova, attributes the decline in production in early 2023 to possible overstocking due to the active production of perfumes in reserve last year, as well as to a decrease in demand. Russian manufacturers largely depend on imported raw materials, in particular, perfume fragrances (multicomponent compositions) were supplied from the European Union, adds Tamara Shokareva, president of the Direct Selling Association. According to her, today Russian perfumers are trying to find a replacement for them, but local suppliers of fragrances for perfumery cannot always provide the required quality.
Petr Bobrovsky, Executive Director of the Association of Producers of Perfumery, Cosmetics, Household Chemicals, and Hygiene Products, points out that some distributors of raw materials that supplied manufacturers from warehouses in Russia have left the Russian market, and the search for other suppliers takes a lot of time. It is unprofitable for many Russian manufacturers to independently purchase raw materials due to the low volumes of perfumery production, Mr. Bobrovsky explains.
According to nnck.gov.ru source (National Scientific Center in the sphere of counteraction to the illegal circulation of industrial products), supplies from countries of the Eurasian Union constitute only 7,5% of the total supply of perfumery. The main suppliers are Italy, Turkey, Hong Kong, Switzerland, and China.
The Golden Apple chain says that throughout 2022, customers bought perfumes from brands that announced they were leaving the Russian market while consumers are exploring new brands, which takes time, company says.
In addition, the representative of the "Golden Apple" notes that it is too early to analyze sales for the first months of this year since last spring's figures are very different due to increased demand and increased prices. For the whole of 2022, product sales increased by 27.6% to 85.5 million bottles.
Alexandra Skorobogatova connects the activation of imports from the EAEU countries with the building of new logistics chains through Kazakhstan and other countries of the union. In addition, parallel imports of brands can be taken into account in this way, she adds.
Now perfumes and eau de toilette are included in the list of goods allowed for parallel import by the entire group of goods, with an exception for some brands, the list of which is periodically reviewed. In March of this year, for example, the Ministry of Industry and Trade removed Yves Saint Laurent perfume from exceptions, allowing parallel imports.
According to Petr Bobrovsky, there are no prerequisites for a full-fledged recovery in demand for perfumes this year. Alexandra Skorobogatova believes that consumer interest will continue to shift to a lower-price category of perfume products, including Russian manufacturers.