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Fragrance sales in Saudi Arabia declined in 2015, according to industry insiders, but the country’s perfume sector still has much potential. Last year, the market was hit by a general economic slowdown, fall in oil price and the downturn in tourism. Fragrance was also up against more competition from the flourishing make-up category, which is garnering increased attention and consumer spend.
But despite this, the market continues to be attractive for both local and foreign players. Fragrance sales were estimated to have reached $1.7bn in 2015, and Saudi Arabia is by far the largest perfume market in the Middle East, outstripping the UAE, whose sales came in at $423m.
Fragrance remains an important part of the daily routine for both men and women in the country and Saudi Arabian consumers are big spenders in this category. The category’s value sales are pushed up by the strong position of local oriental fragrance brands, which sport high price tags. Saudis spend $700 per month on average on oriental fragrances and essential oils, and $500 per month on western fragrances, make-up and skincare, according to a report by Euromonitor International. The market for oriental fragrances in the GCC as a whole is estimated to be worth around $1.5bn.
Key players in the oriental fragrance segment include local player Arabian Oud, which grew its market share in Saudi Arabia from 28% in 2014 to 35% in 2015 according to Euromonitor. (Arabian Oud has also been expanding its reach in western markets, especially in the UK and Europe). Abdul Samad Al Qurashi is another important fragrance brand in the country. The potential of this market segment has also seen Middle East luxury distribution group Chalhoub create its own brand of oriental fragrance called Ghawali this year. The new brand is intended to express what is seen as a traditional product in a contemporary way, according to the group. Like most other oriental fragrance brands, it will be retailed through its own standalone store network. Three stores for the brand are set to open in Saudi Arabia before the end of 2016.
But the market is not just about oriental fragrances. As with other countries in the Middle East, Saudis are now increasingly likely to own several western branded fragrances as well as more traditional scents. Euromonitor predicts rising disposable incomes and increased employment among Saudis will continue to drive the personal-grooming trend and support growth in Saudi Arabia’s fragrance market. More women entering the workforce is also expected to fuel this trend. In addition, increased travel among Saudis is likely to bring global fragrance trends back to the country and provide an added boost to the market. In an attempt to capitalize on the thirst for fragrances in Saudi Arabia, recent years have seen western brands launch scents to cater to local tastes, often based on oud. Men in particular are keen than to sample both global designer and niche fragrances.
However, lately the market has suffered from a flood of cheap, fake products that appear around gift-giving holidays like Eid. Some reports suggest that as much as 30% of all fragrances sold in Saudi Arabia are counterfeit. In February 2015, local authorities shut down a perfume factory in Riyadh, which was creating counterfeit products of global brands, Arab News reported. According to the report, some 10,000 perfume bottles bearing “Made in France” labels were seized during the raid which followed the shut-down of a similar operation the capital just three months earlier.