Feb. 16 (Bloomberg) -- Givaudan SA is trying to fit Lady Gaga into a bottle.
The Swiss fragrance company is working to collaborate with the U.S. singer when she launches her first scent, which Lady Gaga has said would recreate the tones of an “expensive hooker.” Competition for major brands is fierce and ingredient suppliers have to re-pitch when celebrities launch new perfumes, Chief Executive Officer Gilles Andrier said today.
“Fragrances from celebrities are usually very competitive because the first couple of years are very big,” Andrier said in an interview. “Even if you win Lady Gaga, it would be a portion of the business we have to win every year.’
Ever since Elizabeth Taylor annexed her fame to a perfume called ‘‘Passion’’ in the 1980s, celebrity fragrances have gained a footing in the scent market, which researcher Global Industry Analysts predicts will be worth $33 billion by 2015. Collaborating with names such as Lady Gaga would bring a boost to Givaudan’s fine-fragrance unit, which hardly grew last year.
Givaudan has to re-win about 30 percent of its existing fine-fragrance business each year, equal to 100 million Swiss francs ($108 million) to 120 million francs, the CEO said. After a slow start to 2011, fragrance demand picked up in the remainder of the year following a ‘‘strong pipeline of new wins’’ across all major customer categories, Andrier said.
Lady Gaga’s first signature scent will be introduced in 2012. Her perfume campaign and commercial is being shot this weekend, to be edited into a ‘‘special song,’’ she said on Twitter on Feb. 14.
Never Smelt Before
‘‘I can say it’s comfortably something you’ve never smelt before, that you’ll never forget,” fragrance inventor Dawn Goldworm of Paris-based Coty Beauty, the world’s largest maker of fine fragrances, said in an interview.
The U.S. singer, known for extravagant outfits that have included a dress made from strips of meat, joins performers including Britney Spears, Christina Aguilera and Jennifer Lopez in the market for celebrity fragrances.
Givaudan made the ingredients for Fantasy by Britney Spears. Its main competitors are closely held Swiss competitor Firmenich International SA, New York-based International Flavors & Fragrances Inc. and Germany’s Symrise AG.
The CEO is targeting expansion at double the pace of the 2 percent to 3 percent growth expected for the wider market by taking customers from smaller rivals.
Resilient Demand
Into 2012, the fine-fragrance market is holding up after a good Christmas season in the U.S., Andrier said. Givaudan is “well positioned” in the U.S. and celebrity market, he said.
The “base case” for raw-material costs is flat pricing this year, though some natural products and chemicals could see as much as 3 percent inflation, Andrier said. Givaudan plans to increase prices further after higher raw-material costs hurt profitability.
Annual net income dropped to 252 million francs from 340 million francs. Sales fell to 3.9 billion francs. Both figures are in line with analyst estimates, according to a Bloomberg survey.
Andrier today reiterated a mid-term forecast to maintain industry-leading operating profit margins, a challenge for the manufacturer as price increases lag behind cost inflation. The gross margin at the Vernier, Switzerland-based fell to 42.6 percent last year from 46.1 percent.
--Editors: Andrew Noel, Benedikt Kammel
To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net
To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net
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