Last week the news broke that Manzanita Capital had acquired a majority ownership of D.S & Durga. This is not their first niche fragrance acquisition with Malin+Goetz and Diptyque currently sitting under their portfolio as well as their prior ownership of Byredo however, it marks another significant investment within the niche fragrance category. Our Head of Beauty David Pickles sat down with Victoria Kisseleva to provide some insights into this acquisition and potential future developments.
Victoria, currently Partner at FRP Advisory and head of its consumer M&A practice, has extensive experience in the beauty & wellness space. Before joining FRP she worked as an Investment Director at Manzanita Capital, overseeing the portfolio (Diptyque, Byredo, Malin + Goetz, Susanne Kaufmann) and making new investments in the space. Last month she advised on the acquisition of This Works, an award-winning sleep, skin and body care brand. Victoria is passionate about sustainable, innovative and founder led businesses. She believes that fragrance is the invisible luxury that is intimate to its wearer and something that one would rarely compromise.
In the ever-evolving world of fragrances, a quiet revolution is underway, and niche perfume brands are at the forefront. Once overshadowed by mainstream counterparts, niche fragrances have been experiencing a surge in demand, indicative of a broader shift in consumer preferences towards personalization and uniqueness as well as a broader movement away from ‘harder to understand niche’ to ‘generic niche.’
From your perspective Victoria what elements make niche fragrance appealing for an acquisition and what does the future hold for D.S & Durga under Manzanita?
There are two kinds of niche fragrance brands: one that are built on heritage and once that are built on a modern story. Both can be equally successful if they achieve some key factors:
- Unique USP: with an increasingly crowded market fragrance needs to be differentiated either by its story, sourcing of ingredients, ethos and of course scent. Contrary to skincare, once a fragrance is created there is no need to reformulate it and it is here to stay with no expiry date if unopened and out of the sun – so it is very important to get the juice right the first time around.
- Longevity: the bottle, the scent, the story needs to be contemporary enough to be able to last for several decades. There is a number of scents that were very popular in the 70s and the 80s that are rarely being worn now, whilst still created by great perfumers: Opium by YSL, Youth Dew by Estee Lauder, Poison by Dior, Loulou by Cacharel to name a few. Also, those fragrances universe did not expand past the eau de parfum or eau de toilette in couple of sizes.
- Scalability: ultimately investors want the brand to grow and to appeal to a broader audience. It cannot be too “niche”, too focused on one particular demographic or region. It is the ability of finding the right balance between niche with a wider appeal that the investors are looking for. In addition it is no longer the scent that is just the interest but the development of other adjacencies: home scent, body care, colour cosmetics, collaborations, etc…
Manzanita could not have been a better home for D.S & Durga. Manzanita excels in taking a niche brand mainly known in its home market and growing it internationally. D.S & Durga is more established as a brand than when Diptyque and Byredo were acquired 20 and 10 years ago, respectively, but still has a tremendous potential in expanding its product offering and becoming a leading niche fragrance house. It is not just the fragrance it is the whole universe that surrounds the brand that we want to be part of when buying the fragrance – for Diptyque it is the bohemian artistic Parisian life, for Byredo it is the edgy creativity led by Ben Gorham. Both companies successfully expanded their lines outside of fragrances, Diptyque into home collections, Byredo into colour cosmetics. I would welcome a D.S & Durga store outside of the US and something adjacent to fragrance that could complement our experience of the brand’s universe.
The niche fragrance industry, born in response to mass-market and designer fragrances in the late twentieth century, represents a departure from conformity and mainstream identity. Historically characterized by smaller, independent houses like Maison Francis Kurkdjian, BYREDO, and Kilian, niche brands focus solely on crafting unique and high-quality colognes and perfumes. With the separation of niche and designer fragrances usually being characterised by availability of the product the line has become increasingly blurred and, as a result, the upper echelons of the niche market have moved to create some of the world’s most expensive perfumes with a true focus on exclusivity or, like Nasomatto and Orto Parisi, shrouding their ingredients in secrecy.
With major players in the industry such as; Estee Lauder, Puig, Kering Beaute and L’Occitane actively acquiring niche fragrance brands such as Le Labo, Byredo, Creed, and Dr. Vranjes there is a risk that the allure of niche fragrance will be compromised in the pursuit of commercial growth. The balance between exclusivity and commercial appeal is not to be underestimated however, it is possible to strike a balance. Le Labo currently offers city-exclusive scents which then become globally available at a later date. Diptyque city candles released once a year to the wider public have become highly coveted collectables. I feel Ffern have really encapsulated brands going back to their artisanal roots. With each scent being released seasonally with limited availability there is an inherent drive to purchase the product before it is completely gone.
Since the 1980s, the niche fragrance industry has witnessed tremendous growth, reaching approximately 2.9 billion USD in 2022. Forecasts suggest that by 2028, this figure is expected to more than double, reaching a substantial 6.2 billion USD. Once seen as symbols of luxury niche fragrances have now challenged industry titans, securing spots among the bestsellers globally. In 2022 Bacarrat Rouge 450 was the best selling fragrance worldwide with Aventus by Creed taking the top 5 slot. The Maison Francis Kurkdjian staple received a total of 100 million views on Tik Tok showing the impact of social media on growth.
The industry’s emphasis on sustainability, conscious perfumery, and the use of green chemistry and white biotechnology methods in production align with the rising awareness of eco-friendly practices as the post-COVID driven wellness focus. Additionally, the demand for gender-neutral fragrances, customization options, and a desire for unique scents all play pivotal roles in the predicted growth of the category. It is interesting to note that raw material production houses are also developing their sustainability and conscious perfumery portfolios to satisfy consumer demand.
Do you see niche fragrance moving from purely scent-led to consumer-experience led?
Absolutely – even if it is now easier to buy fragrance online as we are increasingly becoming familiar with the olfactive pyramid with key top, heart and base notes nothing compares to discovering the fragrance universe in a physical store. When we enter a Diptyque boutique we are transposed into an artistic universe, we are surrounded by ceramics, murano glasses mixed with candles and fragrances. In a Byredo store fragrance is not always in the centre, there are leather goods, colour cosmetics, pieces of bespoke furniture mixed with limited edition clothing and home textiles and a recently added jewelery line. I see D.S & Durga expanding its offering into other creative lines that will help the customer to transpose itself into its fragrance universe.
Recent trends indicate a shift towards “easy-to-wear” fragrances, reflecting the consumer’s need for familiarity, comfort, and simplicity in a tumultuous world. Traditional ingredients like lavender, vanilla, and patchouli are making a resurgence, providing a sense of safety and security. Fragrance usage is no longer about fitting into a group and attracting others it is about a unique scent that best represents individuality.
Consumers are moving away from generic scents having recognised the sector is becoming oversaturated and too commercialised. The trend of ‘smelling like everyone else’ is waning, and the niche fragrance sector is capitalizing on this by offering unique blends and storytelling. Savvy consumers are increasingly more focused on more avant-garde and artistic formulations. Layering fragrances is also a growing trend that fuels consumption but also a way to create a unique individual scent and allows perfume lovers to play around.
As younger generations, particularly Gen Z, redefine their approach to fragrance, the industry adapts by providing a more fluid experience that caters to different moods and narratives with a strong focus on diversity and inclusion. The impact of social media is not to be ignored with #PerfumeTok receiving significant attention and propelling niche scents to greater heights.
In terms of future acquisition targets within niche fragrance who do you have your eyes on?
There is a number of beautiful niche fragrances at the moment, however, the 3 below caught my eye as not only have a beautiful story but also driven and growth oriented, creative founders whose creativity continues to amaze me.
- Parfum Godet – a French heritage brand founded in 1901 by Julien-Joseph Godet and relaunched in 2016 by the grand-daughter of the founder, Sonia. Godet created perfumes for Matisse, Bonnard and Chagall and the juices are full of history and transpose us to one of the most creative times of the French impressionists.
- Perfumehead – a new brand out of LA with a European influence created by Daniel Patrick Giles. It only does extrait de parfum and the names are incredibly cool and catchy. My favourite is Canadian Tuxedo, just the name makes you want to own the fragrance. Daniel did not cut corners when creating his perfume house, each scent is incredibly complex and unique and due to its high concentration lasts forever.
- Vyrao – founded by Yasmin Sewell in 2021. The ethos of the brand is wellbeing and positive energy. It is a new world of functional fragrances that are increasingly becoming popular as the consumer is more in touch with its emotions and inner self. The bright coloured bottles exhude sunshine and happiness that we all seek in our daily lives.
Looking ahead, the fragrance industry is poised for a new era, with innovations in neuroscience and fragrances that offer more than just olfactory experiences and move into serving multiple purposes from cosmetic to mood-enhancing effects, thus the rise of functional fragrances. The focus is shifting towards well-being, sustainability, and conscious perfumery, indicating a deeper connection between fragrance and personal care. The Nue Co are currently using patented neuroscience technology to deliver different benefits through tapping into different areas of the brain whilst Edeniste are elevating the link between mood and scent by basing their formulas on research into the effect of scent on emotion. Vyrao are also innovating within the wellness fragrance space through focusing on the healing properties of their ingredients and the inclusion of a charged diamond crystal.
The demand for transparency and authenticity will persist, with consumers valuing brands that align with their principles. Coty’s use of carbon-captured alcohol within a Gucci fragrance is an excellent example of sustainable innovation. Botanical ingredient production can also be severely ecologically damaging so innovations within synthetic molecules will also come into focus.
The impact of generative AI and neuropsychology leading to novel scent combinations has not been explored fully either. A company leading the way in AI-generated perfume is No Ordinary Scent that can create personalised and unique perfumes that turns images into fragrances. Osmo AI is currently working on digitising scent so that computers will be able to generate smells like they do images and sounds today.
In conclusion, the niche fragrance industry’s journey from the shadows to the spotlight reflects changing consumer attitudes and a desire for unique, sustainable, and personalized scent experiences. As the industry navigates through innovations and shifting preferences, the future holds exciting possibilities for fragrance enthusiasts seeking scents that go beyond the ordinary.
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