Sweet smell of success

The "lipstick indicator," a term coined in the wake of the 2001 terror attacks, has been a bellwether of amateur economic forecasting. Sure, the economy may be suffering, but an $18 lipstick is still affordable.

Now comes the "fragrance forecast." The depression talk of 2008 has given way to a slow stock- and housing-market comeback in 2009 and renewed optimism for 2010. Consumers apparently want to smell nice for the rebound.

Beauty-industry watchers noticed large growth in sales of expensive perfumes -- those priced above $100 -- this year. Meanwhile, lipstick sales were down 11 percent, perhaps disproving the lipstick-indicator theory.

The NPD Group, a market research company, said earlier this year that while sales of prestige fragrances overall were down 10 percent, sales of the most expensive brands were up 10 percent from the same time last year.

Seems as if consumers looking for a little luxury are finding that a new tube of Rum Raisin gloss just isn't cutting it, but it goes without saying that a trip to Italy or the purchase of that $2,400 Prada coat may have to be put off for another year. Could the $100 bottle of Prada fragrance be a temporary substitute? Can high-style Italian design be captured in a pretty bottle?

"The growth in premium fragrance is driven by the fact that these products are still perceived as more niche and unique to the prestige arena," says Karen Grant, NPD's senior global industry analyst and vice president of beauty. "The trends in premium-price beauty show women are becoming increasingly selective in where they choose to invest their limited resources."

Meanwhile, an NPD survey in November showed that one in five consumers planned to buy fragrances as holiday gifts. The perfume industry accounts for about $25 billion to $30 billion in annual sales.

Thomas Saujet, president of International Cosmetics & Perfumes Inc. and the distributor in the United States of the high-end fragrance line Creed, says sales of his lines are "absolutely fantastic."

"We're up across the board," he says. "We've had an incredible year."

Creed's line ranges from $122 to a $650 bottle of the rare Windsor fragrance. The company opened its first stand-alone shop in Manhattan earlier this year.

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