Dynamic Marketing Communiqué

Sugar, Spice, and Everything Nice: Check out what this company does right to be where its consumers are! [Monday: Marketing Marvels]

February 15, 2021

What kind of world would you like to have?

For one perfume company, it’s a world of opportunity.

―opportunity to provide high-quality products to customers, create value for shareholders, and maximize employees’ potential.

One of the company’s objectives?

To create new products that define growth and maintain an operating culture that energizes employees year after year!

Interparfums SA is a French-based company involved in the design, manufacturing, and marketing of fragrances.

The company is the owner of 3 distribution subsidiaries, namely:

  • Inter Parfums srl for the Italy market
  • Inter España Parfums et Cosmetiques, SL for the Spain market
  • Interparfums Luxury Brands, Inc. for the US market

Additionally, Interparfums SA is the exclusive worldwide licensee for various luxury brands such as:

  • Boucheron
  • Coach
  • Jimmy Choo
  • Kate Spade
  • Montblanc
  • S.T. Dupont

As of 2021, the company operates and distributes its products in over 120 countries around the world.

What strategies does Interparfums use to foster a “world of opportunity?”

  1. Growing Portfolio Brands Through New Product Development and Marketing

    As stated in its 2019 annual report, Interparfums creates a new line of fragrances for each brand every year or after 2 years.

    These products include seasonal and limited edition perfumes such as the special edition fragrance in Boucheron’s Jaïpur Bracelet line.

    DMC%23100-7.png

    Through new product introductions, Interparfums gauges market trends to maximize sales and profit potential.

    Thanks to its knowledge about consumers, detailed analysis of each brand, and a professional approach to international distribution channels, the company is able to produce high-quality fragrances.

  2. Adding New Brands To Its Product Lines Through New Licenses or Acquisitions

    For 25 years, Interparfums has built a portfolio of well-known brands through acquisitions and new license agreements.

    These include agreements with Jimmy Choo, Guess? Inc., Abercrombie & Fitch, Hollister, Kate Spade New York, and MCM.

    Any ideas on what Interparfums’ most recent license agreement in 2020 is?

    It’s with Italian fashion company Moncler SpA!

    DMC%23100-7.png

    Under the agreement, Interparfums will create perfumes and other fragrance-related items for the Italian brand.

    These products will then be distributed in Moncler stores, selected department stores, specialty stores, and duty-free shops.

    Interparfums is expected to launch its first fragrance line for Moncler in the 1st quarter of 2022.

    Thinking about the benefits both companies will get out of this agreement?

    According to Remo Ruffini, Chairman and CEO of Moncler:

    “Interparfums’ renowned expertise and creativity make it the ideal partner to develop a fragrance that is perfectly aligned with Moncler’s DNA and unique identity. The launch of Moncler’s first fragrance line is consistent with our selective brand extension strategy further enriching the clients’ experience with the brand.”

    On the other hand, here’s what Interparfums’ Chairman and CEO Philippe Benacin says about the agreement:

    “This is a great achievement for us. Moncler is the only luxury brand associated to mountains, nature, and constant search for evolution and innovation. Moncler has always stood for uniqueness, authenticity, quality, and excellence. Its achievements are absolutely distinctive, and we are certain that its uniqueness will be successfully translated into a fragrance.”

    Interparfums continues to identify potential brands to partner with in order to strengthen its position in the prestige beauty market.

  3. Building A Global Distribution Footprint

    Interparfums consistently coordinates with third party distributors to maintain the order in its distribution networks, particularly in the US, France, and Spain.

    Aside from that, the company also looks into future joint arrangements or acquisitions of distribution companies to distribute its perfume brands.

    What else is Interparfums doing to expand its market reach in the digital world?

    In 2020, it has ventured into “E-commerce Beauty” via a strategic deal with Divabox!

    Divabox is the company that owns the Origines-Parfums e-commerce beauty platform.

    Since cosmetics, personal care, and fragrance industries are shifting to digital, Interparfums knows establishing its presence in the e-commerce space is essential to being where consumers are.

    You might be wondering, “Why Divabox and Origines-Parfums?”

    As a website of reference for selective fragrance brands, Origines-Parfums is a key player in the online beauty market.

    DMC%23100-7.png

    Named as the top beauty site by French consumer group magazine Que Choisir in 2019, Origines-Parfums has a customer base of over 1 million people.

    Not only that!

    The e-commerce platform is also recognized for its customer relationship expertise!

    Interparfums believes this move will help accelerate digital development and enhance the introduction of fragrance products designed to address a specific consumer demand.

    As stated by Jean Madar, Co-Founder of Interparfums:

    “With online sales for perfumes and cosmetics growing every year, a trend that has been accelerated by the pandemic, Interparfums has been on the lookout for an opportunity to integrate an e-retail dimension since 2019. This partnership fits perfectly with the strategy.”

    As for Divabox and Origines-Parfums, the agreement will provide the resources needed to strengthen both their organizations and raise online visibility.

    In the words of Jean Philippe de Peretti, Chairman and CEO of Divabox:

    “Our goal is to exceed the milestone of EUR 100 million in sales and become a European e-commerce leader for perfumes and cosmetics. This partnership with Interparfums will provide us with substantial operational and financial resources to maintain the pace of our strong growth.”

    For Interparfums, addressing consumers’ needs and adapting to changes in the business environment are keys to future growth.

In the past five years, Interparfums SA has recorded revenues of:

  • EUR 327.4 million in 2015
  • EUR 365.6 million in 2016
  • EUR 422.0 million in 2017
  • EUR 455.3 million in 2018
  • EUR 484.3 million in 2019

With the help of its strategies, the company is able to create perfumes that not only meets the market’s demands, but also tells the unique stories of its brands.

Interparfums SA’s Earning Power: Valens Research vs. As-reported numbers

Interparfums SA (ITP:FRA) makes for a great case study that we come back to regularly. One great reason?

The company has proven itself to be a better earning power generator than investors might think.

So, how well has Interparfums been growing its business in the past years?

The research doesn’t lie—nor do the results. Earning power (the blue bars) continues to show results higher on average than what traditional databases show.

The blue bars in the chart above represent Interparfums’ earning power (Uniform Return On Assets). Interparfums has seen generally robust profitability. After improving from 22% in 2004 to a peak of 166% in 2012, Uniform ROA compressed to 20% in 2014. Thereafter, Uniform ROA expanded to 35%, before declining again to 30% levels in 2019.

The global ROA is just 6%.

The orange bars are the company’s as-reported financial information. If you relied on these numbers, you will see a company with terribly understated profitability. As-reported ROA (return on assets, a measure of earning power) only ranged from 5% to 30% in the past sixteen years. Additionally, when Uniform reached a peak of 166% in 2012, as-reported ROA was only at 30%. Meanwhile, its ROA in 2019 was only at 8%, far lower than its Uniform ROA in 2019.

That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.

The company’s stock price also performed better than the rest of the stock market over the decade, which we can see in the blue line in the chart below. Its returns have been well above the market.

The numbers show that Interparfums has been doing well and making a profit.

The company believes perfume is born as an “emanation of a brand’s universe,” expressing both the positioning developed over time and a moment of dialog between a brand and its target market.

Interparfums’ marketing team builds on this principle to tell a unique story with a connection to each of its brands.

One of the company’s promises to consumers?

It will continue to do what it does best: Designing a fragrance with a unique mix of boldness, reason, experience, and imagination.

About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”

Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.

…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.

The true ROI in marketing can’t be separated from the business as a whole.

What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?

At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.

Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.

However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).

By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.

We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.

Hope you found this week’s marketing marvel interesting and helpful.

Stay tuned for next week’s Monday Marketing Marvels!

Cheers,

Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
Powered by Valens Research
www.valens-research.com