I get many people asking me what is involved in creating a niche perfume company. I will start off by saying that the most crucial thing is a "point of view." Scent is an art as much as music and painting. Similarly to those other mediums, if you don't have a point of view you become drowned in a business which is already saturated. With having a point of view comes the responsibility to stay true to it.
Now to the bones of it. The perfume business has challenges at every step. Making the perfume is the fun bit. Creating a perfume is about getting to know an ever growing collection of materials and learning how they interact with each other. I sit for hours at my bureau and create scent every single day. It is a compulsion. Each material has its own attitude. Some aroma chemicals have an almost "homeopathic" behaviour to them with their magic becoming apparent at lower concentrations. Some have fixative and exalting effects at low concentrations and at higher concentrations pull the spotlight on to themselves. Each ingredient is like a guest at a dinner party. It only takes one guest to throw the balance or to get the party started. Patience is a virtue. If the scent doesn't feel right - its not right. It may sound strange but for me a complete and balanced scent has a "warmth" when I push the atomizer. If I don't experience that warmth the scent is not complete.
Ok, so the scent is made - let's get it in a bottle and sell it. Well, yes - but, no. Firstly your scent needs to be cleared by a lab who can generate the documentation to say your scent adheres to cosmetic regulations and that each ingredient complies with the IFRA recommendations. In a nutshell IFRA is a body who advise on the maximum concentration of an ingredient which is deemed safe to be used in various cosmetic products. There is a different safe level depending on the product ie. EDP vs a shampoo/conditioner. This is to avoid exposure to allergens which have the potential to cause issues such as contact dermatitis. Some chemicals are considered to be potentially carcinogenic (cancer causing) and are highly limited or even banned. The reality is that IFRA is a guiding body not a legal entity. There are many arguments for and against compliance which I won't get in to. I decide to comply. Once your product has been approved, the documentation generated must then be uploaded to the Cosmetics Notification Portal. This is a terribly designed website which holds all of the safety certification for cosmetic products in the EU.
So, you have made a beautiful scent and it has cosmetic safety clearance. Time to bottle it. Niche houses tend to create small batches of scent - by the very nature of niche scent, we don't expect to sell thousands of bottles a month and therefore there is no point having that stock on the shelf. Though ordering higher quantities of bottles and boxes generally means lower purchase prices - cash flow is a more important consideration. Many fulfilment companies aren't interested in bottling and boxing scent unless dealing in MOQs (minimum order quantities) in the thousands. That generally means many perfumers bottling scent by hand. I can tell you first hand that the process of hand bottling, hand labelling, hand boxing, hand packing and hand posting is extremely laborious. We do it because we love what we do. I am lucky to now be able to have some help with a couple of those steps but I still spend several nights filling hundreds of the sample tubes that go in to our Discovery Sets.
The scent is made, bottled and boxed - people all over the world want it! You feel amazing, time to breathe a sigh of relief! Unfortunately not. Posting perfume from the EU is a nightmare. Royal mail will allow small volumes to be posted within the UK. Not a problem. In terms of the rest of the world, things get complicated. Perfume is classed as a "hazardous good" when it comes to shipping. Essentially due to its flammability, it needs to be packed and carried in a way that minimizes its risk of contributing to a fire during its time in cargo. This costs a fortune. To be able to ship hazardous goods you must sit a very expensive course which trains you how to pack the items correctly. Your other option is to use a fulfilment company set up to do this (which is what I do). You then need to use a courier company that is able to handle hazardous goods. This comes at a premium. It costs me almost £70 to send 50ml of perfume to the USA, which I then subsidise. Countries such as Saudi Arabia cost me almost £130 to ship to which is why many small companies don't routinely ship internationally. This makes it crucial to have retailers around the world who can then ship items locally. Shipping 10kg to a retailer may cost the same as shipping 0.5kg to a customer.
This is a nice segue to my final point. Many people question the price of scent. £100 for a bottle of perfume? Well I hope thus far you have an idea of how much work goes in to creating that scent. Further to this, retailers will want a 50 to 70% margin when they purchase from you and a distributor (a company who supplies several stores with your product) may want to pay you less than a fifth of your retail price. On top of that you can become a victim of your own success. Once a company is turning over £80k a year it needs to pay 20% in VAT. A perfumer from a niche house may make a profit of under £10 on a bottle of scent retailing for £100. The giants like Chanel have enormous margins and distribution capabilities and are not touched by this.
I hope this gives you some idea of the magnitude of work that goes in to starting a small niche fragrance house. There are many things I have not mentioned such as the cost of insurance or salaries but these apply to most businesses.
In the end if you have the passion and drive to start a business in scent you should go for it. The artistic rewards are enormous and though there are very tough days, I would not change it for the world. Just be prepared for the many challenges you will face along the way. If you have any specific questions feel free to drop me an email via the contact page!