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Amouage is gunning for a bigger slice of the global fragrance market and is readying to fire its first salvo next month. BusinessToday reports

Chanel, Gaultier, Estee Lauder...Amouage. Surprised? Well, that is what David Crick-more, CEO and managing director, Amouage, and his team are aiming at – making Amouage a part of the stellar constellation of international perfume brands. The aspiration may seem a bit strange to many as the brand has, over the last 25 years, become a part of Oman's popular culture, a symbol of the sultanate in mass consciousness. Paradoxically, it is precisely this association that is hindering its growth. Says Crickmore, "We want Amouage to be recognised as a truly international brand that is based and produced in Oman, instead of just being an Omani brand which sells abroad. That is just a subtle difference to our current positioning, but will give us much wider scope and recognition in the global markets."

The Middle East currently accounts for 65 per cent of Amouage sales. The new CEO’s game plan is to make Europe, US and the Far East account for 60-65 per cent of Amouage's business by 2011. The brand is reinventing itself to suit the sensibilities of the international clientele. While Amouage wants to claim a slice of the international perfume market, it will not be done at the cost of price or positioning. The 'most valuable perfume in the world', is targeting the niche upper end of the perfume market, a preserve of perfume aficionados and connoisseurs. Says Crickmore, "Amouage is only for the most discerning and sophisticated consumer. We will never be a mass market brand as we intend to remain in the luxury positioning."

The premium end of the market makes up close to ten per cent of the US$25bn a year global perfume market. This works out to US$2.5bn – a market well worth taking a shot at. Moreover, this market is growing twice as fast as the mass market.

The four Ps

Plans are on to unveil the first of its products which has an international fit on November 2 this year. The fragrance, packaging and shape of the bottle of the new offering is expected to break the conventional Amouage mould. The company plans to add a new perfume to its product line every year. With 300 new perfumes being launched in the market annually, Amouage has quite a fight on its hands.

The company is sprucing up its game at the retail end of the market. Starting from the GCC market, the brand will work on increasing its profile. Amouage plans to have either a dedicated wall or a shop-in-shop in every retail outlet that it retails in. The brand will build its own stand-alone exclusive stores in critical locations.

Amouage is looking at penetrating new markets like Italy, Spain, Russia, Ukraine, China and Japan. Its first retail outlet in China will come up in 2008. The company has been traditionally strong in markets like Germany, Austria and Switzerland. It has recruited a new distributor to market its products in Europe. Amouage, which has a retail presence in New York, New Jersey and Chicago, is keen to expand its presence on the American continent.

Says Crickmore, "The packaging is the first thing that attracts customers to a fragrance. Therefore, it is vital to have packaging that is appealing and demonstrates the brand's luxury, as this is the first step in the consumer's purchasing decision." So all Amouage perfumes will go back to the packaging table to emerge in a new avatar. Ciel, the first one off the block, will be unveiled in its new garb on November 2. By the end of 2008, all Amouage perfumes will be offered in the new package.

The company also feels that it is time to give its bottles a more contemporary feel. The motif used for women's perfume will change from the older Ruwi mosque to the Grand Mosque. The inspiration for the bottle for men's perfume will continue to be the khanjar though its styling may get a facelift. "Our new bottles will be reminiscent of our existing bottles and will form a bridge of continuity with what has gone before and what is to come," says Crickmore.

Amouage did a kind of a dry run of its new strategy in a quiet vein with the launch of Reflections in September 2006. The fragrance and design of the new launch was understated and less ornate. Its success has emboldened the company's faith in the new strategy. Reflections has been outselling Gold, Amouage's traditional bestseller, and the perfume which Crickmore calls their 'Chanel No 5', by almost double the volume.

Expecting a spurt in sales, the company has worked out plans for a major capacity expansion. As of date, Amouage makes about 12,000 bottles a month. The company has rearranged its current production site and added two new godowns to the factory. This will double the plant’s existing capacity by the end of 2007. A new factory will lead to a further four-fold increase in capacity in 2009. Amouage expects the two-fold expansion to take care of its needs till 2015.

The company, which has been making a year-on-year profit growth of 17 per cent, will fund the first phase from its profits and organic growth. The factory will be financed partly by a private loan from Oman Develop-ment Bank (ODB) and a term loan from its existing bankers.

Amouage expects its enhanced capacity of 96,000 bottles a month to be absorbed by established markets like Germany, Switzer-land, Italy and Austria. It is also looking at making inroads into France, Spain, Russia and Ukraine. Penetrating deeper into the US and GCC markets is also on the high priority list.

Brand extensions
Creating a global market is merely part one of Amouage's plans. Part two involves brand extension. The company has identified two categories: bath products like soaps, gels, body milk etc, and home fragrances including perfumed candles. Amouage expects these extensions to make up 40 per cent of its top line in a few years time.
The home fragrances market has grown fast in the last five years, mainly in the US and core European markets like the UK and France. Apart from perfumes, aromatherapy scents are big business. Scented candles, perfumes for interiors and linen have become a huge fashion market associated with lifestyle statement. Dyptique, Tocca, Jo Malone, Liz Earle, L'Occitane and Molton Browne are some of the biggest names in the perfumed candles market.

The aromatherapy market fits in with the Omani tradition of using bukhoor. Candles do not sell well in the Omani market as many feel they would melt in the heat. Keeping this in mind, Amouage will use a special wax that can withstand high temperatures for its
candles. "We want to be a brand which takes care of all your perfume needs, which means perfuming the ambience in which you live." Apart from increasing business, Amouage feels that these extensions will also help build its brand profile. Almost every luxury brand in the world like Gucci, Louis Vuitton, Prada and Dunhill sell a range of products.

The big league
Moving into the global market means that Amouage will be pitted against deep-pocket players like Unilever and P&G. Launching a new perfume can cost as much as US$100mn, while maintaining the profile of a fragrance can be quite a drain on one’s resources. The 2006 advertisement for Chanel No 5 featuring Nicole Kidman cost the company a staggering US$36.37mn. Aware of its limitations, Amouage plans to go about its strategy in a calibrated manner. The brand first plans to build itself up in markets like Dubai, Riyadh, Germany and Switzerland, where it has traditionally been strong. The company is also looking at using PR to reach its target clientele. "Advertising is also a part of our media strategy, but we don't have the large pockets like the multi-brand fragrance companies like Unilever or P&G," says Crickmore. "Our advertising will focus on a few publications to target our consumer base directly."
The perfume business has its own set of nuances. While launching a perfume, there is only so much that one can do with market research or scientific analysis, beyond which it gets driven by gut feel. With the customer exhibiting a high degree of brand loyalty it is often difficult to make them switch brands. The only thing working in favour of a new entrant is that this clientele is ready to try out new fragrances. Amouage is confident that this window of opportunity is enough for it to get a pride of place on their shelves. g