Interparfums Inc.

For Jean Madar, the road to $1 billion is paved in perfume.

The chairman, chief executive officer and cofounder of Inter Parfums Inc. has led the company to significant growth over the past two years, capitalizing on the boom in fragrance with licenses including Montblanc, Coach and Jimmy Choo, and snapping up a handful of new brands in the process.

In 2020, the company hit $539 million in net sales; 2021 saw a jump to $879.5 million, zooming past pre-pandemic levels. Inter Parfums raised guidance for the year to $1.08 billion following a larger-than-expected swell during the holiday season, and anticipates $1.15 billion in sales for 2023.

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The company is helping fuel a renaissance in the fragrance business, thanks to an approach that prizes creativity and olfactive originality in terms of product development, and a global distribution infrastructure that encompasses key channels around the world.

The strategy is working. In 2021, Montblanc, Coach, Jimmy Choo and Guess, the company’s four largest brands, grew 46 percent, 45 percent, 61 percent and 83 percent, respectively, a performance reflected in Inter Parfums’ share price, up 13 percent in the past year to $110.68 at press time.

Inter Parfum’s growth outpaces the competition in a category that is soaring. For the third quarter of 2022, U.S. prestige scent sales increased 11 percent to $1.3 billion, according to the NPD Group, largely driven by brick-and-mortar revenues. Since the pandemic, designer fragrances and higher-priced collection fragrances have also been engines of growth.

“The fragrance segment has seen extraordinary growth, bigger than skin care and makeup. The past 18 to 24 months have been the time for fragrance, and this is going to continue,” said Madar, during a wide-ranging interview in his midtown Manhattan office. “Fragrance used to be the slowest of those three, with skin care booming in China and makeup booming in Europe.”

That is no longer the case.

“It has never been at this level,” continued Madar, who founded Inter Parfums in 1982 and took it public in 1988. “It’s the first time we’ve reached such a level — not just our business, but the segment of the industry. It’s worldwide, certainly in the U.S. and in Europe, and now it’s in China.

“If we didn’t have lockdowns there, that business would be booming,” said the executive. “Every year, we have 100 million new customers in China, discovering the world of fragrance, and we have fantastic brands for them, like Ferragamo and Anna Sui.”

Inter Parfums

Courtesy

Geographically, Inter Parfums is well diversified thanks to a portfolio of 24 brands that enables it to appeal to wide swathes of consumers around the world. In 2021, North America accounted for $354.1 million of sales; Europe, $202 million; and Asia, $128 million.

Inter Parfums’ core business comprises four key brands, each with $150 million to $200 million in net sales annually — Montblanc, Jimmy Choo, Coach and Guess.

While those names anchor its business, a slew of emerging brands diversifies its portfolio across price points and geographies, including Abercrombie & Fitch, Boucheron, Dunhill, Emanuel Ungaro, Graff, Hollister, Karl Lagerfeld, Kate Spade, Lanvin, MCM, Moncler, Oscar de la Renta, Rochas, S. T. Dupont and Van Cleef and Arpels.

In October 2021, the company acquired the Salvatore Ferragamo fragrance license, and Madar said that brand has already grown 45 percent in its first year under his purview. Most recently, Inter Parfums acquired the license for Donna Karan and DKNY fragrances after the Estée Lauder Cos. wound down its designer fragrance division, and picked up Lacoste after that brand was spun off by Coty Inc. That deal included an 80 million euro entry fee.

Madar anticipates that DKNY will develop into a fifth pillar for the company, estimating that it will reach $150 million in sales in the next 12 to 24 months. “We have big ambitions for DKNY,” he said.

Similarly, the Ferragamo acquisition hasn’t just added sales. It also led to Inter Parfums opening its first offices in Florence, Italy, with a headcount of around 50 employees. “We hired more people, and we think we can have more Italian brands because we now have that presence and production in Italy,” said Madar.

Analysts agree that Madar’s diversification strategy has been a winning one. “In addition to the market environment, the company has been successful in adding different brands to their portfolio. That’s helped them grow at a faster rate,” said Hamed Khorsand, analyst and founder of BWS Financial. “They’ve shown their ability to focus directly on the actual brand, market it well, distribute it well, and create new scents the customer likes. They’ve also shown their ability to get the sales of a brand to improve.”

Retailers laud Inter Parfums’ focus on storytelling. “Inter Parfums continues to capitalize on its position as a mid-sized beauty company. This position gives them agility in our partnership for both product innovation and new marketing tactics and this is all driven by consumer insights and data,” said Jennifer Capuano, vice president of fragrances at Macy’s Inc. “Anchored by the pillar brands, Coach and Jimmy Choo, the Inter Parfums team has focused on storytelling and animation in our stores.”

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Madar applies a hands-on approach to product development, no matter the size of the business. “Our job is to customize each creation. We can’t take one bottle and say it’ll work for everyone,” he said. “Everything is customized, we don’t recycle ideas. If we don’t like a development, we’ll throw it in the garbage and start again. If we’re not ready, we delay a launch.”

The company focuses on four key tenets for a successful launch, although, as the CEO laughs, “it also takes a little bit of luck.”

“What works across the portfolio is the perfect equation between the brand, the packaging, the juice and the advertising,” Madar said. “Sometimes the brand is of very high interest, and sometimes less. It’s our job to make it happen.”

Licensors applaud that approach. “[Madar] is deeply involved in all things that go on in our business; it feels very much like a small company, despite the fact it’s not at all a small company,” said Alex Bolen, chief executive officer of Oscar de la Renta, of his relationship with Inter Parfums. “Jean is in almost all of the meetings I attend, both as a creative matter and a business matter. He brings a very unique approach that is both artistic and commercial, and he has a very strong opinion on the development of fragrances.”

The reasoning behind that style of collaboration, Madar said, is simple. “Think of us like a kitchen: we let the fashion houses into the kitchen to work with us. This makes the difference between us and the very large international companies,” he continued. “We work together, and we welcome [the brands in], because who knows better than them who they are? Our size allows us to do that.”

Inter Parfum’s size also enables it to be agile and responsive. “They’re beating our internal plans for sales, and it’s really, really early stage,” said Morris Goldfarb, chairman and CEO of G-III. “They’ve got aggressive changes planned for this coming year with Karl Lagerfeld, with the Met Gala being in his honor, and a film planned for the following year.

“Inter Parfums is committed to as aggressive of marketing as we are,” said Goldfarb.

The marketing piece is key, given that G-III’s fragrance business also gives its brands global reach. “From an economic point of view, it’s our largest license, but it’s a broad range of venues that make a brand relevant,” he said. “We’re much more global because of the interface with fragrance in consumers’ minds and visual contact, whether it’s duty-free stores or elsewhere in the world.”

Spinning brands into its global flywheel of distribution is also key to its growth over the last two years.

“They understand what it means for distribution of fragrance across the world, and that there’s differences in Europe versus department stores in the U.S. Our China and Asia markets for fragrance are just blowing up,” said Todd Kahn, CEO and brand president of Coach. “Every single one of our fragrances has been successful. They have really grown our business for beauty and for us, it’s an extension of the lifestyle that Coach is… you don’t feel any distinction between the licensor and licensee, they’re part of the family, and they’re incredibly knowledgeable about the beauty business globally.”

Indeed, Madar’s radar is finely tuned when it comes to picking up new licenses. “What we look for first of all is name recognition, but that alone is not enough,” he said. “Coca Cola is maybe the most recognized name, but does it mean people would like a fragrance from them? There also has to be desirability.”

While Madar is optimistic that the fragrance category will maintain its momentum in the year ahead, he’s also treading carefully in terms of new licenses. “The cost of launching a new fragrance today is astronomical — tens of millions [of dollars]. We have to be careful,” he said. “You need to study and learn that the product you’re coming with is right vis-à-vis the distribution, the brand.”

And despite seeing e-commerce sales multiply tenfold during the pandemic, he’s most bullish on brick-and-mortar. “I believe in brick-and-mortar because it’s an experience, and we’ve put so much effort into creating this theater,” he said. “Even when you have great digital assets for e-commerce, the physical contact in store is very important. It’s back and it’s back strong, and we won’t increase the amount of doors.”

Price points have also increased. “For fragrances a couple of years ago, it was difficult to go above $100. Now, for a larger size, under $100 would be an exception,” Madar said. “It’s not only because of inflation, it’s because of positioning, and we have to be careful not to lose customers, so we add smaller sizes with democratic prices. For Graff, $50 wouldn’t make a difference to the consumer, but for Guess, $10 would make a big difference.”

As with other categories in beauty, customers are more knowledgeable than ever. “I was at Macy’s, checking on the new launch of Oscar de la Renta, and a customer asked me where the lavender in the juice came from,” said Madar, noting the same dynamic exists in the Middle East and Europe. “These are questions that we’ve never had before.”

Despite changing market dynamics, success still boils down to the basics that have enabled the company to thrive: olfactive originality. “Philippe [Benacin], my partner, and I agreed we won’t do worldwide testing on our fragrances. We don’t want to create by committee,” said Madar.

“People want the difference — they want to be different. We’re going to pick the fragrance that has more character, more signature, that maybe is more difficult,” he continued. “Maybe some people are like, ‘Oh my God, I hate it!’, but that’s a good sign. The stakes are higher, and it’s very dangerous to stay in the comfort zone.”

All-Star Lineup

For the nine months ending Sept. 30, 2022, Inter-Parfums’ four top brands comprised 63 percent of overall business. Here, a breakdown of each one.

Montblanc

Montblanc Legend Eau de Toilette

Percentage of overall business: 19%

2022 Jan.-Sept. sales (est.): $147.4 million

2021 Annual Net Sales: $168.2 million

Top performing pillar: Legend Eau de Toilette

On Deck for 2023: Montblanc Explorer extension

Jimmy Choo

Jimmy Choo I Want Choo Eau de Parfum

Percentage of overall business: 18%

2022 Jan.-Sept. sales (est.): $139.7 million

2021 Annual Net Sales: $154.9 million

Top performing pillar: I Want Choo Eau de Parfum, Man Aqua

On Deck for 2023: Jimmy Choo Signature extension

Coach

Coach Floral Eau de Parfum

Percentage of overall business: 15%

2022 Jan.-Sept. sales (est.): $116.4 million

2021 Annual Net Sales: $136.8 million

Top Performing Pillars: Coach Floral Eau de Parfum, Coach for Men Eau de Toilette

On Deck for 2023: Coach Man extension

Guess

Guess Uomo Eau de Toilette

Photo courtesy of Inter Parfums, Inc.

Percentage of overall business: 11%

2022 Jan.-Sept. sales (est.): $85.4 million

2021 Annual Net Sales: $101.9 million

Top Performing Pillar: Bella Vita Eau de Parfum, Uomo Eau de Toilette

On Deck for 2023: Uomo extension