Barbell Strategy in Fragrance Business
What is it and who should consider it?
There are multiple approaches to building a fragrance line from both a creative and commercial standpoint. One of them seems particularly suitable for niche fragrance business, especially in the current market. It was frequently used at the dawn of the niche perfume boom but seems underutilized at the moment.
In one of our posts, we discussed how perfume brands can adopt strategies that have been highly successful in other industries. This time, let’s turn to the fashion world.
The first analogy that comes to mind may seem a bit odd. A proven strategy for dressing on a budget while still looking expensive is to mix designer clothes with inexpensive, no-name items in the same outfit. When clothes are blended with style and taste, even a single designer item can signal status and achieve the same effect as an outfit composed entirely of designer clothes.
A better example from the fashion industry at large is the distinction between haute-couture collections, which define brand’s aesthetic and identity, and ready-to-wear collections, which generate brand’s revenue and sustain the business.
This strategy is common in many other industries – retail, luxury goods, finance, professional services, and many-many others.
In finance, it appears in the form of balancing between high-risk, high-reward investments and low-risk investments with smaller returns. It is called “barbell strategy” as it balances between the two ends of the risk spectrum (much like a barbell).
In professional services, another classic example, companies often have a separate line of business dedicated to custom projects that are often unprofitable but draw clients in, establish reputation and maintain loyalty – and another line of business with highly profitable commoditized off-the-shelf services that subsidize the custom work. Neither line of business would exist without the other.
This approach can also work well in perfumery. Some brands, intentionally or not, have used it to great success.
Let’s look at Byredo’s first few releases that sparked interest in the brand as a niche player. Pulp that smells of rotten fruit and M/Mink that smells of ink, fur, and blood to some, may not seem particularly unusual or provocative nowadays. However, at the time of their launch, both their concept and scent were quite offbeat. These two fragrances set the tone for Byredo as an edgy niche brand unafraid to experiment. However, these fragrances weren't conventionally wearable. People were intrigued and wanted to experience them, but few purchased and especially repurchased them. In contrast, Bal d’Afrique and Gypsy Water were more polite, more suitable for everyday wear, and smelling more familiar to audience that was new to the niche category. These two have quickly become the brand’s staple fragrances, generating significant revenue.
Another example is Etat Libre d’Orange with their oddest release Sécrétions Magnifiques, which itself became a form of advertising for the brand, while other more wearable fragrances likely drove sales.
Brands like Comme des Garçons, Juliette Has a Gun, Frederic Malle, Zoologist, DS&Durga, Régime des Fleurs, Blackbird, and many others may be consistent in how daring their concepts are, but from an olfactory standpoint, they offer both conventional and unconventional fragrances – or in some cases, both very simple and very complex scents.
These examples demonstrate that the strategy we are describing can be realized in two main forms:
Investing substantially in a few complex, high-quality fragrances that contain expensive ingredients necessary to realize the creator’s specific artistic vision, while supplementing the line with scents made with fewer costly ingredients that still align with the brand’s concept, are likeable, and… actually profitable.
Releasing a few fragrances that are highly artistic and provocative – even if hardly wearable – for the purpose of building brand image, while ensuring the rest of the line is pleasant and wearable, or at least includes a few pillar fragrances that generate revenue.
In both cases, more complex, artistic, or expensive-to-produce fragrances are needed to establish brand identity and generate the right buzz, while profitable "cash-cow" fragrances provide the financial cushion necessary to create, launch, and keep the former in the line.
This brings us to an interesting and important distinction between the niche and luxury segments. While in the luxury segment releases with poor commercial performance are often discontinued, it is almost imperative for niche brands to keep them in the line to maintain their integrity and niche status (unless regulatory changes or challenges in supply chain make it impossible to keep producing the fragrance). This is something niche brands need to account for in their long-term financial projections, if they want to use this strategy. In other words, if you do this, be prepared to do it long-term.
