Black Swans in the Fragrance Business
Many fragrance brands grow via slow, consistent effort. Many never grow. And quite a lot fall into Taleb’s Black Swan territory, where despite the consistent effort, what really drives growth (if growth even happens) is 2-3 pure luck factors that were impossible to predict before they happened. Remember that joke where a millionaire describes how he got rich? “I sold one apple and with that money bought two. Then I sold two apples and with that money bought three. Then I sold three and… you get the idea. And then my millionaire grandpa died and I inherited his money.” Kind of like this.
In fragrance, there are hundreds of examples of unexpected events completely changing the trajectory of brands’ growth – from earth-shaking macro factors to less extreme events like unexpected PR.
… A sudden explosion of interest in a random country because the key accord reminded consumers of a popular local shampoo that everyone used as a kid.
…A formulation mistake suddenly resonating more than the polished formulas.
…A new fragrance name setting off a meme no one at the brand intended.
…A mainstream celebrity with a surprisingly niche taste putting the fragrance on their vanity that got captured during an interview.
…A TikTok reviewer crying on camera because of what the fragrance evoked.
…Luca Turin including the fragrance in his guide with an unexpectedly good rating.
To be clear, none of this is about growth that lasts – just growth that happens. But what underlies that kind of growth is that beneath the aesthetics and storytelling, much of the niche fragrance market runs on optionality. Many sense this all-or-nothing dynamic and how random events can completely move the ceiling of what’s possible to achieve. But what they often do is try to force that randomness, which is the opposite of what they should be doing. They pour all their energy into trying to predict the winning lottery numbers, when what they should do is build systems to cheaply buy as many tickets as possible (within constraints). You can’t create a system that predicts the winning numbers, but you also can’t win a lottery if you don’t buy a ticket – and the more tickets you buy, the higher your chances. So, following this analogy – own many small exposures that increase the chance of something good unexpectedly happening, rather than read a cultural trend report and try to create something that fits.
Now let’s look at how to turn this into an actual strategy in fragrance.
THE MINDSET
Don't make it your product strategy. Your product strategy is making an exceptional, coherent product; optionality is about how you distribute it. Don't make it a core principle – just always have it in the back of your mind, and this way, you’ll be able to make multiple micro-decisions that build optionality whenever you get new ideas or face trade-offs.
Optionality sounds simple in theory, but psychologically it’s brutal. It's not for everyone. You need to have a certain emotional discipline to operate this way. Be emotionally detached from the outcomes and accept that real success may never happen or happen very late. Lower your expectations of how success will happen. Discipline the ego and accept that it’s very likely that the real money will come from something stupid rather than something you are most proud of.
Be operationally ready to pick up the momentum and fulfill the unexpected demand when and where the momentum hits.
In fragrance, there are certain constraints that you must respect. When you read “optionality”, you probably thought about launching multiple weird ideas cheaply to see what catches fire or testing multiple scattered concept angles via ads. All of that is good, but is directly at odds with what a luxury product requires – consistency and coherence. In investment risk management, what matters is deciding what portion of assets could be safely allocated to high-risk, high-reward investment, so that if all that amount is lost, it wouldn't destroy the investor. In fragrance, it's not so much about allocating money. What matters more is understanding to what extent a brand can run small experiments or make small bets on things that are high-reward but unlikely, without diluting, cheapening, or destroying the brand.
With that mindset in place, let’s look at what kinds of small bets you can make.
THE TACTICS
In these examples below, we want to shift the focus from creative experimentation, which has been chewed to the bone, to thinking outside of the box operationally, betting on practical things that others look down on or ignore. More of a real estate investor buying cheap land in unfashionable areas betting on appreciation, rather than a visionary architect kind of logic.
Be first to market. When/if a non-obvious market warms up to a certain type of smell – you are already there. It's not guaranteed that it ever will, but if it does – you’ll be the one to own the whole category and cash out. For example, you make tea-like freshies and it's logical to pour most of your effort into East Asia, but instead you are setting up some small distribution in the Middle East. One day, tea becomes hot (it's a pun) and you become one of the first few who offer this. The key is – it's only one of many markets where you are present; your whole business doesn't depend on this one bet.
Under the same logic, do not overlook potential partnerships in very small markets, markets that scare you by being under the radar or too “exotic”, or cities with money but no existing scene for niche fragrance. Do not overlook partnerships with non-obvious partners (small local/online retailers or completely unconventional distribution channels). Especially if it doesn't cost you much to be there. You can always renegotiate the deal if it explodes somewhere. Throw small batches here and there at a low margin and see what happens – some of them may perform unusually well or you may get discovered by local creators you don't even know of – that speak a different language but have an audience in multiple markets.
Do not ignore demographic groups that everyone overlooks. Rather than pouring all the money and brain power into Gen Z male teenagers, do broader demographic coverage and one of your fragrances may unexpectedly resonate with 45+ women in high-profile corporate jobs, despite the underground positioning.
Do not ignore very small emerging creators – you are making bets on them getting big one day.
Test new social platforms early. Be careful here, as trends move fast and this can look like a cheap attempt to jump on a bandwagon. But it works when you make it clear that it’s about the unique format supporting your specific creative, rather than the newness of being there.
Network as if every new person you meet could become a major inflection point for your brand. You never know who you are really talking to at an exhibition – the quiet visitor asking basic questions may turn out to own a chain of stores, know the right distributor, or sit on a pile of cash ready to invest in your brand. Or have a father who does. Bring your soul into every conversation.
Scent unexpected spaces. Not a luxury hotel lobby, but something much smaller and potentially more impactful in unexpected ways. A psychoanalyst's waiting room in LA? A hair transplant clinic in Manhattan? A high-end tattoo parlor in Berlin? It costs you a single diffuser, some bulk oil, and some effort to find a way to approach those places with this, but it increases your chances of someone important asking “what smells so good in here?” one day and starting a long chain of unexpected events.
None of this summons luck. And that's the whole point – you can't force it to show up, you can only make sure you have a net ready to catch it. The brands that look "lucky" in hindsight often weren't doing anything smarter than those that quietly disappeared – they just had more small, cheap bets out in the world when the stars aligned. So the strategy isn't "make a great fragrance and wait”, but rather "make a great fragrance, then patiently stack the odds across markets, partnerships, audiences, and platforms."
