When a perfume does succeed, the profits are formidable all around. The laboratory sells the juice to the licensee at two and a half times the cost. The licensee sells it at retail for two to four times its cost and earns about 30 to 40 percent in profits. The licensee then pays the luxury brand royalties for use of the name.
— From Deluxe: How Luxury Lost Its Luster by Dana Thomas (p. 163).
I'm not sure I understand who the licensee would be here..and how they would be a different entity than the luxury brand? Can you give me an example?
Most designer & celebrity brands license their name to someone else. Coty, for instance, holds the license for Calvin Klein fragrances. When “Calvin Klein” makes a fragrance, one of the big fragrance & flavor (IFF, Givaudan, Firmenich, etc) companies makes the scent itself (“the juice”), sells it to Coty, and Coty pays $ to Calvin Klein for use of the name.
Like any mass-market release, the hits pay for the flops.
I really enjoyed the first two-thirds of that book. The last third irritated and depressed me in equal measures.
Does this mean you're reading Deluxe? Mini-review please! (And thanks monkeytoes, for yours.)
Thank you muchly for the explanation re: the licensee, etc because I had the same question. You answered it very nicely and now I feel like I actually know something today! Thanks.
I skimmed the opening, skimmed bits of other sections, read the perfume chapter, read the closing chapter. Almost everything I read irritated me, although if you don't know much about how luxury conglomerates work, it will be an eye opener. Anyone who has read either of the Chandler Burr books, however, won't learn much about the perfume industry from Deluxe.
Unlike Dana Thomas, I do not bemoan the lost world of luxury; the fact that designer clothing is now sold on racks in stores that anybody can enter, instead of in a salon and only to an elite few, does not make me weep. Her description of the luxury store in Brazil, Daslu, which she obviously thought wonderful, I found vaguely repellent. I like nice things, but I have a kind of puritanical streak, I suppose, and most of what she calls “real luxury” I find distasteful and ostentatious.
See above for my usual cranky opinion
If you want a basic introduction to how it all works, you could read Newman's Perfume or Burr's The Perfect Scent. Links to both can be found here:
https://nstperfume.com/blog/_WebPages/PerfumeBooks.html
Daslu IS repellent, especially in a country like Brazil.
I especially loved the socialite who she quotes as saying “luxury is not what you can buy, it's knowing what is the right thing to buy” (not quoting directly but from memory) and then it turns out that means that yes, you do buy Louis Vuitton, you're just not so crass as to buy the “entry level” Louis Vuitton crap that everybody else can buy. Oh, thanks.
What a racket. It's tough being a peon. hahaha
LOL…so very true.
I'm so glad you said that! Someone posted a rapturous mention of the book on MUA, and I read an excerpt online, which I found repulsive and anti-democratic. I said so, and she made some comment in reply about my *obviously* less than deluxe financial means~LOL!
I find the whole notion of nineteenth-century-style luxury glamourized in the book repellant–as in, obscene luxury for a few is built on obscene poverty for many!
Jeez, really! I guess I'm not in the know then! But somehow, I don't feel too deprived……
I'm with you: I read it as a Fast Food Nation with an unreliable and snobby narrator. I don't bemoan the loss of exclusivity, though I do a bit bemoan the loss of craftsmanship. If knockoffs are as “well-made” what is the point of originals (in terms of “quality”).
I keep reading ABOUT this book in various places, but I have yet to read the book itself, and it already sounds too irritating to pay for! I'm always curious about how much packaging adds to the cost of perfume; does it mention anything about that?
I think some of the declining quality issues are also a result of changing attitudes towards possessions–nothing's meant to last for 10 years anymore! And everything is so oriented towards trendiness–I can't imagine anyone carrying a ten-year old bag anymore because of the overwhelming faddishness of most styles; jewelry yes, but clothes and bags, no.
In fairness to Dana Thomas, I should point out that I did not read the entire book, and she does emphasize that the modern “soulless” luxury product is usually made by poorly paid workers in the 3rd world. But the line that sticks with me is again from the end, where she is interviewing the same socialite I mentioned above in Brazil, who points out that when her driver was sick she paid for his treatment.
Monkeytoe, I don't know. I very quickly skimmed the part where she talks about the incredible care taken in the making of Hermes bags. What can I say, I'm not a Hermes bag kind of person — I mostly rolled my eyes. Counterfeiting is interesting to me mostly because I find it fascinating that you can get so many people to buy into the idea that the LV logo on a bag is worth paying *anything* for, much less big $$.
I got it from the library, so it cost me nothing but a few eye rolls.
She says that packaging is usually about 10% of production cost for a luxury perfume (if she ever defines what a luxury perfume is, I missed it though), and is one of the first place companies start to cut back — in other words, they might have nice packaging at first, then they'll make subtle changes to save $ over time.
Interesting… thank you!
It is not a meaning of luxury, it is a meaning of taste – I do wear the same bag for 5 years and will wear it the next ten, and then buy the same, if it is broken.
Things that never been in fashion will never go out of style – it is the classic Longchamp bag in small, but in classic black leather. Was not expensive, it is very nice and classy enough and suits me perfect. I bought it because I love it and it is timeless.
Luxury is the symbolic meaning of an object – perfume is luxury because it serves only our pleasure.
Yet many products have only the symblic stuff left, like labels who used to sell quality and sell crap instead, but still for a lot of money.
In Europe this thinking is changing and people embrace sustainibility, some because it is a trend, some beacuse they missthis craftmanship.
I know people living in cheap apartments and wearing hand-made shoes.
Just getting around to this comment thread. LOL at “cost nothing but a few eye rolls.” This definitely does NOT sound like my kind of book. I have a bit of an academic interest in all that, but in general it makes me roll my eyes and then get sort of [semi-socialistically] angry. However, along the same lines, that other book, “Bringing Home the Birkin” sounded kind of fun.
It's so out of character for me to pay $50 for a little vial of perfumed liquid, but as a former boss said, “At some point, you realize everyone is a hypocrite to some degree.” I'm incredulous at my own behavior sometimes, but… we all have our vices as they say. I also got to a point where I realized I could never be “reponsible” enough unless I wore a hairshirt and tended to lepers like Mother Teresa herself, so I might as well let go of some issues and enjoy my life…
Back to the topic, the whole industry and the “value added” economics/accounting of it is interesting when you realize in no uncertain terms that what we're paying for in the little Hermes bottle is NOT the juice and some “rare” raw materials. Even though I'm a beneficiary (as a consumer and otherwise), it's quite sad, really, what some retail empires are built on in the modern corporate age.
Joe, I think the biggest myth is that you're getting more quality for your money out of a more expensive perfume…I think nothing could be farther from the truth…there's a good chance you're actually paying an even higher premium for a name, or sometimes, for the idea that you're buying something “exclusive”. Hermes, at least, is putting out interesting perfumes, but some of the “luxury” launches really astound me.