Parsing the Americas fragrance landscape
With the insecurity plaguing businesses all over the world from U.S. President Donald Trump’s on-again-off-again tariffs and the resulting economic uncertainties, Travel Markets Insider sat down with Essence Corp Vice President Antoine Bona to discuss the impact on the perfume and beauty markets in the Americas.
As a leading distributor of fine fragrances and cosmetics for duty free and travel retail across the Americas and Caribbean markets, Essence Corp is experiencing the fallout to the current situation first-hand.
“Overall, there’s a lot of uncertainty from both operators and consumers regarding tariffs, although less so in South America,” said Bona.
“But our customers from North America are feeling it. After some tariffs were implemented in Mexico and Canada at the beginning of the year, we saw a slowdown in those markets. Canada is the most impacted, and we saw a slowdown in Mexico, just like there is in the U.S. domestic market,” observed Bona.
“There’s just a lot of uncertainty, especially regarding price increases. A lot of brands are announcing price increases, but not all have defined their strategy, as everybody would like to see what happens. In the U.S., consumers are aware of tariffs and the potential of price increases. It’s constantly in the news. So, consumers in North America are spending consciously to anticipate for higher costs coming.”
While Essence Corp’s customers are not showing signs of panic, the uncertainty has them reducing inventory coverage affecting sales, said Bona.
“We are seeing a softening in retail. People are still traveling — anybody who has committed to a trip, obviously still goes on the trip—but maybe is spending less.”
The Latin America impact
Bona notes that so far, they are seeing less of an impact in South America, which is showing surprising strength.
“In South America, we’re seeing very strong trends out of Argentina, which is really driving sales. Argentine passengers are driving sales also in sister airports, like Uruguay and Chile. The business on the ferries between Uruguay and Argentina is doing well. The Uruguayan borders that were driven by Argentinians did really well, especially during the summer months. We also see good numbers coming out of Colombia. So overall, it was a strong first quarter for LATAM,” he said.
Bona reports that business is also good in Brazil, which was challenged by a weaker exchange rate.
“The rate has been stable over the last six months, and has even gone down a little. Brazil sales at the airport are doing well. The business at the borders has been a little less strong than at the airports, but with new price increases in the domestic market in Brazil based on the new exchange rates, shoppers are starting to see savings again on the borders, which wasn’t the case earlier,” he explained.
Looking at individual operators and segments, Bona points out London Supply, the major Argentine operator in Foz de Iguazu.
“London Supply, which was closed for quite a bit under Argentina’s strong COVID restrictions, opened extremely strong after the pandemic, stronger than any other Argentinian operator. Then they struggled last year because of the exchange rate fixing, but now their trend is way up again. This is similar to what we see with Avolta Argentina.
“In the first quarter of this year we’re seeing very strong numbers from the ferries, Colonia Express, and Bernabel Trading with Buquebus. Our customers in Chuy, which is a border that’s closest to Punta del Este, and is very Argentinian driven, also did extremely well,” said Bona.
Business in the rest of the Americas is not so positive.
“On the other hand, the business in Mexico is flat, the U.S. is not doing well, and Canada is tanking,” he added.
Threat of higher pricing
Looking ahead, Bona is worried about the impact on pricing.
“We think that there’s a storm of price increases coming this summer, even in markets not directly seeing new tariffs.
“In the U.S., companies are not going to raise prices by 10% — maybe they will increase prices five or six percent — but then they’re going to compensate that loss by raising prices in other markets to make up for the loss in the U.S.
“We have a lot of brands that are telling us that they are going to compensate increased costs by raising prices worldwide. So LATAM is doing well now, but you could see a softening second semester if price increases become unmanageable for consumers.”
Shining brands
Essence Corp is also benefiting in Latin America from its strong portfolio of luxury fragrances, which includes Jimmy Choo, Montblanc, Ferragamo, Rituals, Parfums de Marly, and Versace, among others.
Interparfums reported a very strong year, especially after adding some new brands to the portfolio, said Bona.
“This was the first year that Interparfums added Lacoste to the portfolio. Lacoste is a very strong brand in LATAM. They had also added DKNY, and Ferragamo a few years ago. Overall, Jimmy Choo did extremely well. It’s grown to be Interparfums’ number one brand,” said Bona. “And Euroitalia saw great results from its first Michael Kors fragrances, in addition to the strength of Versace and Moschino.”
This year, Bona says that Essence Corp is focusing on building the brands it has.
“We see sales trends in two opposite ends of the market. Our luxury niche brands – those priced $300 and up, mostly from the independent perfume houses– are extremely strong. And retailers are very focused on promotionally priced offers, in the $29, $39 and $49 range. These price points are driving a lot of sales, and are especially well-executed with the cruise lines, with Dufry and with DFA.”
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New headquarters and logistics center
Essence Corp expects to move into its new headquarters being built in Coral Gables, Florida by October, when the first floor of the 12,000 square foot facility will be ready for occupancy. The second floor should be ready towards the end of the first quarter 2026, said Bona.
The company is also in the midst of obtaining a Foreign Trade Zone license for its warehouse so as to be able to manage bonded and non-bonded goods within the same space.
