Bargains Are Heaven Scent

Sydney Morning Herald

Wednesday April 19, 2006

By Harriet Alexander

Stocking up on fragrances needn't break the bank - it simply depends on where you buy them.

A perfume price war is causing a stink in the industry, but leaving consumers with the smell of success.

A growing number of discount stores is selling the same fragrances for only slightly more, or even cheaper, than they can be bought duty free - and significantly less than they cost at department stores.

Fragrances have been available at low prices since the late 1990s, but the big discount stores are only now beginning to challenge small upstarts such as The Perfume Connection.

Kmart jumped into the market about a month ago with prices up to 40 per cent lower than those of its stablemate Myer.

Discounted perfumes are also for sale at Price Attack, Priceline, Cosmo Cosmetics and online. Target plans to introduce a limited range of popular brands this year.

The Perfume Connection has sold discount perfume for more than a decade, and it persuaded the Government to deregulate the market and allow retailers to order perfumes directly from wholesalers overseas. Previously, department stores and local distributors dominated the market.

Price Attack jumped in eight months ago and says its stock is walking off the shelf. "There's a huge market for imported fragrances - about $200 million worth - and we just wanted a piece of that," says its spokesman, Carmelo Francese.

This has prompted established players to lower their prices.

About 12 months ago Myer negotiated directly with large fragrance houses and now boasts of having taken the lead to make perfumes more affordable for consumers.

Its corporate affairs manager, John Gillman, says prices have dropped by as much as half on brands such as Lauder, Dior and Calvin Klein.

The Australian distributors have also lowered their prices so the discount chains are ordering through them as well as overseas markets.

But there's a catch. Department stores and licensed distributors say discount shoppers now risk buying counterfeit products. These are becoming more sophisticated and many are undetectable judging by the packaging alone. But the perfume does not last as long and, worse, can smell bad on the skin.

They also warn that some genuine fragrances coming into Australia have been bought and sold on the black market by criminals to launder money.

Jean-Marc Carriol, the director of the distribution company Trimex, which distributes most luxury perfumes and is best known for Clarins, says it is not uncommon to find perfumes that have been unwrapped, the manufacturers' tracking codes removed and the bottles repackaged for sale in discount stores.

A recent random sampling of perfume bottles in Australian discount stores by Trimex found 60 per cent had been tampered with.

"Why would you spend $5 to redo packaging just to put the product back on the shelf to look the same?" asks Carriol. "To us that's a clear giveaway that someone has a very big interest in not being caught in the world market."

Neale Joseph, the general manager of cosmetics at David Jones, says his company has had the same experience when doing spot checks at discount stores.

"We deal in genuine products and go through the correct channels," he says.

There is little doubt that more counterfeit perfumes are on the shelves, but how much is unclear.

Eliza McIlwraith, the general manager for Cosmo Cosmetics, which sells Dolce & Gabbana for a third of what it costs at David Jones, is adamant her products are genuine. Her shops had bought perfume from the same overseas wholesalers and sold them here for 15 years.

She says she has never had a complaint: "Of course David Jones will sell [perfumes] for $200, [but] we're not that greedy. Fake perfumes only last 15 minutes."

Price Attack has a third-party audit company overseas to check the perfumes it buys are genuine. The NSW Office of Fair Trading says it receives only one or two reports of counterfeits each year.

But last week Customs announced it had seized 30,000 bottles of fake perfumes in February - worth $2 million - in what it said was the largest detection of illegal fragrances since it began checking in 2001.

Pearce Pharmaceuticals, the importer, had ordered 9840 bottles branded Lancome Miracle, 9984 branded Gucci and 10,000 atomiser-sized bottles labelled Joop! from China.

It has agreed to suspend further shipments until the case is resolved.

The company's managing director, Geoffrey Pearce, says the bottles are not counterfeit because the packaging clearly describes them as imitations of the original brand.

They were destined to be sold in pharmacies or discount stores for prices about $10, he says, not the sums that are usually paid for genuine perfumes in discount stores or elsewhere.

Lawyers for the perfume companies are still to inspect the bottles for possible trademark infringement and decide whether to advise their clients to sue Pearce Pharmaceuticals for loss of profits.

Meanwhile, the Australian Consumers Association advises consumers to be wary about fragrances that have been on the shelf for longer than two years, or out in the sun. Perfumes can suffer from discolouration and evaporation if they are not stored properly.

FUN FACT

There are three common types of fragrance. Perfume is the most concentrated and expensive. Eau de parfum is the next most concentrated, while eau de toilette is the cheapest and least concentrated.

© 2006 Sydney Morning Herald

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