The insight: Fragrance accounted for 72% of luxury beauty group Puig Brands’ revenues last year, but the company—whose portfolio includes Jean Paul Gaultier, Rabanne, and Carolina Herrera—said growth in the category moderated in the second half.

That slowdown isn’t surprising. After years of outsize gains in the post-pandemic “super cycle,” sales in the category are normalizing, and YoY comparisons are becoming difficult. Even so, the division still grew 6.4% on a like-for-like basis.

The context: While we expect fragrance to continue outpacing the broader US retail market, growth is set to cool. We forecast US fragrance sales will rise 4.6% this year, with gains slowing annually through 2030, when growth reaches 3.9%.

Implications for Puig and other brands: Puig executives acknowledged it is difficult to predict how the recent “super cycle” will normalize, but said structural tailwinds remain intact. They point to rising demand in emerging markets as consumers move into the middle class; stronger engagement among younger shoppers—particularly teenage boys discovering fragrance on TikTok; and growing adoption in markets where fragrance culture was previously underdeveloped.

Fragrance also tends to be sticky: Once consumers incorporate it into their routine, they rarely trade out of the category. Those dynamics underpin Puig’s confidence that it can continue to outpace the broader industry, even if near-term visibility remains limited.

Still, competition is intensifying. Puig’s share of the luxury fragrance market slipped from 11.5% last year to 11.1% this year, which the company attributed to competitors’ aggressive promotional activity—particularly in markets where Puig holds a strong position, such as Latin America.

As the market normalizes, strong execution will matter. Sustaining premium pricing and driving repeat purchase will require sharper innovation, disciplined promotional strategies, and a focused effort to capture younger consumers early and convert occasional users into habitual buyers.