"Spending Over 1 Million Won: MZ Generation Captivated by Niche Perfumes [Youth Report]"

'Small Luxury' Trend Sparks Popularity of Niche Perfumes
Niche Perfumes Established as a Means of Expressing Individuality

Recently, a 'small luxury' trend has been spreading among young people, leading to the rising popularity of premium perfumes known as 'niche perfumes.' Niche perfumes refer to premium fragrances that satisfy the tastes of a select few. Unlike regular perfumes, which are mass-produced in factories using synthetic ingredients, niche perfumes use high-quality raw materials as their main components. The extraction process is also relatively complex, resulting in higher prices compared to regular perfumes. However, high-priced niche perfumes are gaining attention, especially among the MZ generation (Millennials + Generation Z), who do not hesitate to spend on themselves.

Customers are sampling premium perfumes. The photo is not directly related to the article content.

In Recession, 'Perfume' Gains Popularity Over 'Lipstick' ↑

Recently, Shinsegae Duty Free announced that its perfume specialty store 'Perfume Atelier,' opened at Incheon International Airport, is popular among the 25-35 age group (those aged 25 to 35 with economic power). Comparing the average monthly perfume sales at Incheon International Airport duty-free shop between the first half of last year and July to November, purchases by the 25-35 age group increased by more than 30% in the second half compared to the first half.

This phenomenon is related to the 'small luxury' trend. Small luxury refers to seeking satisfaction through relatively affordable indulgences instead of expensive luxury goods. Traditionally, during economic downturns, consumers purchased more affordable lipsticks to enjoy the pleasure of luxury. However, recently, this demand has shifted to niche perfumes. Since the COVID-19 pandemic, demand for color cosmetics has decreased, while the popularity of niche perfumes, which allow individuals to express their unique personalities, has increased, and this preference continues to this day.

Especially, the MZ generation is leading the popularity of niche perfumes. In fact, in February last year, during Valentine's Day, Shinsegae International, which imports and sells niche perfumes, reported that sales related to perfume brands increased by 43% compared to the same period the previous year. During this period, MZ generation customers accounted for 80% of all niche perfume purchases.

Rapid Growth of Related Market Due to Increased Perfume Demand... Expected to Reach 1 Trillion KRW by 2025

[Image provided by Shinsegae International]

Office worker Kim (28) also purchased perfume as a year-end gift for himself last month. The product Kim bought is over 300,000 KRW for a 50ml bottle. He said, "I bought perfume to refresh my mood," adding, "There is a saying that people are remembered by their scent. I thought it would be nice if I could leave a good impression on others, so I bought it without much hesitation."

Niche perfumes are usually priced between 200,000 and 400,000 KRW. Some products even exceed 1 million KRW. However, young people who actively express their unique personalities are willing to invest generously in expensive perfumes to have a scent different from others.

As the demand for perfumes among young people increases, the domestic perfume market is also rapidly growing. Global market research firm Euromonitor reported that the domestic perfume market size grew from about 600 billion KRW in 2019 to approximately 746.9 billion KRW in 2022. It is expected to expand to around 1 trillion KRW by 2025.

Perfume Duty-Free Allowance Raised from 60ml to 100ml Starting This Year

The duty-free area in the departure hall of Incheon International Airport Terminal 1 is crowded with passengers. [Image source=Yonhap News]

Meanwhile, perfume demand is expected to increase further. The duty-free allowance for perfumes has been raised from the previous 60ml to 100ml starting this year.

Until last year, overseas travelers were subject to customs duties and value-added tax if the perfume they brought from abroad exceeded 60ml. However, from January 1, not only large-capacity perfumes of 100ml but also sets such as two 50ml perfumes can be exempted from customs duties. The Ministry of Economy and Finance explained that the Customs Act Enforcement Rules were revised considering the increase in demand for large-capacity perfumes and traveler convenience. This revision is expected to further boost the popularity of premium perfumes.