Volatile commodity prices and consolidation are driving the growing maturity of the U.S. fragrance industry, according to a new study released Wednesday by national CPA firm Marcum and Cornell University’s Samuel Curtis Johnson Graduate School of Management.
According to the study, large companies are most affected by commodity prices, as 75 percent of U.S. fragrance companies with $80 million or more in annual revenues strongly agreed that commodity prices “significantly impact” their profit margins. Only 35 percent of small and medium-sized companies with annual revenues between $1 million and $80 million had the same response.
More large U.S. fragrance companies also automate, with 60 percent reporting automation of their total manufacturing volume, while medium-sized companies automate a little over one-third of their volume and small-sized companies reporting 20 percent.
Half of all respondents either strongly agreed or agreed that the majority of growth in the U.S. comes from “taking competition’s market share” and three-quarters agreed or strongly agreed that market growth outside the country comes from “market expansions.”
Surveyed companies with the highest growth—over 6 percent year-over-year—reported generating 20 percent of their overall revenue from the sale of aroma chemical and essential oils while companies with 1 to 2 percent year-over-year-growth generated half as much of their revenue from this product group.
“With heightened pressure on profits, due in large part to fluctuating commodity prices and the move among major players to gain efficiencies through consolidation, the U.S. fragrance industry is showing clear signs of maturity,” said Kevin McGann, partner at Marcum and the firm’s fragrance industry practice leader, in a statement. “In launching this annual survey, we are looking to provide U.S. fragrance companies with the industry insight and guidance they need to help grow their businesses in a challenging economic environment.”
The study will be published as a three-part series in Perfumer & Flavorist magazine and is based on a survey of 70 companies conducted by Samuel Curtis Johnson School student researchers.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access