Why are Global Fragrance Makers' Supply Chains at Risk?

The global fragrance market generated a revenue of US$56.6bn in 2024, with an expected Compound Annual Growth Rate (CAGR) of 4.9% between 2025 and 2030. 

However, supply chains around the world have been facing ongoing disruption over the last 10 years, with an incredible boom of volatility in 2025.

The fragrance industry has not been able to avoid this disruption, with tariffs imposed by US President Donald Trump resulting in an industry reshape.

The role of acetophenone

The fragrance market relies heavily on acetophenone, an aromatic ketone which offers a floral-sweet odor. It has functional versatility, chemical stability and an aromatic profile, making it a key fragrance component.

Due to its components, it used in fragrances, personal care and certain foods, providing a slightly bitter aromatic taste and an orange-blossom like scent. In fragrances, it often works as an enhancer to the scent, stabilising the profiles and extending the longevity of top-notes.

As a result, it is used widely, appealing across global markets and growing in valuation. According to Kings Research, in 2024, the global acetophenone market size was valued at US$296.7m, with projections to grow to US$501.9m by 2032. Between 2025 and 2032, the acetophenone market is projected to grow at a CAGR of 6.87%.

The largest acetophenone market is in the Asia-Pacific region. In 2024, the market for this region was valued at US$128.3m and had a share of 43.23%. Expanding chemical and speciality manufacturing growth across the region meant the development of its role in more personal care and fragrance global supply chains. The region's CAGR for 2025-2032 is at 7.51%, according to Kings Research.

Rising consumer demand for long-lasting and high-quality scents is increasing its role in global fragrance manufacturing, but the market is facing volatility from interior and exterior challenges. Operational efficiency and reliable output is impacted by fluctuations in supply, price instability and geopolitical tensions. This, in turn, affects final product pricing, which impacts sales. 

The cost of tariffs

US tariffs have proven disruptive to a range of supply chains around the world and the fragrance industry is no different. Interparfums – which has a portfolio including DKNY, GUESS, Roberto Cavalli, Jimmy Choo, Coach and Lacoste – has operations across the US and France and has been impacted by the addition of tariffs on imported goods. 

Whether the products are made outside of the US or rely on components produced elsewhere, fragrances being sold in the US are subject to this tariff rate on imported goods. 

As a result, the companies are having to make alternative plans, either by moving their manufacturing operations or increasing their product prices. For Interparfums, its price raises came into effect the same day as the tariffs, showing consumers the cause and effect behind the increase. 

President Trump had implemented the increased tariffs as a way to encourage US-based manufacturing and production, ending reliance on other countries and importing. However, Interparfums has moved some of its production away from the US, in order to prevent higher costs and maintain supplier diversity.

“We are in an industry where a lot of components are coming from different places in the world,” says Jean Madar, the CEO and Chairman of Interparfums.

“We think that products that are sold in Europe should also be manufactured in Europe. For instance, if 30% of the Guess business is in Europe, we’ve decided to manufacture some of those products in Europe.”

All supply chain, sustainability, Scope 3 and net zero leaders should attend:

• Procurement and Supply Chain LIVE: The Net Zero Summit - QEII Centre, London, March 4-5
• Procurement and Supply Chain LIVE: The US Summit - Navy Pier, Chicago, April 21-22

Co-located with Sustainability LIVE, these events brings together CSCOs, CSOs and senior decision-makers at a moment when sustainability, supply chains and commercial performance are increasingly interconnected.

Tickets can be booked online today for The Net Zero Summit and The US Summit. Group discounts available.

The impact of inflation

However, global supply chains have also been affected by inflation across the world. While tariffs have certainly had an impact, they are not the sole reason behind sales concerns. Tariffs affect the final price of the product, but inflation is resulting in less product being bought. 

Jeff Lindquist, Managing Director and Partner at Boston Consulting Group, explains: "The average consumer’s grocery basket–household products, groceries, even personal care goods–has risen around 30 to 35% in terms of price, wages have not grown remotely close to that level."

Every single cog within a global supply chain has increased in price over the years, making it more expensive to produce items perfumes and fragrances. To avoid taking company-wide financial hits, brands then have to raise the prices for consumers. As a result, increasing costs result in less sales, especially as the consumer prioritises other products. 

Despite this, Jeff concludes: “Fragrance still has a few years of above market rate growth ahead of it. We are still bullish.”