Commentary: On the scent of a profit

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The Independent Online
Sir Bryan Carsberg, the Director-General of Fair Trading, is pondering a dispute between Superdrug, Kingfisher's chain of health and beauty shops, and 21 of the posh fragrance houses, including Yves St Laurent, Christian Dior and Estee Lauder. Not one of them will supply Superdrug. Instead it relies on 'grey market' for the perfumes it sells at discounts of about 30 per cent.

The manufacturers' reasons vary. YSL and Givenchy, whose selective distribution agreements are EC-approved, say the Superdrug shops do not meet their standards of counter space, lighting, ambience etc. Others refuse to talk to Superdrug until they stop selling unofficial supplies. Others just refuse to talk.

Superdrug says the real reason is its aggressive pricing. Every time Superdrug extends its discount perfumes to a new shop, prices plunge across town - from Boots to John Lewis.

Some magazine publishers are even refusing to take Superdrug advertisements for fear of offending manufacturers.

Fragrance is an odd industry. The customer is buying exclusivity and prestige. The marketing and the glamorous fashion shows are as integral to the product as the droplets of rose petal extract. So too is the place where the product is sold. Superdrug says the stores where it offers perfumes are refitted and more attractive than, say, rackety airline trolleys.

It is a telling argument. The suspicion is growing that the fragrance industry - worth pounds 6.5bn worldwide - is a rip-off. Perhaps Sir Bryan, who is taking longer than expected on the case, is considering referring the whole thing to the Monopolies and Mergers Commission.