CEO of French fragrance group Interparfums, Philippe Bénacin discusses the company's sourcing strategy and how he views the market's current supply chain challenges. Read our exclusive interview published in the Spring 2022 issue of our sister magazine Formes de Luxe.
Interparfums saw strong growth in 2021 compared with 2019 and 2020*, despite tensions related to supply chain and costs. Can you tell us about these difficulties?
Tensions in the supply chain arise from the fact that our suppliers are themselves poorly supplied, resulting in inconsistent deliveries. For one order of 50,000 caps, for example, we only received 35,000. They divide them up so that each of their clients receives a certain amount. And that’s what we do with our distributors. There’s no other way. We’ve been experiencing these difficulties since late May 2021. Before that, we had no problem.
What do you think is causing it?
At the end of summer 2020, we felt that business was picking up after a complicated period. So we increased our stocks in the first half of 2021. We think that during the same period, our competitors were less proactive because they were waiting for more visibility on the situation. But in June and July, the world woke up and so did our competitors! And this overwhelmed the supply chain. In this regard, it seems that we will continue to struggle in 2022. Demand is strong, which is good, but supply is limited and lagging behind demand. Add to this the increased cost of raw materials for energy and packaging, which has tripled or even quintupled, or even much more for specific parts. New increases have been announced for April [editor’s note, 2022].
Could this situation motivate the group to reorganize factory locations?
We don’t envision relocating. We source 80% of our supplies from Europe, with France accounting for more than half, and we like it that way. For Coach, which is American, its perfumes are made in France. We go where the best skills are to be found. Zamak parts produced in China account for a portion of the 20% of supplies sourced outside of Europe. This ratio works well for us. We wouldn’t ease our supply chain by relocating, quite the contrary.
Could you transfer manufacturing of packaging to the US or China, countries where your sales grew significantly in 2021?
We don’t intend to. France is the best in many areas of packaging, including glass and finishing. Even the United States can’t guarantee the same level of quality.
*Interparfums’ 2021 revenue is €560.8m, up 52.7% compared to 2020 and 15.8% compared to 2019.