Gen Z shoppers can't get enough of perfumes. Coty, Estée are benefiting

FRAGRANCES have become a staple for Gen Z shoppers, the fastest-growing buyer category globally, and beauty heavyweights are here for the trend.

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Once dismissed as a luxury indulgence, scents are now a go-to for young consumers seeking to express their style and boost their mood amid economic uncertainty. It is the new "lipstick effect," analysts said, referring to an economic theory that suggests consumers tend to buy small luxury items instead of expensive goods when the economy falters.

Cashing in on the hype are Estée Lauder, L'Oréal, and Coty, owners of fragrance brands such as Le Labo, Tom Ford, Valentino, Yves Saint Laurent, Emporio Armani and Ambre Antique. These companies said in their earnings calls in the past few weeks that they would invest more in their perfume businesses that had become their main sales drivers.

Coty on Wednesday offered an upbeat quarterly forecast, banking on surging demand for its Calvin Klein and Hugo Boss fragrances. Chief Financial Officer Laurent Mercier said the company was going to expand the business.