500 Million.

500 Million.

This is just a number, but it needs context to have meaning.

Now, imagine throwing away a single bottle of perfume, one you could buy at any airport or store. When the liquid is used up, it’s common to dispose of the bottle. If we are environmentally conscious, we separate the glass and plastic before placing them in our recycling bins.

Period.

Now, imagine 500 million used perfume bottles. This is approximately what is bought, consumed, and disposed of globally.

The number comes from about 50+ b$ yearly sales (growing not below 5% per year), with an average retail price of 100$.

Each year.

This translates to about 80,000 tons of glass and 15,000 tons of plastics (PET, PP, PS).

When we discuss being mindful about our consumer choices, we rarely think about luxury items (or in this case, accessible luxury, since we’re not discussing high end jewelry or yachts).

We consumers leave sustainability challenges to companies, while we tend to reward those that prove their commitment with a premium status.

But with luxury, it’s a different story.

Now for the nerdy stuff part..a warm welcome to the (in)famous Giffen goods.

In microeconomics and consumer theory, a Giffen good is a product that sees increased consumption as its price rises and decreased consumption as its price falls, contradicting the law of demand.

For ordinary goods, a price increase typically leads to a substitution effect where consumers buy less of the expensive good and more of its substitutes; the income effect may either amplify or mitigate this reduced demand, but it never completely negates it for an ordinary good. Conversely, a Giffen good is so strongly an inferior good (more demanded at lower incomes) that the opposing income effect outweighs the substitution effect, resulting in higher demand as the price increases. This is referred to as the Giffen paradox.

In other words: if it costs more, you want to buy it even more. Luxury goods are often Giffen goods.

So here’s a trick: make a Giffen good sustainable, and convince consumers to buy it.

I don’t have a strong opinion, but this topic presents a potential opportunity for marketers and sustainability experts. If an “unnecessary good” like perfume could enter a circular economy model, it might lead to a premium price (due to sustainability) and also create potential spin-offs through accurate positioning.

Would consumers buy this?

My view: yes, if consumers of recycled goods are not the same ones who buy the flagship products. Once more, we have positioning issues and food for marketers.

A few firms have tried to work on sustainable perfumes, but they focused more on secondary packaging and ingredients than on the bulk of the material (see Floral Street, Ffern, Henry Rose).

I think this is due to a lack of skills or vision, as these topics are more prevalent in other industries (automotive, electronics on the forefront). Cross-fertilization could help—using ideas from one sector to provide a second chance and create a nice match in another.

Getting all the actors across the same table in an integrated distribution value chain is the first step.

To be continued…