Phlur, the digitally native fragrance brand that launched in 2015, announced the first closing of its Series A round on Monday, totaling $6 million and bringing its funding to date to $12 million.
The company leading the round is an unexpected one: Symrise, a top global fragrance supplier that’s worked with the likes of DKNY and Carolina Herrera, and is already behind four of Phlur’s six scents.
“This is somewhat unexpected, as it goes against the long-held assumption that fragrance houses would not directly compete with their clients,” said a fragrance brand owner who has previously worked for big brands, speaking on condition of anonymity.
However, investing in fragrance startups is one way suppliers like Symrise can fight back against a “pay to play” system that big brands have forced on them for decades.
Big brands like Ralph Lauren, for example, require all suppliers that simply want to be considered for its newest fragrances to pay what the insider described as a hefty six-figure fee upfront. That expense comes with no guarantees, as each supplier is often up against five or six competitors. “The economics are just making less sense on the supply side.”
Enter the need to look at other channels for success.
Although Symrise has previously invested in beverage and probiotic consumer brands, it’s the company’s first fragrance backing. But Achim Daub, Symrise’s global president of scent and care, sees it instead as an investment in a digital platform that will enable further sales of fragrance across the board.
“The digital revolution will not stop in front of the doorstep of the fragrance industry, so we need to get our feet wet and experiment with different models and approaches,” he said. “The fine fragrance market is in need of disruptive innovation, both in terms of brand positioning, and from a distribution and business model point of view.”
Phlur is well-positioned to lead the charge. The brand has been celebrated for its sampling-centric digital sales model, which is now commonplace among most niche fragrance brands. Its consumers pay $18 for three samples, a cost that is then deducted from the total price ($88) of a full-size order. Roughly 35,000 of these kits have been sold so far, the brand reports.
The fragrances are further brought to life online using special editorial imagery and playlists meant to evoke the mood of each scent.
“They are so in tune with the expectations of the millennial consumer,” said Daub.
Many in the industry believe that this deal between Symrise and Phlur hints at a much larger trend to come, and one that may be mimicked by other fragrance suppliers like IFF and Firmenich.
“Increasingly, all the different elements of our industry are converging in the center, and everyone’s playing in the same sandbox,” said Mortimer Singer, the president of Marvin Traub Associates, a business development company that’s worked with brands like Bloomingdale’s and Oscar de la Renta. “The smart companies are playing from all sides, and the idea that you have to pick a lane is a very old-school way of thinking.”
It shouldn’t be seen as channel conflict, he said, noting that he doubts Symrise will give Phlur preferential treatment: “Those who perceive it that way are being short-sighted [about the industry’s future].” That future, as he sees it, will force all consumer-driven business incumbents to either back or buy the newer contenders to survive.
Daub, for his part, isn’t worried about the supplier’s other relationships, believing it important to push the boundaries of traditional thinking.
“With this investment, we are broadening our footprint in the digital space which will increase our capabilities in terms of consumer understanding and fragrance creation,” he said. “That will benefit all other fragrance brands we have the privilege to work with.”
For Phlur founder Eric Korman, an investment specifically from Symrise (compared to, say, a retailer or larger beauty company) is a home run, increasing not just the brand’s bandwidth but its fragrance know-how, too.
“Creating something unique in a crowded marketplace is not easy, and true creativity only comes with access to the type of artists Symrise has been able to attract,” he said.
Concretely, the funds will help Phlur diversify its paid marketing channels, launch additional scents and scented products (like body care) and support further distribution with third-party retailers. For Symrise, said Daub — who now sits on Phlur’s board — similar investments are in the cards.