How Much Are Celebrities Making From Fragrance Lines?

Jay-Z’s latest big-budget project isn’t an album, a tour, or even a clothing line: It’s a fragrance he’s dubbed “Gold Jay Z.” The rapper reportedly picked the name after combing through hundreds of options, eventually striking inspiration when he said, “This is the shit; it’s gold.” If Gold—which hits stores on Black Friday and ranges from $39 to $70—mimics the success of other celebrity fragrances, that’ll be a pretty fair assessment.

Just take Jay-Z’s wife Beyoncé Knowles’s Heat fragrance, which has been flying off the shelves since its debut in 2010. During the first hour of its release while Knowles was at Macy’s in New York City signing autographs, 72,000 bottles were sold. The department store went on to sell $3 million worth of Heat during its first month of release. And in August, Knowles’ Heat collection was named the current best-selling celebrity fragrance brand worldwide, with $400 million earned at retail globally so far.

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Heat’s success is far from a fluke. In 2012, there were 85 celebrity perfume launches compared to only 10 a decade earlier, and celebrities from Justin Bieber to Sarah Jessica Parker are seriously cashing in. According to Karen Grant, Vice President of Beauty and Senior Global Industry Analyst for NPD Group, celebrity fragrance sales are now pulling in over $1.3 billion a year—a huge chunk of the total $5.2 billion fragrance industry in the US.

History of Celebrity Perfumes
The history of celebrity fragrances dates back almost 100 years, when Elsa Schiaparelli designed a curvy perfume bottle in the 1930s modeled after actress Mae West. In the 1950s, Givenchy sold a scent created for Audrey Hepburn. However, the business of celebrity fragrances really kicked into overdrive when Elizabeth Taylor launched White Diamonds in 1991, in collaboration with Elizabeth Arden. That perfume has since grossed more than $1 billion and counting—in fact, Taylor made more money from her fragrances than all of her film roles combined. Now, it seems that every A, B, and C-lister is aiming to mimic that success.

How Much Stars Are Cashing In
In 2011, Maroon 5 frontman Adam Levine tweeted: “I would like to put an official ban on celebrity fragrances. Punishable by death from this point forward.” Since then, Levine has changed his tune, launching a fragrance line this year. Why? The lure of serious cash is simply too much for most stars to ignore.

“Celebrities see it as a revenue stream without a lot of responsibility, and the manufacturers see it as a revenue stream to help their bottom line,” said Rochelle Bloom, president of the Fragrance Foundation.

Celebrities tend to make between 5 and 10 percent of sales for licensing their name to a scent on top of an upfront payment of $3 million plus. With sales in the hundreds of millions for some of these fragrances—you do the math. Bottles of perfume and cologne typically sell for between $60 and $100, and the cost of making them is usually about 25 percent of retail—so the return is enormous.

And with traditional streams of revenue for stars drying up (album sales, back-end movie deals) the lure of fragrance money is stronger than ever. It’s also a possible revenue stream, should the fragrance be a hit, for stars to continue making money after their heyday has passed.

Take Britney Spears, who catapulted to fame in the late 1990s wearing a schoolgirl outfit and crooning “Hit Me Baby One More Time.” A decade later, in the midst of a public meltdown and waning popularity, she was still raking in money, and it had nothing to do with album sales. As one of the top celebrity perfume endorsers she’s sold over a billion bottles of perfume in the last five years, with global sales of over $1 billion. You better believe that a huge chunk of Spears’ estimated $220 million net-worth stems from her various perfumes.

Who Makes It (And Who Doesn’t)
Not every star celebrity who launches a fragrance is launching a billion dollar empire. Scents from Nicole “Snooki” Polizzi, Kate Walsh, and Denise Richards were quick failures. “Celebrities must be at the peak of their popularity when launching a fragrances,” says Shelly Smyth CEO and co-founder of fragrance distributor SAS & Company. The success of a celebrity scent according to Smyth is the perfect storm of celebrity involvement, celebrity fanbase, and lastly, whether the perfume actually has an appealing smell.

Why has Knowles’ Heat been such a huge hit? The singer allowed her fans to sample Heat at all of her North American shows during her The Mrs. Carter Show World Tour earlier this year. “We always talk about bringing entertainment to retail,” said Marsha Brooks, Vice President of Global Marketing, Fragrances, for Coty Beauty. “With this scent, we brought retail to entertainment.” Simply put, selling perfume at a massive concert tour isn’t a retail channel open to the Chanels and Thierry Muglers of the world, but it is open to Beyoncé.

Paris Hilton’s line of fragrances has had unexpected longevity, despite Hilton’s increasingly low-profile, because Hilton has proved to be a tireless promoter of her line which is valued at $1.5 billion. She released her first fragrance in 2004 and is still tweeting about it to her over 12 million Twitter followers.

Jennifer Aniston meanwhile launched a fragrance in 2010 to lackluster sales. The cause? The actress reportedly didn’t do much to promote it.

Which speaks to the issue of celebrity fragrances that seem disingenuous to consumers. Fragrance expert Marian Bendeth, owner of consultancy Sixth Scents, spoke to AdWeek recently about Ivanka Trump’s newly launched fragrance saying: “If they have the money, anybody can put out a fragrance now, but that detracts from the persona of polish and refinement—things that you aspire to other than fame and money. Audrey Hepburn personified beauty and elegance and class, even today. Givenchy was proud to say: This was her fragrance. But Ivanka—who is she? She’s the female figurehead of Donald Trump, so what are you buying into?”

Despite some naysayers, don’t expect the onslaught of celebrity fragrances to come to a halt anytime soon, particularly because digital marketers are already brainstorming unique ways to make these endorsements even more profitable. It won’t be long before fragrances could be incorporated into computer ports and cable TV boxes—listen to Katy Perry’s latest single while smelling her perfume, for instance—with the hope that more points of contact with consumers will equal even more money.

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