Gen Z smell good these days. So good that theyre helping keep perfume sales high even in the face of economic uncertainty, according to the head of one of the worlds biggest cosmetics firms.

The CEO of Coty the French-American beauty conglomerate whose fragrance brands include Marc Jacobs, Gucci, Calvin Klein and Davidoff said on Sunday that despite challenging economic conditions, consumers were continuing to splurge on little luxuries like high-end cologne.

Earlier this month, the company reported strong third-quarter earnings, with 9% net revenue growth from a year earlier. Accelerated demand for premium fragrances, the firm said at the time, had helped drive the increase.

This category is booming in the U.S., Chief Executive CEO Sue Nabi told Yahoo Finance Live. Its 60% above pre-pandemic levels.

She added that the phenomenon was also being seen in Europe and China, which like the U.S. have experienced economic uncertainty over the past year.

People like these little luxuries, Nabi said. At the end of the day, even in an environment where people are constrained this kind of little luxury is something people are not ready to give up on. I believe that this category, and, moreover, the beauty category, is clearly one of the most resilient.

Certain categories of consumers, including Gen Z, men and the Hispanic community were rediscovering luxury fragrances, Nabi said, and driving the strength in sales.

She added that these consumers saw perfume and cologne as a form of escapism, as well as a mood booster and a form of self-expression and noted that they were spritzing their favorite scents more and more often.

[Theyre] spraying more, especially Gen Z, who use fragrances not [only] on their skins, they use fragrances on their clothes and outfits, she told Yahoo. So they spray much more, and its shortening the lifespan of the usage of the product. So thats what explains this boom both in volume and in value behind this market.

Fragrances that had benefited from young consumers love of smelling good included Burberrys Hero, Gucci Flora Gorgeous Jasmie, Chloe Atelier des Fleurs and Boss Bottled, Nabi said.

The lipstick effect

Thanks to the so-called lipstick effect, consumers often double down on purchases of small luxuries like beauty items during economic downturns, preferring instead to cut spending on big-ticket goods like cars and furniture to reduce costs.

Back in 2019, the then-CEO of LOréal, Jean-Paul Agon, told CNBC he was not worried about recessions because of the lipstick effect.

Meanwhile, after the 2008 financial crisis, beauty products became recession-proof as consumers saw the category as a joy factor, according to experts.

Last year, as the U.K. contended with its deepest cost-of-living crisis in decades, British consumers turned to premium beauty brands to maintain a little luxury in their lives while cutting down on other costs.

Ian Baer, a former ad executive and founder of strategic behavioral consultancy Sooth, told Fortune on Tuesday that part of the lipstick effects power came from consumers seeking control when their spending power was squeezed.

When it feels like theres so much in this world we cant predict, people have a tendency to seek control in specific aspects of their lives and personal appearance is always high on that list, he said. I may have no say in the future of my job or the next global health crisis, but if I can control how I look or feel at a certain moment theres a type of emotional salve that comes with it. When everything around us feels chaotic and unpredictable, there is tremendous power in controlling even tiny, predictable outcomes as a way of getting through difficult times.


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