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IRF RISING STAR CHALLENGE 2014

WEAR. LOVE. SPREAD!

Team - Excelsior INDIAN SCHOOL OF BUSINESS

Almeen Arif Swati Gulati Viny Nigam

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Contents

Executive Summary ...................................................................................................................... 2

Introduction ........................................................................................................................................ 3

The House of Vincenzo ............................................................................................................... 7

Vincenzo India .................................................................................................................................. 9

Ittarati ................................................................................................................................................. 12

Competitive Strategy .................................................................................................................. 14

Strategy: Bringing attar to the mainstream perfume market ................................... 20

Competitive Advantage ............................................................................................................. 21

Social Impact ................................................................................................................................. 25

Business Model ............................................................................................................................ 32

Supply Chain and Operations ................................................................................................ 33

Market Demand – Ittarati ......................................................................................................... 40

Marketing Strategy ...................................................................................................................... 42

Segmentation-Targeting-Positioning .................................................................................. 43

Financials ........................................................................................................................................ 52

Expansion Strategy..................................................................................................................... 63

References ..................................................................................................................................... 65

Executive Summary

This report studies in detail, the effects of social impact initiatives undertaken

by the high-end luxury brands on their sales in the Indian consumer market.

The benefits of the social impact campaigns are quantized in form of

incremental revenue due to change in customer preference.

For this project we have assumed a luxury house of brands ‘Vincenzo India’, a

wholly independent subsidiary of House of Vincenzo, Italy. Vincenzo India has

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been operating in India for nearly a decade and is in the business of high-end

luxury products like perfumes, apparel and accessories. It is popular among

the rich and highly educated neo-rich population.

Lately, due to opening up of Indian economy and relaxing of regulations on

luxury goods a lot of foreign players have entered the Indian luxury market

and this is has put pressure on Vincenzo India to create a point of

differentiation for itself. ‘Vincenzo’ is looking to establish a competitive

advantage over its rivals, who operate with similar product lines in similar

price ranges, by occupying the mind share of today’s consumer who is

increasingly becoming socially conscious and concerned.

To this end Vincenzo India has decided to support the declining ‘attar’ industry

of Kannauj by introducing a new line of product called ‘Ittarati’ which

embodies the spirit of India with its quintessential Indian origin and fragrance.

With Ittarati, Vincenzo India looks to impact thousands of talented artisans,

farmers and bottlers whose connection to ‘attar’ making goes back to Mughal

era and beyond.

As part of this business plan, we present how Vincenzo India is able to

influence consumer preference by supporting the dying ‘attar’ industry and

how it also is able to start a profitable line of product that has never been

done before by any luxury house of brands in India.

Introduction

India is a land of fragrances and the science of perfumery and fragrances has

evolved in this land over centuries since ancient time. The earliest western

historical records date this tradition to as old as 2000 years back when the

Greek text Periplus noted the export of Sandalwood in the first century A.D.

Sandalwood is grown in the South Western region of India and has been

historically used in the making of scent and perfumes for at least 5000 years

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as noted in ancient Hindu texts and thus it goes back to Indus Valley

civilization. In the 6th century A.D. when the Arab traders set foot in India they

became one of the major importers of Sandalwood or Tzandana as they

referred it to.

A 2 B.C. perfumer’s stamp ‘Gandhikanama’ was found in Kaushambi (in Uttar

Pradesh), which suggests that the business was perfumes existed way back

in 2 B.C. in the northern region. During the reigns of Mughals the trade of

perfumery evolved and flourished in India and Kannauj became the center of

the ‘attar revolution’. It’s proximity to Agra and the fertile doab region helped in

establishing it as an industrial center and specifically as the mecca of

fragrances. Attar making took off with the eager involvement of the royalty,

especially the princess Noor Jehan who devised several recipes of attar and

made them popular. Several aromatic flowers and spices like Musk, henna,

camphor, sandalwood, oud, saffron were imported from all over India, Central

Asia and other parts of the world. This industry supported numerous artisans,

farmers, bottlers and traders fetching high returns for centuries.

This has now changed. Indian attar industry is on the verge of extinction, with

almost 90% of the attar makers going bust or shifting to supplying fragrances

to alternate markets like Gutkha and Pan Masala. The spiraling costs of raw

materials like sandalwood and unavailability of skilled labor, the existing

factories are under pressure to diversify or just shut shop bringing an end to a

glorious Indian tradition.

Vincenzo India sees an opportunity in this where it can make a large social

impact and also harness the industry resources to start a totally new category

in its line of offerings. It aims to make it a win-win situation for all parties

involved.

Understanding the Indian Perfume Market

‘Fragrances are a big business if only you could smell’ – Anonymous.

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It is true and we believe this, looking at the staggering INR 7000 Crore Indian

perfume market, which is growing at 40% per annum. ‘Others’ capture the

biggest pie of the cake or small time players at 52.9 % and Unilever controls

around 40.1% of this market. The rest 7% of it is dominated by foreign luxury

brands who have capitalized on the increasing purchasing power of the

prosperous middle class in India.

The major categories of perfumes sold in the Indian market include:

Indigenous Perfumes: Around 50% of the perfumes sold in the Indian market

are accounted by the indigenous fragrances sold in the form of perfumes in

standard denominations of 100 ml and 200 ml. These are generally non-

branded perfumes and use cheap and sub-standard ingredients that make

them affordable and also popular among the lower middle class and middle

class. Most of the indigenous perfumes are produced by small time cosmetics

manufacturers who supply to local ‘kirana’ shops and departmental stores.

Ayurvedic essential Oils: These fragrance products are generally produced by

players like Himalaya, Forest Essentials and independent ayurvedic products

makers. The ingredients are mainly herbal and are derived from natural

products. The main target segment is the tourists and middle class buyers

across India. Some of these items have also been made into luxury toiletries,

soaps and incensed candles to name a few.

Indegenous Perfumes.

Ayurvedic essential

oils. Attar.

Branded Perfumes.

Foreign Luxury Brands.

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Attar: It is the quintessential Indian perfume that is known to be spirit and

chemical free and is made from natural ingredients like rose, sandalwood,

agar wood, spices and Oudh. It has a huge market among the traditional

Muslim population for it is alcohol free. It is also a popular purchase among

the visiting tourists. Attar is also exported to China, Middle East and Europe.

Branded Perfumes: In this category the biggest player is HUL (Hindustan

Unilever), which has a market share of almost 40.1 % and has the highest

penetration that even reaches the rural markets. They have a range of

fragrance products that span from cheap to high cost options and are

available through varied distribution centers such as departmental stores,

malls, hypermarkets etc.

Foreign Luxury Brands: This category is the fastest growing category with a

cumulative turnover of INR 600-700 Crores per year with a growth rate of 25%

year on year. The leading brands are Armani, Azzaro and Burberry closely

contested by other leading Luxury brands mainly from Italy, France and

England. These players are new to the Indian market but are rapidly

expanding their footprints across the country with their distribution channels in

7 Star hotels, Hybrid malls and exclusive stores. They charge high premiums

on their products, which are mainly designer perfumes with a price range from

INR 2000 to INR 500,000. Vincenzo is a player among the Luxury perfume

makers with an annual turnover of INR 100 Crores.

Salient Features of the Indian Perfume Market:

Around 60% of the Indian perfume market is dominated by male

fragrance products.

The deodorant and roll-on market is growing at 55% CAGR.

Unorganized sector accounts for nearly 50% of the Indian perfume

market.

Teenagers are a significant target segment as they spend between INR

500-1200 only on fragrance products.

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Even though the sale of perfumes is not seasonal, most of the sales

occur between the warm months of March and September due to

increase in fragrance product usage during summers to counter body

odor.

Leading perfume brands: Armani, Azzaro, Burberry, Chanel, CK1,

Vincenzo and Escada.

Leading deodorants: Park Avenue, Gillette, Brute, Nivea, and Set Wet

etc.

The increase in demand is due to Tier I and II cities.

Attar, the traditional Indian perfume is largely under decline with the

costs of raw materials going through the roof, especially the Indian

Sandalwood, which now costs around INR 70,000 per Kg.

There has been a considerable shift of consumer focus towards the

herbal and chemical free cosmetic products, which has also

percolated, to perfumes and fragrance products and players like Forest

Essentials and Fab India have tried to gain the first mover advantage

by collaborating with small time producers of fragrances.

The House of Vincenzo

Luxury. Comfort. High-end fashion. These three have been the basis of

Vincenzo’s products since the company’s foundation. Vincenzo has created

intricate, class-apart luxury goods, each with a flavor of tradition in it. Its

closeness to tradition along with the authentic work of its artisans has brought

some of the most intricate contemporary pieces to the world luxury market.

The exemplary sense of style within each and every member of the Vincenzo

team is a key factor in its high growth in a short period of time since its

inception in 1971. Today, the House of Vincenzo has made a mark around the

world in apparels, fragrances, shoes and leather goods. Vincenzo Group

operates in more than 30 countries currently including US, France, Italy,

Australia, New Zealand, India.

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Vincenzo’s Ideology

The company’s vision is “to be synonymous with the art of luxury

fashion while delivering a sense of culture in each piece of creativity.”

Vincenzo has always aimed at being a responsible corporate. In the

past, it has achieved certifications to improve its environmental footprint.

It expects to achieve similar and higher goals in the future as well.

Vincenzo’s Luxury products

Customer – Centric Model

One of the differentiating factors that Vincenzo has built for itself in creating its

brands is giving the customers maximum power. Vincenzo leaves no room for

errors when it comes to its customers. The first thing that the company

teaches each new employee is to treat customers like their “bosses”. Each

flagship store includes royal dressing rooms, which a 5 star catering service

for customers. A personal assistant helps you choose the right collection that

suits your personal style. In case of unavailability of a particular size or color,

you are personally intimated by the store’s manager about its arrival and your

next expected visit is kept noted.

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In one of the recent surveys done by a leading fashion magazine, Vincenzo

was the number one in customer satisfaction and hospitality. It quoted one of

the customers saying, “Vincenzo has taken luxury to another level. Just being

at the store makes me feel special.”

Vincenzo India

Vincenzo India has been one of the key subsidiaries of the Vincenzo group. It

is a independent subsidiary of Vincenzo and takes its financial and strategic

decisions on its own without much intervention from the parent company in

Italy. One important advantage of this setup is that the Managers in India

have higher flexibility and risk taking ability as they are more aware of local

market conditions and consumer demands. Vincenzo India was launched

keeping in mind the high demand of luxury goods in the emerging markets in

the past two decades. The rising income of the Indian middle class along with

the IT boom has created immense disposable wealth especially in the hands

of the dynamic young Indians and that makes it an attractive market for luxury

goods. Also, other countries likes China, Brazil etc. already had an

established luxury market where Vincenzo would have faced high competition

and further growth might not have been profitable.

The Birth

Vincenzo India was launched in 2000. It opened its first flagship stores in

Delhi and Mumbai in 2000. Vincenzo India was located in the most

sophisticated localities in the two cities and attracted large number of footfalls

in those areas. By 2005, the concept of hybrid luxury malls had come into

picture and it was evident that the location of store was not everything. It

meant that it was far more important to have a store where the largest

numbers of potential customers are likely to be browsing. That period saw

large number of luxury brands moving into these hybrid malls coming out of

the confines of the 5-Star Hotels.

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Vincenzo India’s growth model over the years

The recent turnover of the company has been close to 100 crore INR and has

seen a growth rate of 25% per year. Vincenzo India caters to a very niche

segment of people in India with its major customers situated in the the prime

cities of the country. In Delhi, Vincenzo shares space with the leaders in

luxury goods situated in one of the major luxury malls in the country. Vincenzo

currently has retail locations in the following cities.

House of Vincenzo’s retail locations in India

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Of all the cities, Delhi and Mumbai have the highest sales for House of

Vincenzo. Vincenzo India currently caters to the luxury segment with the

following products and services:

Apparels

Fragrances

Leather Goods

Shoes

Accessories

Vincenzo ‘s apparels make up for the most amount of revenue for the brand in

India. In fact, they compete with some of the leading brands in the luxury

industry present in India. In the Apparels sector Vincenzo covers both men

and women wear. But it is the fast collection of the women’s wear that have

made the apparel section such a success. Fragrances also form a big chunk

of the pie but not as much as the apparels. Vincenzo’s worldwide launch of

“Mirage” created a buzz in the worldwide fragrance industry. Leather goods

consist of Italian leather handbags – usually customized for the loyal clientele

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in India. This is another unique aspect of Vincenzo’s market strategy. It treats

its customers like kings and queens. Accessories consist of various luxury

items ranging from scarves and sunglasses to stone studded pens and

broaches.

Vincenzo looks forward to growth opportunities in India by increasing its client

base. Also, Vincenzo aims to tap in the legacy of the rich Indian culture and

craftsmanship to tighten its claws in the Indian market.

Ittarati

House of Vincenzo’s fragrance line covers as much as 20% of the company’s

revenues. With the launch of “Mirage” last year, the perfume sales in India

have increased nearly 30%. The high demand in the fragrance industry is the

right opportunity for Vincenzo to launch a product that magnifies the

association of the people to their heritage. “Ittarati” – Wear. Love. Spread!

Derived from the Arabic word “attar”, Ittarati would help us achieve just the

Apparels, 40%

Fragrances, 20%

Leather goods, 15%

Shoes, 25%

Vincenzo India's product segmentation

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same. It is the right mix of the heritage, aroma, glamour and but, of course,

the essence of luxury. Ittarati not only has a potential to win the Indian

fragrance market but also revolutionize the world of fragrance with its unique

aroma that combines both the strong attar essence and the subtlety of a niche

perfume. This will arguably be the first time when a super luxury lifestyle

brand in India will adopt the ‘attar’ and introduce a completely Indian product

line that represents the rich Indian heritage and creates a place it deserves in

the high end perfume market in India and abroad. Apart from the exclusive

and unmatched fragrance, Vincenzo will also strive to preserve the art of

making attar through ‘Ittarati’. ‘Ittarati’ will be manufactured in the perfume city

of Kannauj, which has had a rich tradition of perfumery since time

immemorial. The bottles will be sourced from the traditional ‘attar’ bottle

makers from Farrukhabad in UP and everything will come together in

Vincenzo India’s testing and packaging facility that will ensure the quality of

attar sourced and then bottle and package ‘Ittarati’ under stringent quality

checks meeting Vincenzo’s world renowned standards.

In a report called -“Small Ain’t Beautiful — Point of View on India Luxury

Market”, presented by an executive of Bain & Company, he mentioned India’s

traditional luxury market — which includes personal luxury goods such as

watches, jewelry, apparel, accessories, fragrances and cosmetics as well as

non-personal items such hotels, cars, boats, yachts, furniture and fine dining

— is valued at about US$6 billion and growing at 15% to 20% a year.

Of this, the personal luxury goods segment is valued at US$1.5 billion.

The Indian fragrances market had total revenues of $227.4 million in 2012,

representing a CAGR of 19.4% between 2008 and 2012. 2012 saw a huge

increase in the number of units consumed.

It was also observed that the youth (people under the age of 30) were the key

drivers of the demand in the country. By the end of 2017, although the

performance of the market is forecast to decelerate, with an anticipated

CAGR of 17.6% for the five-year period 2012 – 2017, the market value would

almost to be at $510.6 million by then.

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A first step to House of Vincenzo’s vision of being one of the premium socially

responsible luxury brands is the plan to be involved with the Indian Attar

industry.

The industry that is very close to being dead can witness an entirely new

direction with Ittarati. Hundreds of craftsmen can find employment with Ittarati

being manufactured in India. The expertise of our team members put in the

making of a luxury product would help us achieve a hybrid between the legacy

of the yesteryears and the sophistication of the modern world. Ittarati being a

product targeted to a niche segment would bring us premium margins. This

would just add up to the upliftment of the Indian artisans and craftsmen.

We look at Ittarati as one of the first luxury fragrances ever produced in India.

It is not only a medium for us to enter into the Indian luxury market with a

completely different and social impact but also, it is the product that would

bring India as one of the finest luxury fragrance producers in the world.

Competitive Strategy

Luxury Perfumes in India - Industry Analysis

“Fragrances are a part of the DNA of India; consumers love perfumes and

compared to other countries, they do know what a good perfume is.”

- Marc Jourdan-Gassin, VP, Fine Fragrance International, Firmenich.

India is no stranger to luxury. The stories of the luxurious and lavish lifestyle

of erstwhile Indian royalty and business houses have inspired and continue to

inspire countless Indians to appreciate and aspire for that lifestyle. A recent

luxury brand survey conducted by Nielsen Co. has ranked India third after

Greece and Hong Kong in the list of most brand-conscious countries in the

world. More than 35% of Indian respondents said they spend money on luxury

brands. The advent of luxury brands in the Indian retail scene has opened

new avenues for Indians aspiring to live the “lux-life”. Brands like House of

Vincenzo enjoy great popularity amongst the luxury brand conscious

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consumer, with customers vying to buy the latest trends set by the Italian

business house.

The growing economy has empowered the middle class of India with a higher

purchasing power, and the love of luxury innate in all Indians has laid fruit in

the rise of the Indian luxury market. Estimated at $5.8 billion (nearly Rs

28,500 crore), this market has shown a growth of more than 15% in the past

three years. Perfumes as luxury accessory buys are one of the most popular

must-have items on the Indian buyers' list. According to industry estimates,

the size of the total domestic luxury perfume market is around Rs 600-700

crores and is growing at a rate of 20-25 % year-on-year.

The domestic luxury market is mainly dominated by international luxury

brands, with no Indian players in the scene. In the market where brands

command premium over price and with similar variety on offer, brands need to

look for differentiating factors, which make their product stand out from the

competition.

Industry Analysis

House of Vincenzo plans to launch Ittarati- a line of ultra luxury perfumes

inspired by Attar/Ittar. As Vincenzo India plans to launch attar into the

mainstream luxury perfume market, following are the various industry

analyses:

1) Analyzing the Indian luxury perfume industry: This analysis will focus

on the Indian luxury perfume industry in general

2) Analyzing the Attar industry in India: This analysis will focus specifically

on the Attar industry in India

1) Analyzing the Indian luxury perfume industry

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The five competitive forces influence profitability in the Indian luxury perfume

industry:

Threat of New Entrants: As the luxury market space in India is booming, more

and more luxury brands look to occupy mind space in the minds of the Indian

customer. Each of the competitors has an established set of suppliers abroad

and it is easy for one and all on capitalize on that. All the luxury brands

currently operate similar distribution networks. Customer loyalty is low as

even though customers focus on buying a luxury brand, there is no clear

preference in choosing one luxury brand over the other. Rather, it intangibles

like the novelty and fragrance of the perfume, and tangibles like the make and

shape of the bottle that determine the sale of the perfume. Hence the threat of

new entrants is high.

The power of suppliers: As most of the manufacturing of the perfumes for the

Indian market is done collectively by the luxury brands themselves, these

brands leverage their existing supplier base to source materials for perfumes.

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There is no separate supply network dedicated specifically to the Indian

perfume market. Hence the suppliers hold less to no power in the Indian

luxury perfume industry.

The power of buyers: In the Indian luxury perfume space, we consider the

following buyers:

The consumer: Even the though the Indian consumer is predominantly price

sensitive, when buying luxury perfumes they willingly pay the premium. Also

there are low switching costs between perfumes of different brands. However,

none of these factors raise the power of the buyer and they cannot negotiate

leverage on the price of a luxury perfume. These consumers are not bulk

purchasers; they cannot significantly affect the products costs and capacity,

and therefore its price.

The intermediate customers: This refers to the departmental chains and retail

shop owners who purchase perfumes from the luxury brands to stock and sell

in their retail spaces. These customers buy in bulk and display the latest line

of perfumes. They also influence the actual sale by offering perfume trials.

These intermediate customers negotiate contracts with the luxury houses and

earn a distribution margin, however in the overall scheme of things they do

not exert much power over the luxury brands prices in the Indian market as

they are just a small arm of a big seller network of the international brands

Hence we conclude that the power of buyers is low.

The threat of substitutes: One possible substitute for international luxury

perfumes could have been the Indian perfume brands, but as the Indian

perfume scene is unorganized and has no luxury players in the fray, this

threat is minimal. Also there is no substitute to perfumes as a consumer

good.

Rivalry among existing competitors: The intensity of rivalry among

competitors is high as they are many players in the industry and all of them

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have substantial size and power. Each of these luxury brands focuses just as

much on brand equity and on leveraging that. As the Indian luxury perfume

industry is booming, each of the players operates on similar strategy of brand

premium. Hence there is high rivalry among competitors.

From the analysis of the Indian luxury perfume industry, we conclude that the

industry is attractive and profitable, and brand extension in this industry would

be a sound idea. House of Vincenzo already has a presence in this industry

through its Indian arm Vincenzo India and will leverage that to launch Ittarati

in the Indian luxury perfume space.

2) Analyzing the Attar industry in India

The five competitive forces influence profitability in the Attar industry of India:

Threat of New Entrants: The attar industry in India is largely an unorganized

industry. Due to high cost of raw materials like sandalwood oil, and low

revenue numbers of the existing players, threat of entry by local players is

currently low. However, international brands can enter the attar industry but

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currently only House of Vincenzo is exploring that option. Hence we can say

that threat of new entrants is low.

The power of suppliers: Supplier power is very high in the case of attar

industry as the procurement of sandalwood oil is long drawn out and

expensive process. There is no real substitute to sandalwood oil, if you want

to make premium, high quality attar. There are strict regulations that govern

sandalwood trade. Hence the power of sandalwood suppliers is high.

The power of buyers: As there is no organized retail of attar, there is more

supply than demand of attar. Furthermore, there are no brands, which ensure

quality of the attar that the customer buys. All these factors increase the

reluctance of the buyer to buy expensive attar and buyers succeed in

negotiating effective prices for the same. Hence we can say that the power of

buyer is high.

The threat of substitutes: Perfumes can be effective substitutes of attar. Even

though there are several factors that clearly distinguish perfumes from attars

(like alcohol content), the demand for attars is less and people can settle for

perfumes in absence of good quality attar. Hence we conclude that the threat

of substitutes is high.

Rivalry among existing competitors: There is a lot of rivalry between existing

attar manufacturers as the demand is low and operating costs are very high,

hence making a profit is difficult. Hence the rivalry among existing customers

is high.

Hence we conclude that the attar industry, as it stands in India today, is

unattractive and does not appear to be very profitable.

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Strategy: Bringing attar to the mainstream perfume

market

From the industry analysis of the Indian luxury perfume industry and the attar

industry in India, we realize that where the Indian luxury perfume industry is

attractive with opportunity for growth, the attar industry is not so attractive.

Historically in India, attars have been a symbol of luxury and royalty. Even

now in Middle Eastern countries attar represents high-end luxury. But studies

suggest that attar making in India is a dying art. The House of Vincenzo aims

to revive this ageless art of making luxury fragrances and bring it to the

mainstream perfume market, thereby converting an entire parallel industry

into a supplier channel.

Strategic Gameboard

In bringing attars to the mainstream perfume market Vincenzo India will bring

about a new game strategy, focusing on making perfumes with a difference,

which in turn will largely impact the society. The impact ranges from providing

employment to numerous artisans to introducing a supply chain format in a

completely unorganized market.

With Ittarati, Vincenzo India will focus on introducing this unique line of hand

made, traditional luxury fragrances into a small market segment. This will later

be expanded and diversified internationally in a big way.

Selective Across-the-board

Same Game

New Game

Ittarati

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With their selective, new game strategy, Vincenzo India hopes to:

1) Introduce a novel variety of perfumes, unseen by the consumers

anytime before.

2) Create new and/or different customers for branded luxury attars

3) Successfully boost a dying attar industry by reinventing it as a supplier

to mainstream luxury perfume industry.

4) Bring about a social impact through employment and standardization,

and capitalize on being a socially responsible business house.

5) Establish longer-term advantage and aim for higher profits due to

product differentiation in a competitive market

Competitive Advantage

With Ittarati, House of Vincenzo hopes to achieve the following competitive

advantage:

1. Improve ‘brand equity’ by establishing Vincenzo as a socially

responsible house of products that places great importance in

its values of inclusive growth by enriching the lives of the people

involved in the lower end of value chain.

2. Capitalize on a 5000-year-old premium, luxury tradition that

completely aligns with the company’s strategy of differentiating

itself along dimensions valued by customers (luxury, premium

tag) to command a higher price.

3. Gain a first mover’s advantage in attaching a premium brand

name (and consequently a sense of product authenticity and

quality) to a currently unbranded Attar industry, thereby

erecting a high ‘barrier to entry’ for competitors by tapping into the

40000+ strong network of artisans, suppliers and manufacturers

4. Establish a competitive advantage through a ‘ differentiation

strategy’ by expanding into a line of Attar based products.

Projected market potential of the fragrance industry globally is

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$45 billion in 2018 ($510.6 million in India) and that of the attar

industry is $250 million in India itself. Premium attars sell at prices

starting from Rs10000, well into lakhs of rupees. Reports suggest

an increasing demand for floral and exotic fragrances in India and

abroad

5. Carve a niche for itself in the natural products market, as Attar is

100% natural, chemical and alcohol free perfumes

6. Establish an organized supply chain in the currently

unorganized attar industry and hope to achieve dominion over it,

thereby ensuring longer-term competitive advantage.

7. Rejuvenate the dying art of attar making by changing the

business model by converting the manufacturers of attar in the

attar industry into the suppliers of attar in the luxury perfume

industry.

8. Introduce standardization and a strict quality control into the

attar making process, thereby reinventing the Indian luxury

perfume market. Currently one of the chief challenges of

manufacturing perfumes in India is a lack of quality control

regulations. This prevents us from establishing a foothold in the

international market.

9. Revive the complementary industry of glass making by

providing intricate glass designs and sourcing glass bottles from

glass making artisans.

10. Be the first to manufacture high-end luxury products

manufactured in India for the Indian market.

Vincenzo India Value Chain for Ittarati

Primary Activities

1) Inbound Logistics

Vincenzo India will set up onsite quality checks and once the raw

materials meet the quality benchmark they would be shipped to the

factory warehouse, from where the raw materials would be distributed

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to the attar makers. Similarly, sandalwood oil sourced from Australia

will be procured and stored at warehouse and then distributed

2) Operations

Operations activities will involve a high degree of standardization and

quality control to ensure that the quality benchmarks set by House of

Vincenzo are met. Attar and glass bottles will be sourced from attar

makers and glass bottlers respectively and the final product will be

packaged at the factory

3) Outbound Logistics

Once the attars are packaged they would be stocked and the

distributed to the various retailers

Support Activities

1) Firm’s structure, strategy and leadership:

Ittarati will be managed by Vincenzo India, the Indian arm of the House

of Vincenzo. Vincenzo India is an independent subsidiary of House of

Vincenzo (an Italian luxury giant) with a turnover of over 100 crore and

has been in operation for more than 10 years. Vincenzo India’s current

strategy is to come up with an innovation product, which would bring

about a huge social impact that would differentiate House of Vincenzo

from its counterparts.

2) Human Resource Management:

Apart from the regular office setup, Vincenzo India would contract a

team of master perfumers to analyze and customize the attars

corresponding to the current market trends. Along with perfumers

would employ the following staff –

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1) On site quality control specialists-These would operate out of the

raw material supplier site where they would ensure the quality of the

raw materials being shipped.

2) Factory Quality Control Specialists – They would monitor and check

the quality of the incoming attar and be specialists in the testing

facilities set up by Vincenzo India at the factory site.

3) Labor Staff for bottling, packaging and branding: They would

operate the automated setup of bottling attar, packaging and

branding into the final product

4) Glass art designers: They would be experts in the field of designing

innovative glass perfume bottles inspired by Mughal art.

5) Glass Testing Specialists: They would be experts in testing the final

quality of the glass bottles that Vincenzo India would have received

from the glass manufacturers, ensuring that the benchmarks set by

the House of Vincenzo are met.

6) Liaison Staff: They would ensure smooth operations among the

factory, Vincenzo India, raw material suppliers, glass bottle

suppliers and attar makers.

3) Technical Development:

A state-of-the-art testing facility for attars and glass bottles would be

set up at the bottling and packaging factory. The bottling, packaging

and branding division will be completely automated.

4) Procurement:

Vincenzo India will procure raw materials for the attar makers and

glass manufacturers. Vincenzo India will keep an inventory of

packaging and branding material for Ittarati.

To summarize, Vincenzo India aims to add value to its operations by:

1) Procuring raw materials on behalf of the attar makers thereby creating

economies of scale and reducing threat of suppliers to attar makers

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2) Ensuring quality control mechanisms and standardization of

intermediate and final product.

3) Automating the process of bottling and packaging.

4) Procuring cheap sandalwood oil from Australia and Africa, thereby

obtaining a cost savings of 50-75%

5) Setting up an organized supply chain management system and thereby

setting up barriers to entry among new players and establishing a first

movers advantage.

Social Impact

Saving Kannauj

‘Kyun Meri Chandni Mein Phirta Hai Tu Pareshan

Khamosh Soorat-e-Gul, Manind-e-Bu Pareshan’ - Iqbal

[Why do you roam about in my moonlight, so worried,

Silent as a flower, drifting like perfume?]

These simple couplet by Iqbal encapsulates the present situation of the

erstwhile perfume capital of India – Kannauj. Once a jewel in the Mughal

kingdom , Kannauj was a centre of innovation and culture with its medieval

distilleries producing the most exotic fragrances , called ‘Ittar’ or ‘Attar’ for the

elite and nobility of the great Mughals. Begum Noor Jehan herself researched

and introduced some of the best practices of perfumery in what can be called

as the sleepy town’s Golden Age.

Now it’s just a trace of the glory that remains, 600 out of 700 distilleries from

the 90s have shut shop, workers and artisans have moved onto take petty

jobs or just migrated to the bigger cities for want of a consistent livelihood,

and those still hanging in there are finding it hard to sustain. The onslaught of

‘cheaper’ paraffin based attar and increasing raw material costs along with the

waning charm of Indian traditional perfumery among the growing ‘young’

population of India is too much to handle for the small time players of

Kannauj.

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The reasons for such a decline of Kannauj’s Attar industry are listed as

follows:

Increasing costs of essential ‘Raw Material’ like agar-wood,

sandalwood etc has shot up the manufacturing costs of Attar. It is

tough for small players in this largely unorganized sector to source the

original ingredients.

Availability of cheaper but sub-standard substitutes like paraffin based

base has brought down the quality and now they pose a threat to the

real attar makers.

The traditional customer base in the Indian market has been the

traditional and the old connoisseurs, with time this number has

dwindled. The increasing costs have pushed attar out of reach of its

traditional customer base.

As per a recent study by ASSOCHAM, the young prefer branded

perfumes and are ready to pay the big bucks for luxe brands like

Armani, Azzaro and Burberry which also are the top selling perfume

brands in India. This is boosted by a trend of male grooming in urban

India, as per the report.

Vincenzo’s Role

As a luxury brand , Vincenzo can popularize the use of ‘attar’ among

the urban and neo rich with its alternate line of perfumes ‘Ittarati’.

Vincenzo can command a high premium on its range of perfumes and

that is a boon for the suppliers , artisans and farmers as the high

margin from the luxury product can be used to source genuine raw

materials despite the spiraling cost.

Attar manufacturing and sales have been largely unorganized,

Vincenzo can design its own supply chain and use the luxury industry’s

best practices to streamline processes and boost margins for the whole

value chain of the business system.

They can also invest in R&D in areas that demand immediate attention

like increasing the yield of usable essential oils from agar-wood etc.

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Most importantly they can use mainstream marketing techniques like

advertising on TV and print for the ‘Ittarati’ and create a presence in the

minds of modern consumers.

Constitute partnerships with the local manufacturers after implementing

standard quality checks and thus save on initial investments and also

supporting the dying distilleries.

Employment

Every Attar factory employs around 200 skilled artisans directly who are

involved in the process of manufacturing attar throughout the process

lifecycle. This is referred to as direct employment. The table below lists the

projected employment numbers from 2015 till 2019.

Direct Employment Number of Factories

2014 200 1

2015 1400 7

2016 1600 8

2017 2000 10

2018 2400 12

2019 3000 15

Bottlers

Bottling of attar is as important as the attar itself. Ittar by tradition has been

the scent of the royalty and it was only befitting that such exclusive scent be

packaged in the most intricate vials and bottles.

The attar bottles are a work of intricate artistry and traditionally the artisans of

Farrukhabad and eastern Uttar Pradesh have been involved in designing and

producing bottles for attar. With attar industry caught in a downslide the

bottlers are having a tough time sustaining their business and craft.

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Vincenzo can choose to source the bottles for its luxury line ‘Ittarati’ from the

traditional bottlers and thus preserve the old era charm of attar in the

intricately designed bottles, something the aware consumer would appreciate.

This would also provide a certain source of income and business opportunity

to the bottling artisans of Farrukhabad.

Empowering Farmers

Attar is an interesting product which has numerous varieties and whose

ingredients are sourced from almost every corner of India. In many ways it is

a quintessential India product. One of the most popular flavours ‘Oud’ is

sourced from the North-Eastern states where the local tribes farm and supply

this to attar makers in Kannauj. Equally important is the contribution from

Kashmir which supplies Saffron and mint. Khus which is also an a classic

attar ingredient is sourced from Bharatpur in Rajasthan while chameli, rose ,

kadamb, jafrani, gandaand henna is sourced locally in and around Kannauj in

UP. Kewra comes from the coastal areas of Burhanpur and Ganjam is

sourced from Orissa.

Region/State Raw Material

Kashmir Saffron,Mint,Piny-

Wood

Uttar Pradesh Rose, Other Flowers

Himachal Pradesh Rose

Rajasthan Khus

Andhra Pradesh Raat Rani

All North-Eastern States Spices & Herbs

Karnataka Sandalwood

Assam & Manipur Agarwood/Oudh

The attar industry has been largely unorganized due to which the farmers

involved in the supply of raw materials from across the countries heavily

depend on the middlemen. A lack of consistent demand also creates

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uncertainty in the cash flow. Vincenzo’s entry into this sector would eradicate

the middlemen and ensure that these farmers and other suppliers get a better

price for the raw material supplied.

This will also ensure that a lot of remote areas like Kashmir and tribal areas in

the North Eastern states will become part of a growing industry and this would

thereby also lift their living standards. For example, a significant part of

Manipur’s rural population thrives on ‘agarwood’ farming which is a prime

ingredient for the classic ‘oud’ attar, it is as expensive as sandalwood and

costs INR 50,000 to INR 70,000 per kg. Due to the high costs small-time attar

manufacturers have avoided buying ‘agarwood’ and thus Manipur’s rural

economy has taken a hit. With luxury players like Vincenzo as customers,

these farmers can produce with certainty and also receive a better price for

their produce while the luxury player can ensure that the final product is of

best quality which in turn adds to their premium.

Attar Tourism

Move aside Health Tourism, Education Tourism and Sports Tourism here

comes the Attar Tourism! One most interesting and creative way in which

Vincenzo can boost the economy of attar producing towns is by promoting

what we call is ‘Attar Tourism’. A Google search of Kannauj results in

hundreds of results about this sleepy little town’s age old heritage of

perfumery. There are folklores and fables about how the precious princesses

of the Mughal Kingdom experimented with the most expensive and rare oils

and exotic flowers to design and invent their own brand of attar that live to this

day. There are distilleries that have been run by families who have not left this

business for centuries and still use the same old ‘degh’ and ‘bhapka’

equipments in their rustic factories to derive the rich fragrance of attar.

This will appeal to both domestic as well as foreign tourists and consumers. A

win-win situation, a few benefits of which are listed below:

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This idea will not only help the local artisans, farmers and

manufacturers but also help boost other industries like hospitality,

transport etc and indirectly help generate employment outside the

perfume industry.

Guided tours to Vincenzo’s plants and partner ‘heritage’ distilleries will

create what we can call ‘The Vincenzo Experience’. This will be true to

the aim of showcasing Vincenzo India as a genuine Indian subsidiary

that cares.

It will also act as a ‘Market Entry Barrier’ in the long term for other

brands as this initiative woul be identified as part of the ‘lifestyle’ that is

associated exclusively with Vincenzo India.

On the lines of lifestyle brands like ‘Ducati’ and ‘Harley Davidson’ it will

most definitely contribute to the ‘Brand Equity’ of Vincenzo which in

turn will give leverage for higher premium on its products. A win-win

situation indeed.

‘Attar Making’ Source: travel.cnn.com

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Impact in Numbers (Assumed and Estimated for the year 2019)

Category Direct Impact Potential Impact

Artisans 3,000 20,000

Farmers 10,000 80,000

Bottlers 100 5000

Distilleries 20 100

Attar Tourism 10,000 50,000

Looking at the figures of 2015 we can see that Vincenzo’s plants will

directly employ around 3000 Artisans in its plants thus generating

immediate employment.

There are around 10,000 farmers in and around Kannauj, Himachal

Pradesh, Kashmir, Assam , Manipur , Orissa , Karnataka and other

parts of India who are directly involved in supplying raw materials to

Kannauj’s attar factories. Due to downslide in the attar manufacturing

these farmers have been living in uncertainty. Vincenzo’s investment

would provide a consistent cash flow and also help with R&D to

improve crop yield and more.

Not many initiatives bring together Kashmir and the rest of India

together like this one will as it harnesses an age old relationship

between Kashmir’s saffron supplying farmers and Kannauj’s attar

makers.

Another important section are the ‘bottlers’ who have also been part of

this industry for equally long time as the artisans themselves. They

shall also benefit from an assured source of revenue.

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Business Model

Following shall be the model followed by Vincenzo India for the production of

the Ittarati line of attars. A factory, with state of the art testing facilities and

sophisticated warehouses, will be set up in Kannauj district of Uttar Pradesh,

where there is proximity to attar makers.

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Supply Chain and Operations

The detailed ideas and process flow are as follows:

Sampling and Flavor Identification

Quality Control – Relative importance

Sourcing raw materials for Attars

Manufacturing by Attar Makers

Testing by Vincenzo India

Designing Attar Bottles

Sourcing Attar Bottles

Bottling and Branding Attar by Vincenzo India

1. Sampling and Flavor Identification

The story begins with a Perfumer/Nose from Vincenzo India who will analyze

the latest trends of the Indian fragrance market and identify the compositions

of the top selling fragrances of the Indian Perfume Industry

These perfumers would then be introduced to various samples of attars from

all parts of India and a set of best match fragrances would need to be

identified. These perfumers will then be working closely with the attar-makers

trying to customize the attar essence.

Additionally, business development teams at Vincenzo India will evaluate the

age-old famous attars of India, which have historical or royal relevance.

For Example: The Assamese Oudh is one of the most cherished attars of the

world. The Rose Attar, made from the roses of Kannauj, U.P was discovered

and developed by the Mughal Queen Noorjahan.

These fragrances will also be evaluated specially by the perfumers and be

included in the Ittarati product line as Vincenzo India can capitalize on their

historical significance.

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2. Quality Control - Relative Importance

Attar, “The Fragrance of the Royals”, has been historically made with the

finest and purist of all materials, with as much detail going into the actual

process, as into using the highest-quality natural ingredients.

For the process of making attars, the industry being largely unorganized,

usually attar makers source flowers locally. The farmers are unaware of

proper cultivation practices, and the attar makers do not exercise enough

control over their suppliers to ensure the right crop at the right time of the

year.

Currently there are a lot of local attar manufactures producing attars using

synthetic replacements for the natural ingredients due to rising costs and

difficulty in procurement of raw materials.

For example: Paraffin wax is being used as a substitute for sandalwood oil,

which is quite costly and difficult to procure.

But the factor that sets apart Attar from other perfumes is the purity of

ingredients, and therein lays the premium factor.

For a user to pay a premium price for a House of Vincenzo product it is

important for them to believe that the quality of the material procured and the

attar being bottled is of the highest order and is safe to use.

Plucking flowers at the “right” time, so that they retain their scent; using the

highest quality of sandalwood oil as a base, so that the attar improves with

time and other quality measures are paramount to distinguishing Ittarati from

the local players. Further, it is equally important to check the purity of the final

attar produced before a premium brand like House of Vincenzo puts their

name on it.

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Hence a lot of the operations of Vincenzo India will focus on quality measures

for Ittarati. There will be quality checks at each stage of procurement of raw

materials and after attar makers bring the finished attar back to the factory.

3. Sourcing Raw Materials for Attars

The aim of Vincenzo India will not be to manufacture the attars itself, but to

enable the traditional attar makers to make high-quality attars.

In aid of this, Vincenzo India will source the highest quality ingredients and

make them available to the attar makers.

Two of the main ingredients of any attar are:

Floral/Herb Materials:

This refers to the flowers, herbs et cetera which are at the crux of the

fragrance of any attar. The choice of this component decides the type and

fragrance of the attar. The process requires the following to be taken care of:

The quality of the flowers:

The time in a flower’s lifecycle when the flower is plucked

The duration between plucking the flowers and the process of distillation.

Each of the famous attars require sourcing of special variety of flowers from

specific geographies in India.

Given below are some examples of the same:

Attar Type Sourced from

Rose Kannauj in Uttar Pradesh

Saffron Pulwana in Jammu & Kashmir

Oudh Assam, North-East

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Rose Attar:

On behalf of attar makers, Vincenzo India intends to negotiate and fix direct

contracts with floriculturists from Kannauj. Quality Managers from Vincenzo

will test the quality of flower before plucking and ensure timely shipping to

attar makers.

Saffron Attar:

Vincenzo India will use the process of e-procurement to source saffron from

the various districts of Jammu & Kashmir. Vincenzo India will post a request

and sellers will respond to it competitively. Vincenzo India will then compare

the prices and the suppliers and will decide to source. Dabur has also

adopted this model to source saffron from Jammu and Kashmir. This will

ensure a low sourcing time, reduce costs and encourage transparency.

Oudh:

Oudh will be sourced from Aquilaria plantations set up in the North Eastern

states of India. Currently this is an unorganized industry in Assam. Vincenzo

India will identify legal plantations and source Oudh. Special care will have to

be taken care in the transport of Oudh as it is in great demand. As Agarwood

is an endangered plant species, Vincenzo India will itself run reforestation

programs for the same.

Sandalwood Oil as base material:

It is crucial to use sandalwood oil as the base material, but given the high

demand, low supply and strict regulations for trading in sandalwood that is

imposed in India due to various regulations Vincenzo India would look to

source premium-quality sandalwood oil from Australia. The benefits are as

follows:

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Cost Effective: It will cost us exactly half the price in India (Rs. 35000/ per kg)

Availability of species: Australia is currently cultivating the Indian variety of

sandalwood, so we can get similar quality at lesser price

4. Manufacturing by Attar Makers

The raw materials sourced would then be provided to the attar makers, who

would bring in their traditional expertise in the process and make attar the old

fashioned way. This would be a non-automated process, carried out by the

resources of the standalone attar maker.

5. Testing by Vincenzo India

Vincenzo India will install a testing facility locally where the attar makers are

set up to test the quality of the attars produced by the attar makers.

As maintaining quality is paramount to making a premium product,

laboratories in the testing facility will be setup with the latest testing machines.

Following are some of the key parameters and the devices that will be used

for quality control:

Parameter Testing Device

Optical Rotation Polarimeter

Specific Gravity and

Refractive Index

Refractometers

Olfaction, acid content Gas chromatography–mass

spectrometry (GC-MS)

6. Designing Attar Bottles

For designing glass bottles, Vincenzo India will involve experts who will come

up with intricate designs for perfume bottles and packaging. These designs

will be inspired by Mughal art and be in keeping with the royal tradition and

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luxury associated with attars. Each bottle will have an individual and intricate

design, in sync with the history of that particular variety of attar.

7. Sourcing Attar Bottles

Glass designers will work with small-scale glass art manufacturers of

Firozabad in U.P and work out the design of the attar bottle.

As the House of Vincenzo is already into the perfume manufacturing industry,

they will look towards existing suppliers to source the raw materials required

to make quality glass bottles. Once the glass bottle makers from Firozabad

complete the bottle making, Vincenzo India will run the bottles through the

testing procedure to ensure they meet the high quality benchmarks of the

House of Vincenzo.

These bottles would then be shipped to the bottling plant.

8. Bottling and Branding Attar by Vincenzo India

The attar produced by the attar makers would be bottled, branded and

packaged at the bottling and branding unit of Vincenzo India. These would

then be ready for transport to the retail outlets

9. Supply to customer through flagship retail outlets

As Ittarati is a line of premium attars, it will be made available only to

customers through the flagship stores of House of Vincenzo in Delhi, Mumbai,

Pune, Hyderabad, Chennai and Bangalore. Also Ittarati would be sold in ultra

luxury hotels of premium tourist destinations of India to promote revenue

through tourists. Other products of House of Vincenzo like perfumes are

retailed through stores in malls and departmental store chains. But Ittarati will

be a high-end luxury perfume and will be available for retail only at the

selected stores.

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Supply Chain Diagram

40

Following are the basic blocks of operations, which will interact amongst each

other:

1) Factory: This will include the operations of testing attar and glass bottles,

bottling, packing and branding the final product.

2) Attar Makers: They will manufacture the attar .

3) Glass Makers: They will manufacture the intricate glass bottles.

4) Warehouses: Raw material and finished good inventory will be stocked

here.

5) Transportation Logistics

Market Demand – Ittarati

As Ittarati is an attar based luxury perfume, we can estimate the market

demand for Ittarati in India by evaluating the Indian luxury perfume space.

We estimate the market demand for luxury fragrance Ittarati in India by first

estimating for New Delhi and then scaling the model for the other tier 1 cities.

1) Current Population of India: 1.2 billion

2) Customers for Ittarati:

High Networth Individuals (HNIs): These are individuals that have a minimum

networth of INR 50 million by 2016-17.Currently their number is 1.17 lakh in

India. We assume that 95% of HNI purchase 1 luxury good per year, which

amounts to 1.11 lakh per year.

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Upper Middle Class in Tier 1 and Tier 2 cities: Upper middle class, despite

being cost sensitive, buy luxury goods, perfumes being the most popular

luxury product. Most households earning more than INR 1 million opt for

luxury goods. Reports suggest that this number will be 3.3 million households

by 2015.Assuming that we have 2 consumers of luxury good per household

this number amounts to 6.6 million (66 lakh) individuals i.e. 66 lakh Indians

consume luxury goods per year.

Total number of consumers = 1.11+66 = 67.11 lakh/year

3) Market Size estimations:

Size of Indian luxury market grew to USD 5.8 billion in 2013,growing 30% per

year. Hence projected numbers for 2014 is USD 7.54 billion, which is equal to

INR 28500 crore.

Size of the Indian luxury perfume market is 700 crore.

Hence we conclude that Indian luxury perfume category holds 2.5% of Indian

luxury category.

Total number of customers buying Indian luxury products who specifically buy

luxury perfumes is 2.5% of 67lakh/year, which is approximately equal to 1.65

lakh/year

3) Market Share:

House of Vincenzo currently holds a 16% market share in the Indian luxury

perfume scene, and historical estimates suggest that the launch of a new

perfume increases the market share by 9%. However Hence we can say that

9% of 1.65 lakh consumers/year i.e. 14,850 consumers per year will buy

Ittarati.

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4) Transactions (No of bottles consumed per year)

As customers buy 2 bottles of luxury perfumes per year, 14850 consumers

will buy 29,700 bottles per year.

5) Amount (Revenue numbers)

As each bottle of Ittarati is priced at INR 3100 hence the estimated revenue

per year from Ittarati is INR 9.207 crore.

Once Vincenzo India manufactures Ittarati, it will be evaluated in the pretest

market to estimate the market share that it weaning from the competitor and

the market share that it is cannibalizing from House of Vincenzo’s line of

perfumes. This will help us predict Ittarati’s long-term market share (including

cannibalization and switching from competitor’s product) and sales volume.

This will affect overall revenue. However we are pricing Ittarati in the high end

range and the other perfumes will be priced lower than the latest offering,

hence any cannibalization to Ittarati from any other House of Vincenzo

perfume is beneficial to House of Vincenzo.

Marketing Strategy

Consumer Survey

In order to guage the effect of ‘Social Impact’ campaigns we conducted

consumer surveys across different luxury malls in Hyderabad. The

respondents were generally those consumers who had entered the mall and

spent at least 15 minutes inside a luxury shop and came out buying a luxury

perfume.

Survey Questions:

Q1 Would you buy a luxury ‘attar’ if it was offered by Vincenzo?

Q2 What is the price you would pay for a luxury ‘attar’ offered by a leading

Italian brand? Options – 2000, 3000, 4000 (per 100ml)

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Q3 Would you buy a luxury brand product if you knew that it supported

thousands of artisans and farmers?

Survey Statistics:

Number of Respondents: 54

Malls Visited: GVK One, Inorbit Mall, Central, City Centre

Questions Answers % of Respondents

1 Yes 60%

No 40%

2 2000 70%

3000 20%

4000 10%

3 Yes 84%

No 16%

Conclusion: The respondents showed preference of buying products of a

brand if they knew about the social impact of the house of brands. There was

an increase of 23% in the purchase intention among the respondents once

they learned about the social impact initiative.

Segmentation-Targeting-Positioning

Customer Segmentation

The average upper middle class family in India earns Rs. 30 Lakhs per annum

and the average salary of an IT engineer with 8 years of experience is 20

Lakhs per annum. There are similar customer segments that could be

considered as the target segment for any luxury product that includes ‘Ittarati’.

A close analysis of the Indian luxury market reveals that there are two major

categories of customers, which the Indian luxury market caters to – The Rich

Aristocrats and The new affluent. The Aristocrats are traditional rich and are

loyal to the brands they have been using or their families have been buying,

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interestingly on the other hand ‘the new affluent’ is highly educated , fairly

young and ready to experiment with brands.

The Indian Market Research Bureau has classified the segments into the

following broad categories that also apply to ‘Ittarati’

Experientalists: The neo-rich who like to try new products and go for the

experience rather than just the brand name.

The Connoisseurs: This customer group has developed taste for exclusive

high end luxury products and sticks to their previous buy.

The Aesthetes: This segment of luxury consumers prefers the aesthetics over

brand image as the name suggests. They like to buy a well crafted product

even though it comes from a new brand.

Flaunters: They live upto their name and buy to flaunt. Their value in a

product is the X-factor or uniqueness that it adds to their persona. A traditional

product may not be a most preferred one for them.

‘Ittarati’ will target these segments which constitute of HNI (High Networth

Individuals) who have high affordability and preference for luxury products.

Rich Aristocrats

Experientialists

The connoisseurs

Aesthetes

Flaunters

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Vincenzo’s strategy is to target the cities with the maximum high income

customers. A greater percentage of these customers also have a

psychological inclination for buying the luxury goods. Vincenzo’s positions

itself as the “Art of Luxury” brand. The brand equity developed so far would

form the basis for ITTARTATI, but the social impact it would create with each

perfume bottle coined with its deep connect with the rich Indian heritage

would be the differentiator. Ittarati would be positioned as the uber luxurious

perfume and would be postioned in the high end luxurious hotels and malls

and also in the Indian palaces that would define its luxurious nature.

India’s total personal income spending has been growing at a rapid pace year

on year. The figure below shows India’s personal spending since 2004.

Luxury

Prestige

Masstige

Mass

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Among the various cities in India, the metropolitan cities give way to have the

maximum number of high earners. Delhi and Mumbai with the outlook of

some of the major enterprises and industries as well as with current and

potential demand in the luxury sector become the major targets for possibly

any luxury product. However, these are not the only cities in India for Ittarti’s

launch. Vincenzo India plans to launch Ittarti in more than 6 cities in India.

Here is a list of how the opportunites in different cities shall be tapped by

Vincenzo:

1) Delhi: Delhi acts as the epicenter for all the luxury goods activity. The first

ever luxury hybrid mall is located in Delhi and it holds nearly 170 brands

including 70 international brands. Currently Delhi corresponds to nearly

50% of the luxury consumers in India. The high real estate drivers and the

socio-psychological parameters all influence in its becoming the top luxury

city in India.

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Source: DLF Emporio, New Delhi

2) Mumbai: The star studded city of the country is another target for any

luxury brand. Mumbai has the highest demand in the retail sector. The

only reason for Mumbai to lag behind Delhi is the high real estate rates in

some of the prime locations, which act as a barrier for its retail needs.

Nevertheless, Mumbai stands to be the highest consuming city.

Source: Palladium, Mumbai

3) Bangalore: Bangalore – the silicon valley of India, also has a high retail

quotient. Very affordable rents have been a boon for the city to flourish in

the retail sector. The only glitch here is that the personal consumption is

not as high as in other cities. Bangalore has a very high number of

flagship stores of various brands.

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4) Chennai: Chennai is one of the affordable cities when it comes to real

estate. According to a report, Chennai has been picked as one of the 12

upcoming destinations for Luxury Real Estate. Boom in the real estate

means a boom in the luxury industry overall. Down south, Chennai serves

as one of the most developed cities. Because of this reason, it also

becomes the target for any luxe products that wish to cater to the people

of South India.

5) Hyderabad: Hyderabad is set to be the next IT hub of the country. With

the amount of IT and services company rising here, the level ans

stanadards have been on the uphill in the past decade. Hyderabad has

seen a transformation in the recent years. From Malls to luxury hotels to

palaces, Hyderabad has all geared up to offer luxury to its youth.

6) Pune: Pune provides the most affordable rents in prime areas among the

Tier I and Tier II cities. Also, with large office spaces it has in its pipeline it

can easily offord to have more migration from various other cities. Its

proximityto Mumbai is one added reason of considering this as the prime

laucnch city for Ittarati.

Vincenzo will also look to have its kiosks and exclusive stores in a few tourist

destinations with heritage hotels which attract the uber rich from India and

across the world. This is also in line with positioning the Vincenzo brand as

the one that relates to Indian culture and is inspired by its varied richness.

The Hotels under our consideration set have been listed below:

1) Oberoi Udai Vilas (Udaipur): This hotel symbolizes the epitome of Rajput

elegance as it welcomes it guests in the middle of Lake Pichola after a short

boat ride from the main land. It has consistently been rated amongst the Top

3 hotels in the world and has hosted the who’s who of Hollywood and power

corridors from around the world.

2) Oberoi Rajvilas (Jaipur): This has the advantage of being in the capital of

Rajasthan which is a hub of tourist activity. The Pink City as it is known also

hosts a large number of destination weddings and Rajvilas is one of the

49

preferred destinations. An excellent place for a luxury brand to make its

presence felt.

3) Oberoi Amarvilas (Agra): Agra needs no mention, it is the home of Taj

Mahal, one of the seven medieval wonders. Taj is on every moneyed tourist’s

bucket list abroad and so is Oberoi Amarvilas if you want to have a

breathtaking view of the Taj from you’re the window of your room.

Courtesy: Hotel Oberoi Amarvilas

4) Taj Nadesar Palace (Benaras): Benaras of Varanasi as it is known is

perhaps the oldest city in which still thrives. It has the distinction of having the

highest inflow of foreign tourists in India beating any other place by a

distance. Taj Nadesar palace is the only heritage hotel managed by the Taj

Group of Hotels and lives upto any connoisseur’s expectations easily.

Although, the competition faced by Ittarati at these locations would be

extremely high, given the current luxury perfumes available in the market from

some of the leading and well known brands, Ittarati’s USP is its deeper

connectivity with the culture of India. Ittarati would redefine India’s heritage for

the world instead of bringing the world culture to India.

Here is how the 4P’s for Ittarati would look like:

50

Marketing & Communication

Ittarati’s promotion is one of the most critical steps for the product’s potential

growth. Apart from the customers who visit Vincenzo regularly looking out for

new collections of the seasons, Ittarati would demand a greater campaign in

order to convey the right message to the right people.

Vincenzo has had some of the most unique ad campaigns in the past.

Vincenzo’s creative team has some of the best minds in the country. One of

the best marketing campaigns Vincenzo ever launched was the “Inside Job”,

where people could see the inside of the store by using google maps from

their personal computers. The footfalls increased nearly 5% after the launch

of that campaign. Vincenzo’s history and association with the niche market

requires it to be connected to the Fashion world day in and day out. Vincenzo,

has models walking down the ramp in world’s leading fashion shows.

Product

• One of the fine luxury perfumes enriched with traditional attar and modern day subtlty

• A first luxury perfume related to the Indian attar industry

Price

• Premium Luxury product priced for high end customers

• High margin - substanitally low cost product

Place

• Metropolitan areas in the country

• Places with evident high luxury items sales

Promotion

•Ittarati - Wear.Love.Spread • Roots campaign

that depicts our enriched ancient culture to be a need for the modern day

• Catalouges, fashion shows, high profile magazines

• Celebrity endorsements

51

For Ittarati, Vincenzo plans to work with some of the biggest Fashion shows of

the like,

Roots – Campaign

The campaign is another extremely creative campaign Vincenzo

plans to launch for Ittarati. As can be seen by the name - the campaign is

dedicated to remind people of their rich roots, which in this case symbolize the

rich Indian heritage. The main focus shall be on the attar industry and how

one bottle would affect hundreds of artisans. A different version of the earlier

“Inside Job” campaign for Ittarati would involve creating a video which would

take the viewers inside the homes and everyday lives of the artists and

craftsmen.

Other campaigning modes for Ittarati include covering high profile magazines

and promoting Ittarati in luxury hotels and Indian palaces. Indian palaces are

the major tourist attractions which see foreigners and expats coming down in

large numbers. Also, for a luxury product, television and media might not be

the best way to reach out to the special segment that requires exclusivity. In

the past, Vincenzo has made use of season collection catalogues which have

proved very successful. Ittarati would form a larger part of those catalogues

with its great launch in India. Vincenzo also plans to have celebrity rich launch

events for the Ittarti. Any celebrity endorsement usually leads to high levels of

product promotion and the sales might eventually go past the roof if the

product has the right potential.

52

.

A snapshot from the “Roots Campaign”

Financials

The financial modeling for Ittarati has been done below , from Vincenzo’s

perspective. We have assumed the scenario where Vincenzo invests in the

testing and bottling plant and sources ‘Attar’ from local manufacturers and

sells the finished product through its already existing ‘Brick & Mortar’ stores

and online portal. The complete manufacturing process has been explained in

detail as part of the Operations.

Following assumptions have been taken into account for the financial

modeling:

1. Vincenzo has its online portal for selling its already existing line of

products.

2. They do not sell through independent distributors, but instead they only

sell through their exclusive luxury stores.

3. Raw materials are sourced from various regions of India and the cost

of the ingredient per 100 ml of ittar accounts for the sourcing cost also.

53

4. There will be minor store modifications done throughout the country to

accommodate Ittarati line of products.

5. All manufacturing will be done by local factories and then supplied to

Vincenzo’s plants for quality checks and bottling. The workers at the

facility will be on company payroll.

Costing and Break-Even analysis for ‘One’ factory that produces 2500

attar units/month.

Cost of (100 ml Standard Attar) 2014

Sandalwood (10gms) 650

Flowers (50gms) 30

Spices 50

Packaging 50

Water 4

Bottle (Glass Vial) 60

Total Cost of 1 Bottle of Attar 844

Labour Cost (Local Vendor's) 253

Total Cost to Company per Bottle

of Attar

1,097

Total Variable Cost per Month

Total Cost of 2500 Bottles of Attar 2,110,000

Labour (per month) 200 Workers 1,400,000

Manufactufing Overhead(Variable) 600,000

Transportation (per month) 400,000

Inventory Costs (Warehousing

Rental)

200,000

Total Variable Cost per Month 4,710,000

Fixed Expenses

Factory Cost 7,000,000

License 250,000

Manufacturing Overhead(Fixed) 800,000

54

Trucks (For Distribution) 3,500,000

Store Modifications 2,500,000

TV Commercials (Shooting) 2,000,000

Celebrity Endorsements 2,000,000

Equipment 2,000,000

Selling & Administrative Expenses 2,000,000

Total Fixed Cost 22,050,000

Revenue

Sales per Month 2,000

Price per 100ml 3,500

Total Revenue 7,000,000

Inventory 500

Contribution Margin Calculation

Variable Cost 4,710,000

Contribution Margin 2,290,000

Depreciation 0

Profit (Per Month) -19,760,000

Yearly Profit (Monthly Profit * 12) NA

Break Even Volume

Fixed Cost 22,050,000

Contribution Margin/Bottle 1,145

Break Even Volume 19,258

Break Even Time (Months) 2

It is noted that the Break-Even time for an Attar factory is only 2 months.

This is mainly possible due to lower land prices in small towns like Kannauj

55

and nearby towns and also the high premium (approx. 350%) that luxury

perfumes command in the Indian market.

Given below is the detailed projection of profits for next 5 years coming from

‘One’ factory that produces 2500 units of Attar per month. We have accounted

for the inflation that alternates at the rate of 8% and 9% every year.

Inflation

8%

Inflation

9%

Inflation

8%

Inflation

9%

Inflation

8%

Cost of (100 ml Standard

Attar)

2014 2015 2016 2017 2018 2019

Sandalwood (10gms) 650 702.00 765.18 826.39 900.77 972.83

Flowers (50gms) 30 32.40 35.32 38.14 41.57 44.90

Spices 50 54.00 58.86 63.57 69.29 74.83

Packaging 50 54.00 58.86 63.57 69.29 74.83

Water 4 4.32 4.71 5.09 5.54 5.99

Bottle (Glass Vial) 60 64.80 70.63 76.28 83.15 89.80

Total Cost of 1 Bottle of

Attar

844 911.52 993.56 1,073.04 1,169.62 1,263.18

Labour Cost (Local

Vendor's)

253 253.80 276.64 298.77 325.66 351.72

Total Cost to Company

per Bottle of Attar

1,097 1,165 1,270 1,372 1,495 1,615

Total Variable Cost per

Month

Total Cost of 2500 Bottles

of Attar

2,110,000 2,278,800.

00

2,483,892

.00

2,682,603.

36

2,924,037.

66

3,157,960.

68

Labour (per month) 200

Workers

1,400,000 1,512,000.

00

1,648,080

.00

1,779,926.

40

1,940,119.

78

2,095,329.

36

Manufactufing

Overhead(Variable)

600,000 648,000.0

0

706,320.0

0

762,825.6

0

831,479.9

0

897,998.3

0

Transportation (per

month)

400,000 432,000.0

0

470,880.0

0

508,550.4

0

554,319.9

4

598,665.5

3

Inventory Costs

(Warehousing Rental)

200,000 216,000.0

0

235,440.0

0

254,275.2

0

277,159.9

7

299,332.7

7

Total Variable Cost per

Month

4,710,000 5,086,800.

00

5,544,612

.00

5,988,180.

96

6,527,117.

25

7,049,286.

63

56

Fixed Expenses

Factory Cost 7,000,000 0.00 0.00 0.00 0.00 0.00

License 250,000 0.00 0.00 0.00 0.00 0.00

Manufacturing

Overhead(Fixed)

800,000 0.00 0.00 0.00 0.00 0.00

Trucks (For Distribution) 3,500,000 0.00 0.00 0.00 0.00 0.00

Store Modifications 2,500,000 0.00 0.00 0.00 0.00 0.00

TV Commercials

(Shooting)

2,000,000 0.00 0.00 0.00 0.00 0.00

Celebrity Endorsements 2,000,000

Equipment 2,000,000 0.00 0.00 0.00 0.00 0.00

Selling & Administrative

Expenses

2,000,000 0.00 0.00 0.00 0.00 0.00

Total Fixed Cost 22,050,00

0

0.00 0.00 0.00 0.00 0.00

Revenue

Sales per Month 2,000 2,100.00 2,190.00 2,230.00 2,305.00 2,420.00

Price per 100ml 3,100 3,410.00 3,751.00 4,126.10 4,538.71 4,992.58

Total Revenue 6,200,000 7,161,000.

00

8,214,690

.00

9,201,203.

00

10,461,72

6.55

12,082,04

6.02

Inventory 500 500.00 500.00 500.00 500.00 500.00

Yearly Revenue 85,932,00

0.00

98,576,28

0.00

110,414,4

36.00

125,540,7

18.60

144,984,5

52.24

Contribution Margin

Calculation

Variable Cost 4,710,000 5,086,800.

00

5,544,612

.00

5,988,180.

96

6,527,117.

25

7,049,286.

63

Contribution Margin 1,490,000 2,074,200.

00

2,670,078

.00

3,213,022.

04

3,934,609.

30

5,032,759.

39

Depreciation 0 0.00 0.00 0.00 0.00 0.00

Profit (Per Month) -

20,560,00

0

2,074,200.

00

2,670,078

.00

3,213,022.

04

3,934,609.

30

5,032,759.

39

Yearly Profit NA 24,890,40

0.00

32,040,93

6.00

38,556,26

4.48

47,215,31

1.64

60,393,11

2.73

57

Based on the projections, Vincenzo can earn a profit of INR

24,890,400.00 from ‘One’ factory per year.

Accounting Decisions:

Manufacturing Overhead: This includes the designing costs of glass

bottles, training expenses for the employees and unskilled labour,

procurement of glass for the vial manufacture and quality control

activities undertaken during the production process.

Factory Cost: This includes the book value of the factory that

encapsulates the land value and the built up real estate value.

The cost of attar per bottle has been calculated by breaking down the

cost of individual raw materials as per the quantity required to produce

100 ml of attar.

There is a separate ‘labour cost to company’ that is the fee paid to the

local manufacturer who will produce attar for Vincenzo. It is ideally the

outsourcing cost for the skilled labour provided by the local

manufacturer in producing the attar.

Labour/Month (200 workers) is a separate head that covers the cost of

retaining 200 skilled artisans in Vincenzo’s plant for production of attar.

The marketing expenses have been segregated into a few heads like

Selling and Administration expenses, advertisements and celebrity

endorsements. Celebrity endorsements are indispensable when

launching a new line of fragrance products as by and large the

consumer is indifferent to individual characteristics of a high end

perfume but rather influenced by the brand image and equity.

Market Share & Forecasting Production

The current Indian luxury perfume market is worth INR 700 Crores and

growing at 40% year on year. This niche market is highly dominated by

Foreign players like Armani, Dior, Azzaro, Chanel etc.

58

Major Demand Centres

With India’s growing middle class and rising urbanization there has been

recent surge in the average Indian’s spending on cosmetics and grooming

products. As per the recent ASSOCHAM study on Indian fragrance market,

the teenagers in cities are spending on an average INR 500-1200 on

deodorants and perfumes on a monthly basis. Interestingly there is space for

every player in this versatile market.

The Tier II and Tier III cities have really boosted the demand for mid-range

fragrance products led by an increased awareness and channels like hyper

markets and mushrooming malls.

Tourist Destinations like Agra, Jodhpur, Jaipur, Varanasi now have high end

luxury hotels that cater to the uber rich domestic and international tourists who

are a major target segment for luxury products. Vincenzo already has its

presence in this tourist towns at these super luxury hotels like Udai Vilas,

Udaipur and Umaid Bhavan Palace in Jodhpur.

Hybrid Malls in Tier I cities like Delhi and Mumbai have a daily footfall of

around 100,000 visitors. These hybrid malls house luxury brands and

Vincenzo India’s focus has been to find places in these hybrid malls in metros

like Delhi and Bangalore where they can operate out of the confines of the 5

Star Hotels and also gain a larger audience without compromising on brand

positioning.

The overall fragrance market size in India is INR 7000 Crores which is also

growing at a CAGR of 40%. Vincenzo with its line of fragrances already has

16% of Indian luxury perfume market captured and ranks 3rd.

59

The total revenue earned by Vincenzo in 2013 was approx. INR 100 Crores.

With the launch of ‘Itterati’ we look to increase the market share by 3.5 % and

thereby maintain this for the next five years as the market grows. The

projected net revenue for the next five years based on the above target is as

follows:

We can increase the number of factories depending on the target market

share and incremental revenue that we foresee. For the year 2015 the

projected incremental revenue at the rate of 3.5% growth is 56 Crores, which

16%

27%

20%

15%

13%

9%

Market Share(2014)

Vincenzo

Armani

Azzaro

Burberry

Dior

Others

0.00

500.00

1000.00

1500.00

2000.00

2500.00

3000.00

1 2 3 4 5

700.00

980.00

1372.00

1920.80

2689.12

56.00 78.40 109.76 153.66 215.13

Projected Market Size

Projected Target Revenue

60

would mean that we need to operate around 7 factories to meet the annual

target if we look to achieve the target by our new product ‘Ittarati’.

Financing ‘Ittarati’ Line of Product

‘Ittarati’ is completely new line of product that Vincenzo will offer for the first

time in the Indian market. This is an ambitious project which will require a

handsome initial investment. As per our financials for the project the

Breakeven time is nearly 4 months hence it is considered to be a safe

investment. The total fixed cost will be taken into account as the initial

investment as the product starts to make a positive contribution margin from

the first month itself (as per our estimates.)

2014

Factory Cost 7,000,000

License 250,000

Manufacturing Overhead(Fixed) 800,000

Trucks (For Distribution) 3,500,000

Store Modifications 2,500,000

TV Commercials (Shooting) 2,000,000

Celebrity Endorsements 2,000,000

Equipment 2,000,000

Selling & Administrative Expenses 2,000,000

Total Fixed Cost (NPV) 22,050,000

The amount required as initial investment is 2.2 Crores.

Source of Financing: The initial investment amount of 2.2 Crores shall be

procured from Vincenzo India’s cash balance of last year. The ending cash

balance in Vincenzo’s account was 18.7 Crores FY 2013. There won’t be any

kind of loan sought.

61

Rules and Regulations affecting Ittarati

1) Indian Forest Act, 1927: Currently one of the chief barriers to making

premium attar is the high cost of sandalwood oil due to low supply. Indian

Forest Act, 1927 restricts sale and manufacture of sandalwood and

sandalwood oil. It also levies export restrictions on sandalwood and

sandalwood oil.

2) The Sandalwood Act: The Union Ministry of Environment and Forests

(MoEF) is formulating the special legislation to regulate the cultivation, trade

and import of sandalwood. This act, currently in draft stage, would impact the

company cost structure in the long run. If sandalwood cultivation is

successful, Vincenzo India can source legal sandalwood from India and would

not have to import from Australia, where sandalwood cultivation is legal and

inexpensive

3) Import duties and taxes for sandalwood:

Importing sandalwood to India requires paying up of the following import

duties and taxed:

Most favored nation (MFN) tariff of 10%

No Sales Tax

Landing charges (1% CIF)

Countervailing duty (12% (CIFD + Landing charges))

CESS (3% (Duty + Countervailing duty))

Additional Countervailing Duty (4% (CIFD + Landing charges +

Countervailing duty + CESS))

Import of Goods is not subject to VAT

The government’s plan of increasing import duties will not affect sandalwood

import.

62

4) Liberalized FDI Policy in luxury retail in India, November 2013: Increasing

FDI in the luxury retail sector will make it easier for House of Vincenzo to

invest more in Vincenzo India and in Ittarati.

This will mitigate the investment risk that Vincenzo India would have to bear

alone. A recent regulation that makes it easy for House of Vincenzo to invest

in Ittarati is that 100 per cent foreign direct investment (FDI) in both single and

multi-brand retail requires 30 per cent of local. Ittarati business model focuses

on sourcing raw materials from Indian suppliers

5) The Trademarks Act of 1999: This will protect the Ittarati trademark from

being copied. One of the chief reasons that make foreign investors hesitate

before retailing in India is trademark counterfeiting.

6) The Copyright Act, 1957: The artisans, attar recipes and processes, and

bottle designs of Ittarati can be protected under the Copyright Act of 1957 to

preserve exclusivity. This would ensure a competitive advantage over

competitors, as perfume recipes would be a “secret”.

7) The Standard of Weight and Measure (Packaged Commodities) Rules

1977: This regulation ensures that weighing and measuring standards are met

so as to provide the customer with the correct weight, measurement and

quantity of the product. As bottling and packaging of Ittarati will be done in a

factory in India, these rules will have to be followed.

8) The Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics

(Amendment) Act, 2008: This act ensures that adulterated, spurious or

misbranded drugs and cosmetics are not sold in the Indian retail market. The

Government reserves the right to inspect the product. This law will also be

applicable on Ittarati.

9) Intellectual Property Right (Imported Goods) Enforcement Rules, 2007:

This law empowers Customs authorities to seize counterfeit goods.

63

10) Land Acquisition Act 2013: This will impact Vincenzo India, as it would

need to acquire land from the state government of Uttar Pradesh to build a

factory near Kannauj

11) Environment (Protection) Act, 1986: This will impact Vincenzo India as

factory will generate waste.

Expansion Strategy

The U.S. luxury market for personal luxury goods is estimated at US$75

billion as opposed to India’s US$1.5 billion. The more relevant comparison, to

other BRIC nations, also suggests a considerable lag. Brazil’s personal luxury

goods market is at US$4 billion with 130 stores while China has surged ahead

at US$20 billion with 1,100 stores. (India has around 60 stores). Focusing

only on the fragrances, the global perfume industry is generally valued at

around $28 billion (based on a 2012 report) per year. However, a more recent

report says it’s going to be far, far bigger than that. Perfumer & Flavorist cites

a 2013 study by Global Industry Analysts which says the industry will “reach

about $45.6 BILLION dollars in 2018,” in a mere 4 years time. The driver

behind such a high growth is primarily the emerging markets with very high

potential and innovation. France is expected to have a very high growth in the

number of women buyers in the next 4 years. Italy also holds a major ground

for perfume sales and out of all its perfume sales has nearly 60% sales for

women perfumes. Middle east and South east Asia are coming up as the

major luxury markets of the world. Though, US and Europe still serve as the

home of luxury goods, the developing countries are not far behind. An

inflexion point will take five to seven year, but it is definitely expected.

Middle East has one of the closest connections with the traditional Arabic Oud

– a form of Arabic attar. Arabic Oud has the highest share in Dubai as

compared to other niche premium fragrances. A product that is the first ever

combination of both tradition and a leading premium brand would see a

64

demand of great size. Owing to the immense potential in the new emerging

markets, Vincenzo would aim to launch Ittarati in the Middle east, China and

other parts of South East Asia in the near future.

Also, from the point of view of its turnover, Vincenzo would expect to have a

return of nearly INR 8.5 crore in the first year of Ittarati launch. With the rising

demand of Ittarati in India as well as with the plan to go abroad with the

product, would need further investment and a higher competitive edge in the

market. As a result, in the long run, Vincenzo India aims to develop a strategy

where it can providing funding to its attar manufacturers. The main idea

behind this would be to empower them even further. Getting a stake in their

companies would provide them the needed support and the assurance of

orders that is hard for them to achieve in the recent scenario. This also is one

of the biggest reasons for the attar industry to have seen such a decline. The

decline is not because of the unavailability of artisans or the raw materials, but

the demand for the attar in this modern day.

Owning stakes in the attar manufacturing companies would at the same time

provide a competitive advantage to Vincenzo India. This would help it to lower

the bargaining power of the attar manufacturers and also reduce their

switching power towards other manufacturers, in case the perfume industry

competitor choose to enter into this business.

The ultimate long run goal of Vincenzo India is to maximize the profit to the

artisans and craftsmen. Globalization and Competitive strategies together

when applied would act as a framework to increase the social impact to this

industry.

65

References

http://www.ffdcindia.org/pdf/indian_21may2014.pdf

http://ipindiaservices.gov.in/

http://www.arabnews.com/life-style/india%E2%80%99s-traditional-perfume-

makers-threatened-scent-modernity

http://www.niir.org/blog/blog/12/project-consultancy-services-for-

manufacturing-perfumes-fragrances.html

http://economictimes.indiatimes.com/magazines/indulge/perfume-market-

expanding-in-india/articleshow/6016621.cms

http://fleurrance.wordpress.com/2014/03/03/new-affluents-consumer-

segmentation-of-indias-emerging-luxury-market/

http://www.kafkaesqueblog.com/2014/02/20/the-global-fragrance-industry-world-

markets-popular-fragrances-sales-figures/

http://en.wikipedia.org/wiki/DLF_Emporio

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market-luxury-shopping-luxury-mall

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G-ASSOCHAM-India-Luxury-Summit-2014.pdf

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out-of-5star-hotelstohighstreet-mall.html?utm_source=copy