"a distilled spirit blended with certain essential oils so as to give off a fragrant scent," by 1844, short for Cologne water (1814), loan-translation of French eau de Cologne (which also was used in English), literally "water from Cologne," from the city in Germany (German Köln, from Latin Colonia Agrippina) where it was made, first by Italian chemist Johann Maria Farina, who had settled there in 1709.
"Now, a worked Lyon handkerchief, moistened, not with cologne, but with rose-water. Eau de cologne is vulgar, it's the odor of every shopboy; and now you are ready, and I leave you." ["Charles Sealsfield" (Karl Anton Postl), "Rambleton," 1844]
The city seems to have been known in English generally by its French name in 18c. The city was founded 38 B.C.E. as Oppidum Ubiorum, renamed and made a colony in 50 C.E. at the request of emperor Claudius's wife Agrippina the Younger, who was born there. By 450 C.E. the name had been shortened to Colonia (see colony).