I love the smell of bread in the morning. It's the smell of victory.
i like the bread's smell
I also like the bread's smell
"The smell of bread" and "the bread's smell" do not mean the same thing. The former is in general, the smell of ALL bread, and the latter would be a specific type, or a specific loaf that you were referring to.
...unless "the smell of the bread." That would also specify which bread
Why is "I like the fragrance of bread" not accepted?
Fragrance is related to perfume, deodorant, flowers, air fresheners, etc. The word "fragrance" is not used with food.
The string "fragrance of bread" gets 176,000 hits on Google and "fragrance of baking" 482,000, so clearly some people do use it that way.
Click on the tenth page and you'll see that it's just 80 hits for "fragrance of bread".