An uncertain economic climate was not enough to deter Italy’s C&T consumers from spending their euros in 2007. Katie Rodgers reports on the continued revival of the Italian beauty industry from Cosmoprof Bologna as it celebrates its 41st show
According to Unipro, The Italian Association of Cosmetic Industries, 2007 was an encouraging year for the Italian C&T market, with the total turnover standing at almost €9bn, or €8,995.78m to be precise. This is an increase of 2.5% on 2006’s figures when the total turnover stood at €8.792bn. Indeed, in the past ten years in Italy, the average growth of the C&T market stands at more than 3.5% a year, which is promising for a country that for governmental and economic reasons has faced so much instability of late.
Beauty as a priority:
As nearly 112,000 Italians descended on the city of Bologna to take part in Cosmoprof, the world’s largest beauty trade show, they showed unanimous support for their country and their beloved C&T industry. The fact that so many domestic visitors attended was particularly impressive given that the same weekend saw the Italian general election, a topic that was on the lips of many at the show. The election would see Silvio Berlusconi elected into his third term as the country’s prime minister. Italian newspapers and political commentators seem fairly optimistic that the country’s economic situation will now improve, with Italians having voted in their first majority government in a very long time. However, only time will tell whether this new-found optimism will turn around the growing unemployment, inflation and pension crisis that gripped the country in 2007.
Speaking at the group’s annual address to the Cosmoprof press contingent, Unipro president Fabio Franchina discussed 2007’s promising results and told SPC that despite these concerns there is currently a positive feeling in the market. “We have every reason to think that the 2008 Unipro figures will be even better than this year. If Italians have stayed loyal to the industry during this rocky economic climate, then we have reason to think they will do the same next year. The key for us as a country is to recognise that the consumer is more demanding than ever about its C&T needs, and we must invest continuing time and money into research and innovation to strengthen our export market further and to give our consumers the best quality choice they have ever had.”
Despite this vote of confidence, and the domestic market holding firm according to Franchina, Unipro figures show that the trend in exports has slowed compared to previous years. In 2007, this sector grew by just 1% to a total €2,280m. Franchina admitted that tensions over crude oil prices coincided with Europe’s record-breaking value against the dollar in the second half of last year and this has had a negative effect on the value of Italian cosmetic exports. He added that France remains the top market for Italian exports, followed by Germany, the UK and the US.
Skin care shines on:
As with last year, skin care was the big Italian success story for 2007, with the body care category alone posting a 4.8% rise to total a huge €1.23bn. Specifically, the moisturising, nourishing and exfoliating creams categories were collectively worth €186m, up 7.2% on 2006, while the men’s skin sector also saw significant growth, with men’s treatment creams putting on 8.5% to jump to €48.1m. Meanwhile the facial products sector put on 2.6% to reach a market value of €1.18bn, with the real success story in this field being the sales of eye contour creams where sales rose nearly ten-fold in percentage terms to reach €134.5m. Other highlights were make-up removers and cleansing wipes, growing by 3.7% and 3.3% respectively. However, it wasn’t all gains in the facial products category – tonic lotions registered a loss of 1.3%, dropping to €42.4m, while facial moisturisers and nourishing creams also slid 0.3% to €287.4m.
Sun care products, always a key area for the industry, grew 7.1% to reach a now significant market value of €343.1m.
When it came to scents, the women’s fragrance sector rose by 3.9% to €545.4m, confirming the popularity of fragrance in the lives of Italian women. The perfumery sector was responsible for channelling €483.1m worth of this, with the mass market share coming next in line at €60.6m sold. Men’s fragrance showed even more promising growth, jumping 4.6% to a record high of €351.2m in keeping with the general rise in usage of male lines. The men’s grooming market, including shaving soaps, aftershave lotions and cream lotions, confirmed this further growing to €216.4m, a rise of 2% on 2006.
The hair care sector actually saw a loss in value of 0.1%, though it still posted impressive overall value of €1.16bn, with hair dyes cushioning this loss, managing to put on 1.9% to reach €244m. Sales of Italian lip products also plummeted, seeing a worrying dip of 2.7%, with sales of lipsticks, lip glosses and lip pencils all taking a nose dive and leaving the category turnover at €271m.
But despite these blips, the view from Unipro is ultimately positive. Franchina continued: “The market is stronger than it has been for a long time and this is down to product quality and innovation. The quality of cosmetics and toiletries in Italy is second to none and people know that Italy is synonymous with good quality – that’s the reason 60% of all cosmetics in the world are manufactured in Italy. People know the quality in Italy is the highest in the world and they trust our beauty market implicitly.”
Channelling growth:
Most traditional sales channels saw positive growth in 2007. The chemist/drugstore channel once again saw the most effective growth, rising 8.5% to €1.3bn sales and illustrating the fact that over 15% of cosmetics in Italy are sold through this channel. The perfumery channel also grew by 3.3%, while mass organised distribution, the sector that accounts for the largest share in the cosmetics market at 44%, managed a 1.1% rise.
The professional channels generated total value of €970m, with the revival most obvious in sales made in the beauty salons and beauticians sector (up 2.1%) and less striking in the case of professional products sold through hairdressing salons (up just 1%).
In terms of retail distribution, body care and face care now account for a 16% share, with hair care close behind at 15%, personal hygiene at 15% and cosmetics at 14%. Next comes women’s fragrance and oral hygiene, jointly tied on an 8% share, second to last is men’s fragrances at 5% and men’s grooming products made up the smallest segment at 3%.
Future focus:
Despite gains in most categories, it was the over 50s market that had really piqued Franchina’s interest. He commented: “The over 50s market, or the baby boomer generation as it is known, spent €2.2bn last year, which was a staggering rise on 2006. This would explain the rise in turnover of products such as cellulite creams (which put on 7.5% to reach €110m) and body firming and anti-ageing creams (which rose by 10% and are now worth over €63m as a category). This is definitely an area we are targeting as a country as these consumers have the money to spend on themselves now their children have grown up and left home. Our manufacturers are developing more niche products for this market, many of whom will spend good money on a product if they feel the quality is high enough.”
Key market trends:
Two main reasons were suggested for the successful state of the Italian market. First was the fact that cosmetics have become a “staple feature of everyday life” for Italian men and women, from personal hygiene to wellness, despite “vigorous influences against the propensity to consume”. The second was the now constant process of polarisation in consumption that translates into a shift towards niche products and towards products with an evidently high quality-to-price ratio. Evidence that the desire is there to spend money on particular ranges, targeted at particular age groups and needs was a fact corroborated by many exhibitors at Cosmoprof this year.
Sofia Hannaert of Italian cosmetics range Bella Oggi feels that the teenage market is a key area to explore. “We are focusing on young, trendy products this year. We’re launching two specific teen products at the show: Beauty Kits and Tenderpets. We have found teenagers are the key market to target and others should be doing the same. There is lots of development in the teenage sector across Italy.”.
Christian Ross, ceo of Milan-based Exclusive Elegant feels that colour cosmetics was the trend to back across all age groups. “In the past year I’ve never seen so much desire for strong lip colours and eye colours and we’re launching several more this season. This is helped by young people using more cosmetics these days as they tend to go for bright colours.”
Mark Anthony Carter, export manager at Layla Cosmetics in Milan emphasised that beauty is still extremely important to Italians, a fact reflected by the company’s increased year on year sales. “Beauty is synonymous with fashion in Italy and therefore will always be in vogue. We are seeing strong sales across lip glosses, eyeshadows and blushes – anything bright really as this is a key trend for this year. We also try and customise our packaging more to attract specific ages. For teenagers we put charms on our lip gloss tubes and pay attention to the colour and design very specifically. If you know the Italian market, as we feel we do, you must always adapt and improve.”
So, as Italian industry experts and companies testify, when the market is willing to purchase, as it seems this one is, this desire must be backed up with innovation and an expert knowledge of your customer. This is omething the C&T industry in Italy seems to be achieving at the moment.