Italy – a success story

Published: 1-Jul-2010

For the second year in a row the Italian cosmetic industry has put on a brave face against the economic ups and downs and is still growing despite negative results in the professional markets and a noticeable reduction of exports. Nadia Di Martino reports

For the second year in a row the Italian cosmetic industry has put on a brave face against the economic ups and downs and is still growing despite negative results in the professional markets and a noticeable reduction of exports. Nadia Di Martino reports

In the face of economic uncertainty and slowdown, another positive year for the Italian C&T industry confirmed the industry’s claim that cosmetics have become part of the daily life and habits of consumers.

As usual, Cosmoprof Worldwide Bologna was the ideal place to get a glimpse of the Italian cosmetics industry. According to Italian cosmetic trade association Unipro there has been an upward trend in the cosmetics market in Italy. Unipro president Fabio Franchina drew attention to Italian manufacturers and their efforts, particularly in the last couple of years: “The nearly 500 member companies from all over Italy make the cosmetic industry one of excellence, distinguishing themselves in the framework of the Confederation of Italian Industry (Confindustria) as one of the few sectors with a positive balance of trade,” he said.

Franchina also highlighted how: “supply-side, segmentation and hyper-specialisation in all channels confirm Italian firms’ ability to keep up with the changes in a market that refuses to dispense with the everyday use of cosmetics, increasingly a means for consumers of all backgrounds to achieve individual wellness.”

Unipro stated that in 2009 consumption of cosmetics and toiletries in Italy was enviable when one takes into account the heavy restraints that consumers had to face, in particular those with less spending power.

Indeed for many it wasn’t a choice but a necessity to give up certain cosmetic treats but manufacturers did their best to lure consumers to their tills by launching more affordable or multifunctional items. Also more often than ever, they launched items in bigger formats as this represented another way of providing consumers with more of the product at almost the same price.

These moves seemed to work well as, among consumer goods, cosmetics ranked second only to foodstuffs in recording a positive performance on the Italian market.

In 2009 the C&T market was worth €9.1bn according to Unipro, up 0.3% from the previous year. On a negative note, exports were heavily damaged by the economic depression, with losses of 9.8% and revenues standing at just above €2bn. This was due to other countries worldwide feeling the crisis more than Italy. Conversely, imports also diminished by a staggering 10%; evidence of the growing success of Italian companies in Italy.

The pharmacy goldmine

Despite the worldwide economic crisis that has affected markets since the autumn of 2008, consumption of cosmetics in the pharmacy channel remained constant if slightly reduced in comparison to a few seasons ago. In 2009 sales in this channel stood around €1.4bn representing about 15.7% of the total cosmetic market. Italian consumers seem particularly happy to buy cosmetics in pharmacies as here they find the customer service and attention to detail that they demand and which is far superior to all other channels.

Pharmacies were in tune with their needs, especially for safety and reliability. The channel literally was a goldmine of new launches and innovation. Among the sectors that were particularly successful in the pharmacy channel was sun care as sun risk, prevention and health became the centre of several campaigns in Italy to engage consumers in protecting their skin in the sun.

Alessandro Pasquini, senior brand manager at sun care company Angstrom (PharmaChem) says: “it’s interesting to see how the market, and ultimately consumers, are becoming more and more careful about any potential risks to their health and this obviously includes sun damage.”

Consumers often feel safer when buying products in the pharmacy and Italian retailers have made the effort to upgrade what used to be a somewhat dry selling point by shifting towards a perfumery setting without leaving behind that safety and knowledge that attract consumers in the first place.

“In the past few years, buying cosmetics in pharmacies has become something of a habit, with Italians relying heavily upon products that are recommended to them by pharmacists. This trend has increased even further during the recession as a response to consumer desire to cut down on superfluous items and focus on efficacious ones,” says Michelle Gueritte, commercial director at skin care company Laboratoires Nuxe Italia.

Gueritte also defines the new status of this channel in Italy: “over the past three to five years, Italian pharmacies have had to substantially evolve and modify due to economic losses and because of intensified competition originating from the mass market and from parapharmacies. Pharmacists have had to re-evaluate the way they run their businesses and focus on people, their customers and their main core values. So complete solutions for their well-being have been put in place while the pharmacy has also become a more aesthetically pleasing and less clinical place. Basically the era of the pharmacist/ entrepreneur has been born and these are business people who really invest in their staff training.”

Meanwhile parapharmacies have also started to appear in Italy – a new phenomenon that still needs to be quantified but that has definitely contributed to the success of the entire channel. Throughout last year, pharmacies were the channel most able to respond to rapidly changing consumer needs and it’s not surprising that it went from selling 1.05 million units of cosmetics in 2004 to the current 1.431 million units. Such a ready response to customers’ needs was also found in the mass market, with an average growth of 1.2% as the market was able to promptly respond to consumers’ diversification as well as the polarisation of consumption.

Table 1: C&T Consumption in Italy 2010 (€M)
Hair care1,181.380.6
Facial skin care1,169.58-0.3
Facial make-up321.88-0.4
Eye make-up258.361.6
Lip products263.211.0
Hand care191.206.9
Body care1,267.121.8
Personal hygiene1,068.171.8
Oral hygiene655.762.1
Baby care132.272.9
Male grooming211.57-1.6
Source: Unipro

Table 2: Cosmoprof 2010 in figures
Exhibition space92,821 sq m
Domestic visitors146,331 (+4.88% on 2009)
International visitors33,404 (+6.34% on 2009)
Total exhibitors2,254 (+0.26% on 2009)
Domestic exhibitors929 (+0.4% on 2009)
International exhibitors1,324 (+0.15% on 2009)
Source: SoGeCos

The mass market was also a fruitful channel in Italy and a big driver for sales of cosmetics, cashing through its tills over €4.1bn and growing by 2.6% over the previous year. Taking up a solid 45% slice of the entire Italian C&T market, the mass market was able to provide consumers with a complete offer, and one that was different and specific for everyone.

Francesca Galassi, product manager for Deborah (Deborah Group) explains: “Italian consumers are very sensitive to innovation and they like products that can bring together quality and efficacy at the right price. Today more than ever before we must meet these needs and take care of this desire for inexpensive and effective beauty items.”

On the same line, Giuseppe Fanello, marketing manager at Mirato, a well known name in the Italian C&T panorama, says: “We can’t deny that the economic downfall has had an impact and has caused evident cuts in consumer spending in Italy. Consumers are now much more careful about convenience. They demand high quality products at reasonable prices,” which explains why they often turn to the mass market.

Perhaps unexpectedly, door-to-door sales showed a 4% growth over the previous year, with sales exceeding €391m and representing a healthy 4% of the total consumption of cosmetics. Tailored customer service explains the success of this service that managed to understand consumers’ needs.

Another channel that reconfirmed its success was that of herbalists, which showed a positive trend above the annual average. Sales stood at €330m growing by 4.9% over 2009. Thanks to the further public appreciation of the natural and organic trend, herbalists managed last year to also sell highly priced and niche products.

Need for a change

While perfumeries represent 25% of the cosmetic market right behind the mass market, in 2009 this channel performed badly sliding 3.5% with a total value of around €2.2bn. This confirmed a trend that dates back to a few seasons ago. The channel was extremely lively, with many launches, stock reductions and attempts at keeping prices under control but all this wasn’t enough to modify its fortunes. In general, the most luxurious and selective brands succeeded in perfumeries rather than masstige options as the former were more solid in the uncertain economic climate.

<i>The Italian sun care sector thrived in 2009, a result of several national sun safety campaigns</i>

The Italian sun care sector thrived in 2009, a result of several national sun safety campaigns

However perfumeries have at least got the hint that they need to evolve and face deep changes if they aim to lure consumers back to their tills. Italian perfumery group Limoni recently announced the launch of its new retail chain, B Basic Beauty, which will be aimed at consumers who want to watch what they spend. The new chain will target budget-aware consumers and will stock a brand new private label brand that has been created especially for B Basic Beauty.

<i>The male grooming sector, however, declined more than any other (-1.6%)</i>

The male grooming sector, however, declined more than any other (-1.6%)

Limoni has also revealed that it is franchising up to 20 of its stores by the end of this year as part of the company’s sales plan to increase its turnover by 10% by the close of 2010.

Similar moves from other retailers might help improve the current status of the perfumery channel. According to Michela Marchesi Patti, marketing director for local success Aquolina (Selectiva): “Our brand is sold exclusively in perfumeries and we have noticed that our customers are more attentive about their purchases, both about what they buy and how much they spend. Because of the hard financial times we have felt much more pressure to be innovative and have had to up the ante.”

Meanwhile the professional channel, both in terms of beauty salons and hairdressers, represents the most affected sector of C&T in Italy as the recession made sales and visits to these sites less frequent than ever. Consumption in beauty salons has been dropping steadily for at least the last two years and in 2009 it was down by a worrying 4.5% to €196m, which makes it imperative for operators in the channel to understand that it’s time for a change.

Nails rule

Looking at product categories, 2009 confirmed how the average consumer in Italy didn’t give up cosmetics but focused instead on more specific and multifunctional products.

Hand care products, including hand creams and nail polish, showed the highest growth in 2009, up a staggering 6.9% over the previous year to €191.20m. It should also be noted that this sector recorded a striking 10.4% growth in the pharmacy channel. In particular nail polish, to which consumers turned most frequently as a treat in recessionary times, showed the most positive performance, up by 13% over 2008 to €85.94m. Evidence of the popularity of this segment was the ‘area nails’ introduced by Cosmoprof for the first time this year and a focus that turned out to be extremely successful.

Body care products attracted the highest value of consumption, habitually reaching €1.2bn in 2009 with a growth by 1.8% over previous year. Deodorants had an extremely good year too, up by 4.1% to nearly €400m, while hair removers were up by 6.8% to more than €73m. Bathroom products were up by 1.8% to a value of about t1.1bn. “To understand this market it must be said, first of all, how even during the worst economic downturn, bathroom products have maintained positive sales levels, which is something to be admired,” says Francesca Sala, brand manager for Unilever Italia. “With our brand Dove, we have seen an almost 30% growth rate as consumers strive for value for money.”

<i>Bathroom products maintained good sales levels</i>

Bathroom products maintained good sales levels

On the Italian market, no product category showed an extremely negative performance, with the exception of anti-cellulite products, down 9.1% to just over €100m. Men’s lines as a whole – including shaving soaps, aftershaves and lotions – slid more than any other category, recording losses of 1.6% to €211.57m.

However this is a segment that manufacturers are still keeping an eye on, hopeful that once the economy improves and with to the right marketing moves, it will pick up once again. Giuseppe Francioni, head of Biotherm Italia, says: “In the past few years Italian men have definitely increased the amount of effort they put into their personal care routines. The result of this trend is that taking care of their body and image is not perceived as a duty anymore but as a pleasurable activity. Furthermore it is completely acceptable to be a man who is concerned with his image. Numbers have almost doubled in just five years.”

Meanwhile products for the face were slightly down by 0.3% to €1.2bn. However, according to Francesca Galassi, product manager at Deborah: “The Italian cosmetics sector, including facial skin care, hasn’t really been affected by the recession up to now. This market is keeping pace because Italian consumers are savvy and knowledgeable. Such is the resilience of the market that the average C&T unit price has gone almost unchanged throughout the economic crisis. Some companies that have invested in their products and in trade relations are positively taking up the challenge and the advantages of what should be considered a time of real opportunity.”

And, considering the latest results, this seems the approach that most manufacturers have adopted in Italy, and with good results so far. Once the global economy is fully restored, there might be a happy ending for the Italian cosmetic industry.

Rewarding the perfumery industry
With an updated voting system and a new jury composition, the traditional International Accademia del Profumo Award in its 21st edition took place on the 16 April, the day Cosmoprof Worldwide Bologna opened to the public. For the first time, the winning perfumes, one for him and one for her, were chosen by a jury of consumers who voted between February and March in perfumeries and retailers such as La Rinascente across Italy. Further to this, a special jury, made up of established beauty editors, perfumists and show-business personalities voted for the best creations in the categories of olfactory, packaging, communications, niche and Made In Italy. “For the first time”, says president of the Accademia del Profumo Luciano Bertinelli, “Accademia del Profumo has involved all publishers, so as to maximise the event’s visibility and encourage investment on the part of firms working in the perfumery channel, which achieved a market turnover of €2.3bn in 2009.”
Furthermore, this year the Gruppo Vendite in Profumeria of Unipro (Perfumery Channel Sales Group) also presented a new project to celebrate the perfume industry chain by introducing the first edition of the Melik Award, dedicated to beauty journalist Elena Melik who devoted a a great deal to the perfumery and cosmetics sector.
The aim of this new prize is to stimulate rather than celebrate the excellence of perfumery by choosing a personality or an idea every year.

Best Perfume of the Year for Women MARC JACOBS LOLA
Best Perfume of the Year for Men CK FREE

Best Olfactory Creation for Women A SCENT BY ISSEY MIYAKE
Best Olfactory Creation for Women ACQUA DI PARMA MAGNOLIA NOBILE
Best Female Packaging A SCENT BY ISSEY MIYAKE
Best Female Communication MISS DIOR CHERIE L’EAU
Best Male Communication D&G 1 LE BATELEUR
Best Product Made in Italy for Women ACQUA DI PARMA MAGNOLIA NOBILE
Best Product Made in Italy for Women BLV EAU DE PARFUM II
Best Product Made in Italy for Men COSTUME NATIONAL HOMME
Best Niche Perfume for Women SERGE LUTENS FEMINITE’ DU BOIS
Best Niche Perfume for Men ETRO PEGASO

Cosmoprof and Cosmopack 2010
At the last minute some exhibitors and visitors were unable to take part in Cosmoprof Worldwide Bologna 2010 as a result of the Icelandic volcano ash cloud that grounded virtually all European flights. Despite this the exhibition, in its 43th edition, was still hailed as a success. Organiser SoGeCos actually reports that total of foreign and local visitors was up by 4.88% on last year with 6,808 more visitors than 2009.
The majority of visitors, namely 77%, came from Italy with the remaining 23% made up of international visitors from across the globe.
With a slight increase in exhibition area and exhibitor numbers, Cosmopack and Cosmoprof 2010 tried to cater for all taste with a series of conferences and events aimed at creating a lively conversation among leaders of the cosmetics industry.
Much talk focused on an ethical way of doing business and on green solutions and Cosmoprof introduced Cosmoprof Nature Green-volution, an event fully dedicated to natural and bioorganic cosmetics. Running for four days, it looked at all the related aspects of this segment, including certification and green packaging. It was also the theme of a seminar at Cosmopack that looked at how the cosmetic industry can help the final consumer to be more environment oriented.
Meanwhile the Symposium Spa also took place, with presentations looking at how to set up a spa mixing local culture with this type of business and getting the best out of it.
Looking at the future, the 2011/2010 Trend Seminar, focused on beauty runway trends and beauty packaging forecasts.
Aureliana De Sanctis, delegate administrator of SoGeCos, said: “the recorded data means a lot if we take into account that we believe we have lost about 18% of participants due to the situation in Iceland.”

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