A lot of the second and fourth quarter results that have been coming in over the last couple of months, both from suppliers to the cosmetics industry and manufacturers, look pretty promising, even showing double-digit growth in some cases. The luxury sector is looking particularly upbeat; Estée Lauder for instance says it has seen its best increase in operating income since going public in 1995. And certain companies now half way through their financial year are revising profit estimates upwards for the full year. So perhaps the concept of ‘the lipstick effect’, often dismissed in this latest recession, isn’t too wide of the mark.
Not such good news is the fact that a number of ingredient and packaging supply companies have raised their prices in the last few months, largely as a result of increases in material costs but not helped by the fact that many companies are demanding longer payment terms.
Meanwhile suppliers continue to consolidate, which inevitably decreases the choice of supply available to manufacturers.
It has been a tough couple of years for the industry and many sacrifices have had to be made in pursuit of leaner businesses that are better equipped for survival. And while everybody would like to be enjoying this moment and the general outlook can realistically be termed optimistic, caution will undoubtedly remain the watchword for the forseeable future.