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6 Apr

Cosmetica Italia Assesses COVID-19 Impact on Italian Beauty Industry

Cosmetica Italia Assesses COVID-19 Impact on Italian Beauty Industry

MILAN — “Numbers are usually not comforting us but luckily our performance was barely higher than we expected. That is the moment to react, even when it would take us longer than we thought to return to [pre-pandemic] performances,” said Renato Ancorotti, president of the Italian association of beauty corporations Cosmetica Italia during a webinar on Wednesday.

In the course of the event, the organization released preliminary data on the industry’s performance in 2020. Last 12 months, total sales of Italian cosmetics corporations were down 12.8 percent to 10.47 billion euros in comparison with 2019.

Exports — a key driver for the national beauty industry — decreased 16.5 percent to 4.1 billion euros. Italian supply corporations were those most affected by the contraction in international demand attributable to the pandemic, as these firms’ sales were down 17.5 percent to 1.37 billion euros last 12 months.

Inevitably, the health emergency affected distribution across most channels. Lockdowns and restrictions caused a slowdown in sales generated in skilled hair and wonder salons, where revenues decreased 28.5 percent and 30.5 percent, respectively, leading to a combined lack of 240 million euros.

Similar performances were registered for direct sales made through door-to-door operations in addition to in perfumeries and herbalist shops, with decreases fluctuating between 27 percent and 30 percent and losses of 150 million euros, 550 million euros and 120 million euros, respectively.

Pharmacies and mass distribution, which were in a position to operate with more continuity throughout 2020, showed greater resilience, each reporting losses of two.5 percent. Particularly, the mass market still represents the prime distribution channel of cosmetics goods in Italy, accounting for 44.4 percent of total sales, followed by pharmacies and perfumeries.

The one channel performing positively was e-commerce, where sales jumped 42 percent to roughly 700 million euros last 12 months, making it the fourth largest, accounting for 7.4 percent of total sales.

Although projections for the primary half of 2021 showed that online sales will proceed to grow at the identical rate, Ancorotti stressed the importance of brick-and-mortar stores, underscoring that the 200 million euros gained in online sales last 12 months “can’t make up for the opposite losses.”

Yet, along with e-commerce, projections for the primary half of 2021 show a recovery and positive signs across all channels. Overall, total sales and exports are expected to extend 6.1 percent and 5 percent, respectively, by the top of 2021.

Ancorotti lauded corporations’ resilience and their entrepreneurial commitment even through difficult times, as last 12 months firms continued to speculate 6 percent of their revenues in digitalization and R&D activities, in comparison with a national average of three percent invested by corporations operating in other manufacturing sectors.

“Flexibility and adjusting to the evolving context, digital investments and continuing to secure high-quality standards in production” were three of the positive elements the pandemic revealed in beauty corporations, in keeping with Ancorotti. Then again, he mentioned the “difficulty in planning activities, budget cuts on account of contractions in revenues, the unexpected acceleration within the transformation of distribution models and shifting behaviors of consumers” because the cons of the pandemic for the industry.

An internal survey conducted among the many association’s members — which last 12 months rose to incorporate 594 corporations, 95 percent of that are small to medium-sized — confirmed the general optimism, with 46 percent of corporations believing a recovery is already in progress and 37 percent of them considering it should occur within the second half, while 14 percent cautiously predict it should happen in 2022.

“On one hand, corporations feel the urge to restart, but on the opposite they need recent and solid conditions to give you the option to attain their goals, flanked by a governmental plan that may support them when it comes to the promotion of Made in Italy, of innovation, of digitalization and development in foreign markets,” said Ancorotti, who sounded cautious on the newest developments within the national political situation. To wit, his approach clashed with the overall sentiment of hope and confidence generated by the appointment of economist and former European Central Bank president Mario Draghi, who last week was invited by Italian President Sergio Mattarella to form a recent government following the resignation of Prime Minister Giuseppe Conte on account of a government crisis.

On the product front, Ancorotti underscored the ever-increasing importance that cosmetics offering natural and sustainable features can have in the longer term, while those claiming antiaging and multifunctional properties will see a slowdown.

A report compiled by Cosmetica Italia’s study center found that sell-in sales of cosmetics with natural and bio formulations generated 778 million euros last 12 months, while sustainable products totaled 876 million euros, for a combined value of 1.66 billion euros. Particularly, hair products accounted for 33 percent of combined sales, followed by skincare and makeup.

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