How did the cosmetics industry in Italy react to the outbreak of the 2020 pandemic crisis?
Losses were heavy, with a 12.8% drop in turnover at the end of last year. However, the sector performed better than initially expected.
The latest economic survey by Cosmetica Italia takes a snapshot of market developments, providing interesting data and trends with which to look ahead to the recovery expected in the coming months.
The inevitable difficulties caused by the health emergency situation have conditioned domestic demand, with losses of over 500 million in the perfumery channel, 150 in direct sales and 200 in professional channels such as beauty centres and hairdressers. These figures were partially offset by the growth in online sales, reflecting a trend that is now consolidated in many sectors.
Also weighing on the negative figure for the end of 2020 was the drop in exports, with a contraction of over 4.1 billion euros for a highly competitive sector that in 2019 had recorded a trade surplus of over 3 billion euros.
The persistence of a state of uncertainty for the world economy still hinders a full relaunch of exports, to which the Italian cosmetics sector owes around 40% of its turnover: however, as highlighted by the study, the recovery expected for the second quarter of this year – favoured by the vaccination campaign – should ensure an improvement in the situation.
In spite of a complex scenario, the supply chain has nevertheless shown itself capable of reacting during the past few months: a spirit of adaptation that has made it possible to maintain high investment in R&D and, at the same time, to limit losses compared to other sectors of our manufacturing industry. One example is clothing and leather goods, with losses of almost 30%.
Contributing to a less negative result than expected is undoubtedly the essential nature of many cosmetic products, such as skin and hair care products, combined with growing consumer awareness of organic and sustainable products. Last year was marked by a positive trend for these products, which in Italy are now worth over 1,654 million euros in terms of sales.
As far as foreign markets are concerned, which are the most interesting ones?
Alongside a marked fall in exports to our historic partners (France, Germany, the United States and the United Kingdom), there are positive figures for other countries: China, the Czech Republic and Ukraine are leading the list, with imports from our country up 6.1, 6.2 and 14.8% respectively.
Continuing to be present on foreign markets is certainly a key factor in the recovery of the supply chain: as emerges from the Cosmetica Italia survey, 60% of firms are convinced that the relaunch has already begun, demonstrating optimism for the future. The rescheduling of the main trade fairs – both national and international – for the second half of the year is certainly helping to instil positive expectations in companies.
However, the current months will be crucial for rethinking existing strategies in order to make up for lost ground: a wish once again expressed by the companies interviewed in the survey, whose priorities include reorganising the supply chain.
The goal is to optimise their presence in a difficult competitive context, where the coming years could be marked by an increasing number of mergers and acquisitions; to this is added the need to make distribution policies more efficient, focusing increasingly on digital and on new foreign markets characterised by growing demand.
This is the only way for the Italian cosmetics industry to continue to be successful, positioning itself among the industrial excellences of our country.