Cosmetica Italia assesses the impact of COVID-19 on the Italian beauty industry – WWD

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MILAN – “The numbers don’t reassure us, but luckily our performance was slightly better than expected. Now is the time to react, although it may take longer than expected to get back to [pre-pandemic] performances, ”said Renato Ancorotti, president of the Italian association of beauty companies Cosmetica Italia during a webinar on Wednesday.

During the event, the organization released preliminary data on the performance of the industry in 2020. Last year, the total sales of Italian cosmetics companies fell 12.8% to 10.47 billion euros compared to 2019.

Exports – a key driver for the domestic beauty industry – fell 16.5% to € 4.1 billion. Italian supply companies have been hardest hit by the contraction in international demand caused by the pandemic, as sales of these companies fell 17.5% to € 1.37 billion last year.

Inevitably, the health emergency affected distribution in most channels. The closures and restrictions caused a slowdown in sales generated at professional hair and beauty salons, where revenues fell 28.5% and 30.5% respectively, resulting in a combined loss of € 240 million.

Similar performances were recorded for direct door-to-door sales as well as in perfumeries and herbalists, with declines ranging between 27% and 30% and losses of 150 million euros, 550 million euros. euros and 120 million euros, respectively.

Pharmacies and supermarkets, which were able to operate with more continuity throughout 2020, showed greater resilience, each recording losses of 2.5%. In particular, the mass market is still the main distribution channel for cosmetic products in Italy, accounting for 44.4% of total sales, followed by pharmacies and perfumeries.

The only channel with a positive performance was e-commerce, where sales jumped 42% to around 700 million euros last year, making it the fourth largest, accounting for 7.4% of total sales.

Although projections for the first half of 2021 showed that online sales will continue to grow at the same rate, Ancorotti underlined the importance of physical stores, noting that the 200 million euros earned in online sales last year “ can not do for other losses.

However, apart from e-commerce, projections for the first half of 2021 show a recovery and positive signs across all channels. Overall, total sales and exports are expected to grow 6.1% and 5%, respectively, by the end of 2021.

Ancorotti praised the resilience of companies and their entrepreneurial engagement even in difficult times, as last year companies continued to invest 6% of their revenues in digitization and R&D activities, compared to a national average of 3 % invested by companies operating in other manufacturing sectors.

“Flexibility and adaptation to the changing context, digital investments and maintaining high quality standards in production” were three of the positive elements that the pandemic has revealed in beauty companies, according to Ancorotti. On the other hand, he referred to the “difficulty in planning activities, budget cuts due to the contraction in income, the unexpected acceleration of the transformation of distribution models and changes in consumer behavior” as the drawbacks of the pandemic for industry.

An internal survey of association members – which increased last year to include 594 companies, 95 percent of which are small and medium-sized – confirmed the general optimism, with 46 percent of companies believing that ‘a recovery is already underway and 37 percent of they believe it will happen in the second half of the year, while 14% cautiously predict it will happen in 2022.

“On the one hand, companies feel the urge to restart, but on the other, they need new and solid conditions to be able to achieve their objectives, accompanied by a government plan that can support them in terms of promoting Made in Italy, innovation, digitization and development in foreign markets, ”said Ancorotti, who was cautious about the latest developments in the national political situation. Namely, his approach has clashed with the general sense of hope and confidence generated by the appointment of economist and former European Central Bank President Mario Draghi, who was invited last week by Italian President Sergio Mattarella. to form a new government following the resignation of the Prime Minister. Giuseppe Conte due to a government crisis.

On the product front, Ancorotti stressed the ever-increasing importance that cosmetics with natural and long-lasting functionality will have in the future, while those claiming anti-aging and multi-functional properties will experience a slowdown.

A report by the Cosmetica Italia research center revealed that sales of cosmetics with natural and organic formulations generated 778 million euros last year, while sustainable products totaled 876 million euros, for a combined value of 1.66 billion euros. In particular, hair products accounted for 33% of combined sales, followed by skin care and makeup.

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