By  on April 6, 2007

Bologna, Italy — An emotional connection.

Those three words summed up the main theme of this year's Cosmoprof and covered everything from an increased focus on the consumer to greater innovation to a greening of everything from packaging to the design of trade show stands. They're trends that are bound to be seen over the rest of the year and beyond on retail floors and at international trade shows stretching from Singapore to Cannes.

Beauty firms exhibiting at the five-day Cosmoprof here said they are increasing their marketing budgets and expanding into new product categories in their attempts to tap into new customers. The themes fed into the bullish mood at the fair, which drew 145,331 visitors, a 5 percent increase over the prior year's session, while organizers celebrated the fair's 40th anniversary.

In Italy, at least, the moves are paying off, since the industry has rebounded from three years in the doldrums. The Italian beauty industry generated 8.08 billion euros, or $10.15 billion at average yearly exchange, in 2006, representing a 2.7 percent increase over the prior year. The country's beauty export business rose 4.5 percent to 2.24 billion euros, or $2.8 billion, in the period, but Fabio Franchina, president of Unipro, said, "We still are not anything compared to what we could be."

Unipro plans to host 21 programs for Italy's small and medium-size beauty companies to set up distribution around the world, particularly in emerging markets. On the home front, Franchina said the long period of decline of perfumeries had stabilized, and retailers had become aggressive in building their franchises with a sophisticated and personal touch. He cited as examples Mazzolari perfumery's expansion of its flagship in Milan and Rinsascente department store's beauty department revamp.

"They're getting absolutely closer to the consumer," he said, adding that when it comes to product, Italian beauty firms are spending more on research and development and marketing than ever before.

The Estée Lauder Cos., which was situated in the heart of the Beauty Onstage along with P&G Prestige and L'Oréal's Luxury Products Division, certainly epitomized the customer-friendly strategy. The company was so friendly, in fact, that it invited almost 300 VIP European customers of its Estée Lauder and Clinique brands to take part in interactive product presentations."It takes us back to what everyone is talking about, an emotional connection with the consumer," said Orna Schezen Nofarber, managing director of the Estée Lauder Cos. in Italy.

The Coin department store, based in Venice, is trying to get closer to a younger consumer through a 40 million euro ($53.4 million at current exchange) renovation of its 40 stores.

"What we did in the past was just think about women 30 to 55 years old, but they were getting older and older," said Paolo Valerio, category manger of the retailer, who explained that Coin added more beauty brands, including Korres, Amazon Secrets and Dr. Hauschka, plus spiffed up the retail concept with pink lacquered merchandising units. Valerio said beauty sales in the 12 renovated stores had already spiked 40 percent to 50 percent.

By the end of this year, Coin's fast-fashion retailer Oviesse is to introduce 50 perfumery corners into its doors. Coin will also launch a private label beauty line there.

The renewed attention to consumer dynamics is being matched by a re-engineering of the business model at many companies, ranging from an expansion into new product categories to a reinvention of corporate mission.

One example of category diversification is Groupe Arthes, a mass-market fragrance company based in Grasse, France, that is breaking into the prestige sector with two recently licensed brands, Smiley and Elite.

"Our aim is to establish ourselves as a main player on the fragrance distribution market in mass and selective," said Francois Damide, president of Arthes' new U.S. subsidiary, which also produces the Jeanne Arthes, Boum and Love Generation brands.

Seen at the Arthes stand was Ian Ginsberg, owner of C.O. Bigelow Apothecary in New York, who said the retailer would start distributing Smiley in about a month.

Another company broadening its scope is Deborah, the rapidly expanding Milan beauty house. "The company is modifying our strategy to create value on three points — our brands, through our network and by opening our subsidiaries to partnerships with other cosmetics groups," said Gianluca Bonetti, Deborah's chief executive officer. "We consider we can add value by opening our network. We are becoming distributors." Bonetti added his firm was also going into the private label business.As previously reported, Markwins International is pushing hard into the prestige segment with the introduction of CK Beauty color collection from Calvin Klein. Markwins, which began as a Hong Kong producer of promotional gift sets, has been steadily climbing up the distribution ladder, first by acquiring the Wet n' Wild mass color line, then by adding the SoHo makeup brand, which goes from drugstores to midtier department stores.

Now, the company is pushing into selective distribution, and it's only the beginning, said Eric Chen, Markwins' ceo. He said the company was developing a Calvin Klein skin care line, slated for launch perhaps as early as next spring. He said talks were under way for either licenses or joint-venture projects for fragrance.

Markwins' ambition is more than matched by executives at Morris, which last week announced it had been sold by Henkel to a private investment group called Invest Industrial and a group of Morris managers as minority shareholders.

"It is the same game plan as Selective Beauty," said Martin Trout, Morris' export manager for the Southern Hemisphere, referring to the French beauty manufacturing and distribution conglomerate. "We're looking at acquisitions and signing new licenses." Last year, Morris signed three niche Italian licenses, Breil, Bois and Laura Tonatto. Morris also inked a distribution deal for Piguet in Italy alone.

Company founders of Selective Beauty, whose latest move, as reported, was the acquisition of U.S. distribution for Ferragamo Parfums, summed up the concept of the new business model they are inventing.

"We think we are big enough to matter and small enough to care," said Corrado Bondi, president of Selective Beauty.

As reported, the company is structured into four divisions — luxury, prestige, fashion and lifestyle — plus distribution. What makes it tick is an evenhanded dedication to both securing licenses and wholeheartedly backing a distribution business. Selective Beauty executives claim they have representatives covering 70 percent of the world market.

"We have subsidiary coverage of a $1 billion multinational in a 152 million euro [$202.95 million] company," said Christophe Cervasel, ceo, who said by the end of the year, the firm expects to employ 600 people."The price of flexibility is complexity," said Bondi.

Korres Natural Products, an Athens homeopathic beauty line, is focusing on expansion while gearing up to make an official public offering on the Greek stock exchange next Thursday. According to Giorges Korres, the company's managing partner, Korres should add eight doors to its existing network of seven by the end of this year. In 2006, Korres generated 26.9 million euros at wholesale in global sales, or $33.8 million. Korres is also launching new facial skin care product based on thyme honey, billed as a moisturizer.

The most visible move into the eco-friendly camp was made by Davines, based in Parma, Italy, which had a stand designed by Shigeru Ban and created entirely with recyclable cardboard. The area was furnished with screens and lamp shades made of the same material.

Davines' stand was a visible nod to the company's repositioning itself on the motto "Sustainable Beauty." Jorge Blanco, Davines' brand manager, said the company was not going organic, but working toward using sustainable business methods.

The great majority of companies still use Cosmoprof as a showcase for new products and innovative technologies, including a peptide found in snake venom. Apivita, a Greek natural, herb-based personal-care line, has been busy adding hair, skin and body care products with 18 new organic extracts. The company, which has a global volume of 25 million euros, or $31.4 million, is also adding cleansers for different skin types, plus seven new stockkeeping units to its Express lines of sachets, according to Alexandros Argyropoulos, company vice president and export director.

Apivita is also rounding out its spa offerings and launching a line of hotel amenities. "It's very important for us because it builds consumer awareness," said Nikos Koutsianas, managing director of Apivita.

At ITF, the company was gearing up for its Dsquared fragrance introduction in the fall. "It could become one of our pillar fragrances," said Roberto Martone, ceo.

Kelemata highlighted introductions for its Perlier, Victor and Venus brands, covering the selective and prestige categories. Elena Giraudi, ceo of the company, said it was repositioning the Orlane brand in Italy to be part of the luxury market, alongside Sisley and La Prairie.Artdeco was promoting its bronzing line, which includes compacts and a spray-on leg tint. According to Christian Kafer, the company's export manager for Latin America, Artdeco's bronzer sales surpassed those of the perennial bestseller from Guerlain in Germany last year. Kafer said his company, which is trying out products in 1,000 Walgreens doors, has been having discussions with the Home Shopping Network, as well.

Luciano Soprani is launching its fourth women's fragrance, Salme, for Carla Fracci. It is also introducing the LS men's scent, its fourth, for the Soprani brand.

Eurocosmesi's introductions include Canali Summer night, Byblos Water Flower, and Mila Schön Lui and Lei scents.

"We want to focus on fewer brands, but at the same time are developing our own brand that will have niche, luxury positioning," said Elena Ghiretti, Eurocosmesi's marketing manager.

In Cosmoprof's Masterpieces section, which is devoted to niche and exclusive brands, the art form was said to be thriving at retail, much to the chagrin of one of Italy's market leaders in the category. Said Silvio Levi, president of Cale distributors, "Unfortunately, the demand is absolutely growing. There is too much talk on niche."

He said there was a risk of having too many me-too niche products, and distributing them too widely. "When you are a niche brand, you have to be innovative," he said. "In 12 years, it should still be a bestseller. If a father and son are asking for the same fragrance, it's working."

— With contributions from Jennifer Weil

and Pete Born

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