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Cosmoprof: Beauty at the Crossroads

Talk of war and recession dampened the normally ebullient mood of this month’s Cosmoprof as the Italian beauty industry pondered its next step.

BOLOGNA, Italy — Talk of war and recession cast a pall over the normally ebullient mood of Cosmoprof as the hard-pressed Italian beauty industry pondered its next step.

The domestic association of cosmetics industries, Unipro, reported the domestic market managed to eke out a bare 0.9 percent increase for 2002, and that was considered a middle ground in the European experience.

“It’s a very tough period; it’s an expression of the times we live in — people don’t believe in the future,” said Angelo Gotti, president, founder and owner of Micys Co. SpA, which has such brands as Pupa. “But we’re strong enough to fight it.”

Gotti was one of several exhibitors who noted the four-day fair which ran from March 7-10 seemed quieter than usual. However, show organizers said the attendee turnout for the session was “unchanged” at 120,000, despite “a slight decrease in foreign visitors due to the negative international situation.” Attendance at last year’s Cosmoprof had been reported as totalling 129,827 people last March. In terms of exhibitors, the prestige divisions of L’Oréal decided to take a one-year break from the show this year and LVMH Moët Hennessy Louis Vuitton was also absent. “It reflects the situation in Europe,” said a show organizer, who noted that there is a long list of exhibitors waiting to get into the show.

The addition of a new 111,110-square-foot exhibition hall is being planned to expand the already sprawling show compound. It could be open by 2004.

But despite the chilly economic climate, individual companies were busy talking up plans to launch new products and add new markets as drivers of future growth. So much so, that Intercos, Italy’s premier supplier of color cosmetics, is laying plans to open production in Shanghai next year. Dario Ferrari, Intercos chairman, was touting his future Chinese operation as a supplier cosmetics for the mass market and promotional kits, while the headquarters outside Milan in Agrate Brianza, Italy, would remain the creative center, and the North America plant in Congers, N.Y., would continue to supply local customers.

“Chinese packaging is getting better and better; they have the best equipment,” said Ferrari.

While looking eastward, Intercos is also investing in its own turf with a 366,000-square-foot new plant in Dorena, Italy. It is also looking to further develop its skin care operation and that of its Interfila technical pencils.

Intercos has been one of the perennial high points of the Bologna meeting with its colorfully imaginative and elaborate presentation of future makeup and packaging trends. This year, however, the supplier decided to stage the exhibit in its new showroom in its Agrate Brianza headquarters.

The Intercos exhibit was about contrasts. The increasingly high-tech business of makeup was taken back to its primitive, artisanal, creative roots in makeup artistry. There was a play of surfaces and textures, color and light. Capping it all was the eternal conflict between good and evil, according to the vision laid down by concept and creative director Madina Ferrari.

Meanwhile in Bologna, Intercos maintained its large presence. But instead of a trend exhibition, it broadcast an institutional message through an eight-minute video promotion of its “intangible assets.” Ferrari said he wanted to raise a more institutional profile at the fair through the film and a thick report detailing survey results concerning the company’s strengths and weaknesses. His motivation is to achieve a status as the number-one cosmetics supplier and maintain that position.

The desire for greater customer satisfaction was also reflected at another supplier, Techpack. Jean-Paul Imbert, chairman and chief executive officer of the firm’s CMI subsidiary, said he had hired a new executive, Sharon Garment, as a senior vice president for full-service business. Imbert said he felt it was important to have an executive on board who understands all the facets of the packaging process, from design to factory production.

Companies are straining hard in a difficult climate. According to Colipar, Germany — Europe’s largest market — reported the weakest number, clocking a minus 0.7 percent last year. Spain set the high-water mark of 6.9 percent growth, with the Benelux countries clocking in 6.1 percent; France, 5.3 percent, and the U.K., 4.5 percent.

“After years of constant growth that was consistently and significantly higher than the average for consumer products, the market for cosmetics in Italy suffered a noticeable, across-the-board deceleration, one that in some channels even turned into an important falloff in demand,” according to Unipro.

The $7.4 billion Italian beauty industry sustained a 4.2 percent drop in its prestige perfumery business, while recording a 3.5 percent gain in pharmacies and a 3.9 percent jump in total mass distribution last year. In terms of the professional business, hair salons and retail sales in salons moved ahead 3.8 percent. However, the direct-selling and mail-order business suffered a 3.7 percent slump.

All dollar figures are converted from the euro at current exchange rates.

Perhaps more importantly, exports rose 4.9 percent to $1.9 billion, solidifying Italy’s recently hard-won identity as one of the world’s biggest beauty factories.

Intercos was not alone in extolling the inevitable march to China.

“I think China will be an important factor for the future,” said Ferdinando Silva Coronel, managing director of Giver Profumi, the holding company of Versace’s beauty business.

He was speaking at an interview following a rare appearance on the trade show floor of Santo Versace, which created a lather of excitement. Versace came to promote the brand’s latest fragrance introduction of its men’s scent, Versace Man.

Versace’s presence at Cosmoprof underscored the brand’s determination to enlarge dramatically his fashion firm’s beauty business.

Satinine, manufacturer of Ferrari and Luciano Soprani products, is looking to spike business growth through developments in Russia and China, where the company has built a distribution network of 90 department store doors.

“In terms of development, China is unbelievable,” Silvio Usellini, export director at the firm, said.

Satinine is in the process of launching fragrances from its two primary brands, a Ferrari men’s fragrance called Racing and a Soprani women’s scent, Strass. Both will be in export markets by yearend.

ITF is also banking on three upcoming fragrance introductions to help catapult sales in 2003. “This year, we will focus on achieving three times the turnover of 2002,” said Roberto Martone, ceo of the firm, without divulging numbers.

From the firm, Romeo Gigli’s first signature scent will make its debut this spring. It comes in a bottle featuring script writing printed on its rear wall so that when viewed from the front, Shakespeare’s words stand out.

“Fifteen years ago Gigli was a success in Europe and the U.S. The brand still has a good memory and potential for making an interesting business,” said Martone.

Massimo Cappini, managing director for ITF, talked about the unusual ad for the Gigli fragrance in which the model’s braided hair is tied across her eyes. “It’s very romantic,” he said.

The Gigli juice, created by International Flavors and Fragrances, features notes of licorice, water lilies, lotus flowers, white nymphaea, cedar wood, vanilla and musk.

Two more upcoming introductions this October include a men’s scent, called Roberto Cavalli Man, and the women’s scent, Essenza d’Eau, from Gianfranco Ferré.

There are new products slated for Euroitalia, as well. It will launch a men’s scent from Alessandro Dell’Acqua in June, and this fall, Moschino and Dolce & Gabbana scents.

“We had a 21 percent increase in sales last year without any new launches, so consequently, we are not worried about the future,” said Euroitalia’s president and chief executive officer, Giovanni Sgariboldi.

Claudio Tenan, export manager at the firm, underscored the contention of robust growth by pointing out that the Dolce & Gabbana fragrances from 1992 and 1994 are still growing in all their major markets. At Douglas in Germany, for instance, they still rank in the top 10.

Commenting on the sluggish business in Italy, Tenan said: “The market is flat, Valentine’s Day was very soft,” but he blamed the situation more on war jitters than poor fundamentals. “It’s a question of uncertainty, not of bad economy,” he said.

But there’s a blaze of sunshine to the East. While Tenan admits the Chinese market is still developing, with “consumption, it’s not what you would expect. We have to be ready. The market can boom at any time. It has great potential and is going to be huge.”

Another way to future growth is revamping of the selling floor, said Paolo Calvi, product manager at Coin department store. The chain has so far renovated 17 of its 34 perfumeries that come in three basic sizes: 1,670, 2,220 and 2,780 square feet (150, 200 and 250 square meters). However, its two largest beauty departments, in Milan and Rome, sport departments of 4,440 square feet (400 square meters) each.

Coin has taken the opportunity to expand assortments with every upgrade. For instance, Calvi pointed to the Trieste store, in which Shiseido, Clarins and Clinique were added.

Such additions helped spike sales by 25 to 30 percent per new perfumery floor last year. Overall beauty sales for Coin were up 9 percent in 2002, despite an 8 percent drop in the Italian department store beauty market.

Strong-selling brands at Coin include Madina Milano and Aquo Lina. Calvi said he’d like to have Origins, while admitting it’s not yet ready for Italian distribution, and he’d like to expand the number of his doors selling MAC. Calvi also would like to regain Aveda and spread its distribution beyond the one Limoni Best superstore, where it is sold in Milan.

Calvi said in-store training is also key to driving growth. “The most important action is to teach the staff to sell,” he said.

Calvi said the next big growth category is natural products, but ruefully admitted: “We need more space.”

One of the most dramatic developments at Cosmoprof was a gala dinner for 140 hosted by Procter & Gamble Beauty at the Grand Hotel on the seashore in Rimini. The event served as a declaration of P&G’s intention to sharply raise its profile in the global beauty industry.

“It is an important statement for our company,” Paolo de Cesare, vice president of global prestige beauty and skin care. “Twenty years ago we could never have put together P&G Beauty. We have the brands, commitment and vision and can go out and make a statement.”

“We have the know-how to operate in that market,” added Robert Jongstra, general manager and vice president of hair care in Europe. “We are a truly global business, not a Euro-or U.S.-centric one.”

Also looking for a global identity was an entire pavilion filled with Brazilian manufacturers. First among them was Natura, a direct-selling company that chalked up sales of $670 million last year, a 20 percent increase over 2001.

Philippe Pommez, vice president of Natura Ekos International, said parent company Natura is eager to step out of Latin America, perhaps landing first somewhere in Europe. That’s due to the firm’s already-established familiarity on the continent, according to Antonio Luiz da Cunha Seabra, president and founder of Natura.

A study gauging consumer perception of the Brazilian brand has already been done in Europe, and Pommez expects a similar effort to be conducted in the U.S. by midyear.

Currently, products are being tweaked for international launch. Packaging for the Ekos line, for instance, will clearly say Made in Brazil.

While Natura has not decided on a final line of attack, Pommez made it clear that it would not go abroad as a direct-seller.

Another company turning over a new leaf is Diego Dalla Palma, which has completely repackaged its makeup artist line with a bright white, linear-edged, modern look. The new packaging is matched by a gleaming merchandising unit with interchangeable parts. They follow Dalla Palma’s exit from the company last December.

“We are hoping for growth of 30 percent due to the new packaging,” said Vittorio De Nadai, general director of AGGF, owner of Dalla Palma. The brand generates sales of $6.3 million in Italy with only 600 to 700 sales points. Looking ahead, the brand expects to expand in Asia.

So, too, will teen brand Caboodles. It will launch in 200 doors in China this year. Elsewhere, it will introduce products in South Africa and Mexico, said Gary Schofield, president of the three-year-old brand that’s available in 25 countries.

Already, Caboodles’ export business is booming. Last year, it grew more than 300 percent to reach $5.5 million, said Schofield, who added that exports now contribute around 15 percent of total sales.

“Our objective is to be a leader in the teen demographic,” he continued.

Another brand hoping to lasso teens and tweens is Morris, owned by German giant Henkel. The company is launching into color cosmetics for its Fiorucci brand this fall. It will introduce the Miss Fiorucci Makeup line comprised of cleverly illustrated kits aimed at two distinct groups, 11- to 14-year-old tweens and 14- to 19-year-old teens. The kits’ provocative titles include Sex Bomb, Hot Kiss Balm and Fashion Victim.

Another brand that has perennially reached out to young customers in a playful manner is Pupa, owned by Micys. This year, it will launch a trio of fragrances in an attempt to work with a traditional fragrance packaging.

“We wanted to be Pupa in a more conventional way,” said Paolo Bevegni, director of the brand’s international division. But at Pupa, conventionality has its limits. Not only does the fragrance come in three flavors, but the clear bottles are framed in equally transparent outer cases that are playfully decorated with three different floral designs.

More traditional is the offer from Eurocosmesi, which continues to build its designer fragrance portfolio with the acquisition of the Antonio Fusco license. The first fragrance, for women, for the Milan-based fashion designer is due out in September.

There also will be a new Iceberg masterbrand, for men and women, called Light Fluid, due out in June. And a men’s and women’s B5 duo from Brooksfield is slated for May. For the second half of the year, Eurocosmesi plans to introduce new women’s scents for Mariella Burani and Les Copains.

All these launches are meant to spark sales in an otherwise dull market. “In the past 10 years we have never experienced such a flat market,” said Roberto Venini, ceo of Guaber group, which owns Eurocosmesi. “We need to discover new high flyers.” And these young designers, he said, must be Italian.

Venini, who spent his career in consumer products companies such as Sara Lee and S.C. Johnson, took the helm of the Guaber group last June. He is filling in following the departure of Enrico Scabinni, the former Eurocosmesi division general manager. Scabinni, who has launched his own consulting firm, is still working with Venini one day a week.

As always, new launches were plentiful at Cosmoprof. They included:

Diana di Silva, which will introduce Histoire d’Eau Amathyste for its Mauboussin brand in April. For summertime, it’s launching Montana Eau Transparent and a new Mauboussin men’s scent is due out in September.

Werska and Joel is gearing up for the launch of Paillettes Number 3 for women by Enrico Coveri in May. Basile, a new men’s and women’s fragrance duo, will start rolling out in June.

One of the newer makeup brands, Kiko, is moving out of the initial product stage and into some of the nuances of franchise building. Stefano Percassi, Kiko’s president of international marketing, plans to expand into Greece and further into South America and Switzerland. Possibilities also include Spain, Germany and France.

“We want to be the Swatch of the cosmetics industry,” he said.

Meantime, Sogecos hopes to become the beauty trade show source. The organization branched out last November with its first hairstylist education conference in Rimini. Sogecos now plans the debut of its Cosmoprof North America in partnership with BBSA in late July. That show is intended to focus on all aspects of professional beauty, including skin care and makeup.

“There is a real gap existing in the American market,” said Laura Zaccagnini, general director of Sogecos. “Each industry has its own event. We want to put all elements into the same show.”

The Winners

At the Accademia del Profumo’s gala dinner, which is held every year during Cosmoprof to announce the industry’s choice of best new fragrances, the following awards were granted:

Best women’s scent: Parfums Giorgio Armani’s Sensi

Best men’s scent: Parfums Giorgio Armani’s Mania

Best women’s packaging: ITF’s Roberto Cavalli

Best men’s packaging: Parfums Givenchy’s Givenchy Pour Homme

Best women’s advertising: ITF’s Roberto Cavalli

Best men’s advertising: Parfums Lacoste’s Lacoste Pour Homme