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ArtCosmetics Outlines Business Growth, Invests in New Plant

The Italian cosmetic manufacturer will reach the 100 million euros benchmark this year.

MILAN — Italian cosmetic manufacturer ArtCosmetics is in expansion mode.

The company’s sales will reach the 100 million euros benchmark in 2018, according to its chief executive officer Pierfranco Accardo.

Since Accardo joined the firm almost two years ago, the company grew from posting sales of 68 million euros in 2016 to close 2017 registering a turnover of 93 million euros. Projections show the cosmetic supplier’s sales could reach 108 million euros in 2018 and the group aims to reach 180 million euros by 2022.

“This has been an organic growth,” explained Accardo, underscoring that, although these figures are attracting the interest of many private equity funds, “there’s no plan to open the capital to foreigners.”

In particular, the executive attributed the acceleration to many drivers. Underscoring that the “ability to innovate” is part of the company’s DNA, he said that ArtCosmetics’ expertise in manufacturing its core products such as lipsticks and emulsions — foundations specifically — put the firm in a privileged position as these categories have been highly demanded by customers in the last couple of years.

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Another key driver was internationalization. Founded in 1990 by current chairman Piero Origo, the family-owned business now counts 280 customers in 29 countries. The domestic market is historically relevant for the company, but it currently accounts only for 15 percent of its total sales, while France and the U.S. have become more strategic for the group.

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In particular, ArtCosmetics entered the U.S. opening an office in New York in 2014, headed by Lori Kutch. Local sales accounted for less than 5 million euros in 2015, this year they will account for over 40 million euros out of the projected total turnover.

“This acceleration was especially due to new, unconventional brands that have been established in the region in the last couple of years” said Accardo, highlighting that “ArtCosmetics’ assets — including product innovation, time to market speed, service flexibility and ability to provide custom solutions to each client — have proven to be fitting to these indie and celebrity brands, which we successfully supported.”

Simultaneously, ArtCosmetics also established a team dedicated to the American market and clients in its Italian headquarters in Mozzanica, in the so-called “Italian Cosmetic Valley,” one-hour drive from Milan.

“We actually have two dedicated teams. We started our business [focusing] on the East Coast but considering the impressive increase of beauty companies on the West Coast, we needed to double the team over the last year,” noted Accardo.

In a similar operation, ArtCosmetics also opened a commercial office in Seoul in 2016. “The Asian market is very interesting but we are still not very present,” said Accardo, who believes the future of the industry is headed East. The executive explained that opening a unit in South Korea “had a double purpose for us: to start serving a market demanding exploration, comprehension and experimentation and to have an outpost detecting everything that happens locally, in order to inspire and fuel our innovation processes.”

In order to support this expansion, ArtCosmetics invested 25 million euros in building a new plant, which will be unveiled not far from the current one by the end of the year. The new, 322,917-square-foot plant, which Accardo defined as “another milestone,” will double the company’s product capacity on a selection of categories — including emulsions, foundations, mascaras and lipsticks — as well as hosting a new innovation center with a 16,145-square-foot laboratory and cutting-edge tech implementations.

The rendering of ArtCosmetics' new plant.
The rendering of ArtCosmetics’ new plant. Courtesy Photo

In addition, the firm’s existent facility will be expanded, revamped and turned into a center of excellence for powders, “a business where we aim to grow a lot in the upcoming years.” To wit, the executive considers powders a classic category that “had lacked innovation over the last year, so we will go in the opposite direction to bring value to our clients.”

“Innovation in our industry is not measured only in terms of industrial investments but also in human resources,” continued Accardo. Currently counting 500 employees, the company enrolls 60 people in processes of innovation, including development of new formulas, industrialization of the products and marketing strategies.

“At the end of the day, our role on the market is to be an accelerator of innovation for our clients,” said Accardo. “This is what we can offer through our ready-to-go formulations and our industrial platform in this fast-moving market.”

The executive noted that new brands’ disruptive “agility, courage and will to experiment” led both suppliers and established beauty players to revisit their business models, with the former ones forced to “offer fast solutions and shorten the product development cycles” and the latter ones induced to be “more agile, to shorten the supplying procedures and cherry-pick innovative products.”

Asked about the industry’s future scenario, Accardo noted that “we’re still in a moment where there’s space for everyone, but the ability in using digital tools in an efficient way will be key in the future.”

“This industry is not imploding but rather atomizing. Many niche categories are coming up and tomorrow’s challenge will be finding and conquering valuable niche markets through brands that have very specific targets and that enable companies to engage interesting communities with spending capacity,” he concluded.