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After 50 Years in Business, Intercos’ Innovation Plans Keep Multiplying

Dario Ferrari, the visionary entrepreneur behind the Italian cosmetics manufacturer, recalls the turning points of his career and reveals what’s next for the beauty player.

MILAN — Fifty years young.

That’s the impression one gets of Intercos Group through the words of Dario Ferrari, the visionary entrepreneur who established the Italian cosmetics manufacturer in 1972.

“It’s just the beginning, in a certain way,” he said during a lengthy conversation at his office in Agrate Brianza — a 40-minute drive from Milan — where the company is headquartered.

Ferrari said it took him all his life to put the firm in a “stronger than ever” position. After half a century of tweaks in the business model, IPOs (three tentative, one effective), supply chain disruptions as well as experimenting with different approaches to trend forecasting and plenty of formulations, the founder believes there’s room to further grow in the industry.

To do so, he might spice up his business’ recipe with new elements but said he’d never change its secret ingredient: innovation.

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Today, Intercos has 11 research centers, 16 production plants and 16 sales offices worldwide, manufacturing and supplying everything from lipsticks and eye shadows to pencils and skin care to more than 700 international clients. Almost 1,000 out of its global 5,200 employees are dedicated to R&D, developing more than 1,300 new formulas per year.

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Innovation has been the guiding force of the company, putting Ferrari in a privileged position to observe the many shifts in the beauty industry over the past five decades.

Among his personal highlights, he mentioned the launch of the Prisma Shine patented technology for powders in 2011, which combine performance with special effects, such precise drawings on the texture; new technologies on the lipstick category centered on filling and assembly with silicon molds, as well as ideas borrowed from other fields.

“I remember I went to see a pharmaceutical company not long time ago, and they were using an air system to grind the active ingredients to make them micro, very refined…We took the idea and we started to use it as well,” said Ferrari.

Yet Intercos’ pivotal moment in terms of innovation traces back to the very beginning, when Ferrari got inspired by the production process behind decaffeinated coffee he saw at a friend’s coffee plant. “Coffee is a powder. To extract the caffeine they used a solvent, and when I saw the technology I said: ‘Wow we can adapt it to powder and eye shadow’,” he recalled, underscoring how eye shadows at the time used to be “very dry and not comfortable.”

The discovery enabled Intercos to develop unprecedented creamy, shiny formulations, with the extra benefit of being “easy to produce, less expensive and definitely longer lasting.”

“Nobody had a product like this. That was really breaking through the system,” said Ferrari. Shortly after, this innovation led to the first turning point of his career.

“I think that in 50 years, the first important step for the company occurred in 1982,” he said, stressing that the first decade was spent to “learn a little bit about [the industry] and put together our business model.”

“We’ve been very creative and innovative in those years. And in fact, what happened in 1982? Somebody knocked at the door and it was Estée Lauder,” said Ferrari, explaining that the American company offered him a $30-million deal at the time at the condition he started producing in the U.S. Ferrari agreed and set up a plant Stateside, but after finding out that Intercos also worked with other clients overall, the deal was turned into a 50-50 joint venture, with Estée Lauder taking over the whole American company after three years. “We built the best factory for them and they still have it in Bristol… While we kept our position as a creative lab for them,” said Ferrari.

“But suddenly everybody started to wonder ‘Who’s this company making a joint venture with Estée Lauder?’ That’s why in the 1990s we grew tremendously… And it created a big problem because at the end of that [decade] everybody would think Intercos was a fantastic company but that didn’t deliver. In reality, our capacity was 100 and we had orders for 200. So from the early 2000s, we started to build factories,” said Ferrari, citing operations in the U.S., China, Italy, Brazil, South Korea and, most recently, India.

The group’s global presence came in handy even years later, as during the pandemic the local facilities and research hubs handed the firm a competitive advantage both in speeding up production and anticipating trends.

“We gained a lot of space,” admitted Ferrari. “First, our big customers, the multinational groups, had [slowed down] for a couple of years because nobody went to the office… Our competitors have been somehow struggling, too,” he said. Conversely, a small group of top managers and R&D staffers at Intercos managed to go to the HQ and “keep the innovation going.”

As result, the company maintained a strong position on the market, despite lockdowns and the disruption of the supply chain. To wit, in the first quarter of 2022, revenues grew 21 percent to 174.6 million euros compared to the same period last year. In 2021, the group totaled 673.7 million euros in revenues, up 11.1 percent versus 2020.

Before the pandemic, other key changes of paradigm included transitioning from a solely product company to incorporating branding skills, therefore “acquiring a completely different know-how compared to what we used to have,” such as extra knowledge of customers and distribution.

The listing on Euronext Milan at the end of last year added another piece to the acceleration puzzle. It also enabled Ferrari to finally tick off from his personal list the IPO goal, after that several plans shelved due to sudden changes in the economic climate throughout the years. “Being public, we can now attract investors and people. It’s a different situation to be in… And we’re going to have a very aggressive plan for the next three years.”

Looking ahead, trend forecasting will play an increasing role for the company. Ferrari said this aspect “is becoming the most difficult part” of the job, noting that if Intercos has been anticipating trends for many years based on its experience, now that is no longer enough. The rapid change in young consumers’ behavior forced the company to invest heavily in “a completely different system of forecasting” called Intercos Intelligence and based on data collected both off- and online.

Overall, Ferrari believes that open innovation will be the main driver across all industries. “Either you believe that only bright people work for you or you have to rely on bright people outside, so why not doing that? Big corporations have already started and so have we.”

Last year the company inked a five-year agreement with the University of Milano-Bicocca to jointly conduct scientific research on new raw materials, formulations and sustainable processes aimed at developing innovative beauty products.

Ferrari revealed he has also tapped an American start-up specialized in AI to further help with formulations. “We are very close to starting this process. It takes a long time because AI works well only if it is full of data, so we’ve been focusing on this part for the last six months,” he said.