COSMOPROF: ITALIAN BEAUTY GROWS UP
Byline: Nicole Kaldes / With contributions from Brid Costello
BOLOGNA, Italy — The Italian beauty industry is discovering adulthood.
The domestic cosmetics market continued to grow, registering a 5 percent increase to $8.9 billion in 2001, compared with a 5.8 percent increase in 2000, according to Unipro, Italy’s association of cosmetic industries. That puts Italy in third place behind France and Germany. Perhaps a more significant trend is the awakening of a handful of Italian companies to a need for more sophisticated strategies both domestically and overseas. Some companies are merging into more meaningful forces and others are taking a stronger hand at developing their overseas businesses. Many firms also are continuing to improve their in-store merchandising efforts.
Five-day trade fair Cosmoprof, which ended Monday, attracted 129,827 visitors, down slightly from last year’s 130,122. Cosmoprof organizers attributed the drop to the fact that the fair was held over a month sooner this year than last.
Some business leaders, like Roberto Martone, have gained greater clout through alliances. He joined with fashion powerhouse IT Holding to form ITF. There’s no stopping Martone, who has gone gangbusters since the company’s October 2001 founding. He has acquired the Romeo Gigli and Roberto Cavalli perfume and cosmetics licenses and recently snatched up the Gianfranco Ferre perfume license from Diana de Silva: a logical move, since IT Holding owns Ferre.
Diana de Silva was unconcerned about the Ferre loss, saying it had already compensated with Montana Parfums. “We expect huge results for Montana,” said Roberto de Silva, holding court in his booth across the way from ITF. “In this first year [since we acquired the license], we have already doubled the sales Clarins had done.” The company launched Montana Green, a new men’s fragrance that sources say could bank $4 million wholesale globally in first-year sales.
Diana de Silva will sell Ferre fragrances until June 2003 but Martone will launch a new women’s fragrance in October 2003, followed by a men’s scent. For the new Cavalli fragrance, launching this September, he estimates first-year sales of $6.8 million.
“We have a very aggressive plan for Ferre,” Martone said. “You have to be well structured for international business, it is a good reality for our market. In my opinion, I see a certain merging for companies.”
Martone’s five-year goal is for turnover to go from $17 million, at present, to $176.7 million. Of Italy’s 1,000 companies in the cosmetics sector, he added, only about 50 could be counted as big players. “In my opinion, I see a certain merging of companies.”
“Our future is to either take another company or to sell our company,” asserted Mario Usellini, vice president and chief executive officer of Satinine Spa. His company acquired fashion house Soprani last year, and at Cosmoprof they launched Soprani Funny Rose, a line of fragrances packaged as flowers that is expected to ring up $684,000 wholesale in Italy. Satinine was also showing Ferrari One men’s fragrance gift-with-purchase sets. Gift sets, he said, represented about 22 percent of Satinine’s total marketing budget. Unipro figures show Italian gift set consumption rose 17.3 percent in 2001, the largest increase of all the beauty categories.
Another company that has been taking a more pronounced role in developing a foreign presence is Pupa, which opened a Spanish branch in mid-February. “You really touch the market when you are there,” said Paolo Bevegni, director of Pupa’s international division. “We realized that Spain could be Italy, too, we feel they have the same mood about the brand.” The brand is now present in 80 countries, but doesn’t strive to be multinational, said Bevegni, noting that U.S. perfumery development was “not extraordinary.”
Pupa’s new advertising campaign, focusing less on the product and more on a way of life, is heading where few beauty companies have tread. After surrounding themselves with a smattering of top beauty ads, executives noticed they were all facial close-ups. Pupa’s ad, developed in-house, is a full-body shot of a model with a product inset.
Also paying attention to international promotional materials and advertisements is Kiko Makeup Milano, the company managed and created by real estate and commerce giant the Percassi Group. Stefano Percassi, Kiko’s president of international marketing, explained that, for some markets, its previous image of a semi-androgynous woman with harsh features was perhaps too strong. The company also revamped its on-counter consumer sample catalog with products listed in Italian, English, Spanish, German, French, Arabic and Japanese.
Now present in six markets, Kiko also is packing its makeup bags and sprinting overseas. It plans to add six more Mideastern markets by the end of the year. In addition, it is in the process of entering the U.S and Taiwan. Kiko also has its sights set on England, Greece and Spain, as well as 25 more points-of-sale in Saudi Arabia.
“We are growing step by step and working more with the customers,” Percassi said. Kiko opened as a test in the Milan Fiorucci store in June 2000, but the brand was first established with 50 doors in Switzerland and another 12 in Japan. “You need to have energy to survive; we have gotten in 150 Italian perfumeries in the last six months,” he said.
Philippe Lacoste, area manager of all brand activities of Lacoste, said: “I think customers are more demanding. How you present [your brand image] is what’s important. How can you give the message to the consumer, it needs consistency. I see less pushy salespeople, which in a way is what the consumer wants. If you have a question you can ask.”
Others still are expanding overseas networks. D&D Cosmetics, manufacturer of the Deborah mass-market cosmetics line, has just in the past two years begun looking into distribution in China, Japan and Brazil, among others.
“We are in the development phase,” said Adriano Ripari, managing director of the company’s international cosmetics division. “The U.S. is difficult and expensive. Obviously, we should be there, but we need a factory or a distributor with its own factory.” Ripari said the company’s annual turnover is around $200 million.
For its part, Euroitalia has had a great U.S. success, particularly with its Dolce & Gabbana Light Blue fragrance. “The sell-through of Light Blue was great, just great since Chanel took over,” said export director Claudio Tenan. Euroitalia will launch a new Alessandro dell’Acqua fragrance on March 28 in half of the Nordstrom chain. A Moschino L’Eau de Cheap & Chic was in Bloomingdale’s on Feb. 22 and then rolled out to Nordstrom and Sephora. A Dolce & Gabbana women’s fragrance will be launched next spring in the U.S. Eurocosmesi managing director Enrico Scabini said it was looking for new business to conquer — particularly for the Transvital skin care line that it acquired in 1998. “It is not our biggest line but it is our most important in terms of strategy,” he said.
Scabini said Guaber’s turnover is around $150 million, $34.8 million of which comes from Eurocosmesi, and that parent company Guaber Spa plans to go public by the end of this year. The company has begun distribution in 20 new markets, and in 2001 they reached 500 points of sale worldwide — a number expected to reach 1000 by end of 2002. Scabini and crew also are trumpeting its new super-luxe Transvital Swiss Beauty Center in Cortina’s Hotel Cristallo, and launching at the end of March is a new men’s antiage Transvital men’s line with six references.
The men’s market is pumping up in Italy, said Michel Lhoste, Italian general manager for the Biotherm and Cacherel lines. According to Lhoste, the Biotherm Homme line holds 72 percent of Italian market share and sales grew 30 percent in Italy last year. Their Abdosculpt body treatment, designed to trim waistlines, flew off the shelves after its June 2001 launch.
One American exhibitor, Caboodles Cosmetics of Plano, Ill., was there on a mission — to become the number one teen beauty brand in the world. That involves achieving a strong presence at all distribution levels. Gary Schofield, president, was showing off the new She She cosmetics line that will be launched in June in Federated Department Stores.
Versace showed its trademark va-va-voom with its new Jeans Couture men’s and women’s fragrances due to bow in September. The rhinestone-encrusted bottles, which are very expensive, reduced margins by around 10 percent. “The bottle is very expensive,” said Ferdinando Silva Coronel, managing director of Versace’s beauty division, Giver Profumi. “But for us, we are more artisanal. It is more important than the cost. We accept a lower margin, but we want to give the customer something particular.” Intercos, which is viewed as the dominant supplier of color cosmetics products, rose to the occasion once again as both a spotter and creator of trends. This year’s exhibition housed a myriad of cosmetics concepts, with products running the from minimalist to ostentatious or from feminine to feisty. The firm offered something to suit everyone’s taste — and budget — concerns key to maintaining a competitive edge, according to the color supplier’s president and chief executive officer, Dario Ferrari.
“Today we need to have innovative products,” he said. “[However], we need to do it at a really competitive price.”
This year’s umbrella “Freedom” theme was divided into six individual concepts. The first collection, called “Freedom to Dream,” included makeup products in bronze and gold with a Mediterranean feel. Eye shadows and powders were shaped like gold nuggets or were laser printed with patterns to add dimension. The “Freedom to Adore” collection was inspired by the Belle Epoque and included compact powders featuring pearl necklaces or gemstone printed on the surface and eye shadows styled to look like antique cameos. Products in the “Freedom to Be” section were in red, white and black and had packaging encrusted with Swarovski crystals. “Freedom to Express” was inspired by freestyle expression and featured Eighties-style computer graphics powders and T-shirt-shaped eye shadow compacts. “Freedom to Rest” featured soft, muted colors and pale blue packaging, while “Freedom to Wander” was brightly colored and inspired by far-flung cultures such as the Himalayas.
As examples of new product formulations, Intercos was showing a long-wear “mousse eye shadow,” a weightless “Go Lighter” lipstick, a volumizing “Lip Shaper” and “Ultra Light Loose Powder” and “Vibrant Matte” foundations. All these were demonstrated on a touchy-feely lab table that featured bowls and beakers of exotic-looking materials. For example, sticking your hand in a dish of jellified goo, which was adhesive yet not sticky, showed how the new “Magnetic Wear” for the lips stays put without puckering.
One of the quirkier attractions at the show was the Cremasco-based Gamma Chroma, a small but budding rival of Intercos. The color cosmetics supplier has perfected a technique that allows brands to print visuals, including photographs of people, onto compact powders, eye shadows and blushes. Using laser technology, images such as a photograph of a brand’s spokesmodel can be mounted onto powder compacts with varying degrees of color contrast, explained Romuldo Priore, creative director.
Although lacking the razzmatazz of the Intercos or Gamma Chroma booths or even the plumes and sequins, the Brazilian pavilion exuded a carnival atmosphere at the show with 16 exhibitors presenting their skin care, fragrance and cosmetics lines. Last year, the Brazilian contingent numbered just eight firms and next year the group plans to return with 24 companies, according to a spokeswoman for the Brazilian Toiletry, Perfumery and Cosmetic Association .
While the Brazilian beauty market weighs in at $3.5 billion and is growing at a rate of 9.6 percent annually, according to the BTPCA, many indigenous brands are looking to expand their horizons. Brazilian firms plan to leverage the country’s cultural diversity as a selling point for their brands that cater to a wide variety of ethnic skin and hair types. Among them, the direct sales company Natura, which rang up $680 million in sales last year.
Phillipe Pommez, vice president of business development and innovations at Of Natur, was showcasing the brand’s 36-unit Ekos line, which was designed as a platform for growth in countries outside of South America. The range of soaps, shampoos, hair conditioners, moisturizers and fragrance products did $40 million in its first year in Brazil, according to Pommez.
Another major force is O Boticario, which operates 2,100 franchise stores in Brazil. It has others in Paraquay, Bolivia and Peru, as well as 61 units in Portugal. The company, which boasts nearly $900 million in retail sales, is expanding into Mexico, with four to five flagships in Mexico City next fall, according to George Parik, director of international.
Direct-sales brand Hinode was also taking steps to stretch its borders. The family-run brand was laying groundwork for entry into a number of foreign markets by the end of this year. The company was introducing its 10-unit Aromazon line of hair and body treatment products that average in price around $3. Hinode executives estimate that Aromazon could increase its $7.5 million annual sales by 5 to 10 percent.
At the Estee Lauder Italia stand, president Pier Luigi Garcea was pleased by the shows’ turnout, noting it was “extremely dynamic.” Lauder staged a makeup “theater” for its portfolio of brands featuring models sporting MAC and Estee Lauder makeup looks from the past four decades.
Parkod Europe staged a glittering event, including a sumptuous dinner, at the late 16th-century La Villa Cicogna, to unveil plans for a Europeanwide beauty sales-tracking network that will capture selling data from prestige perfumeries.
The company also is testing its new Parkod Image product, an image and data bank to be used by customers in perfumeries. The goal is to provide automatic training for salespeople, as well as boost sales and better inform the consumer. Customers can take products to the in-store monitors then swipe the bar code to find detailed product information. The system is currently being tested in Turin’s Aqua Profumi, and MSII Lucien sales executive Lucien Seca reported that 3,000 bar codes were recently scanned on the system in one day.