BEHIND THE WORLD’S TOP BEAUTY BRANDS: THE MANY SHADES OF THE FERRARIS
Byline: Jackie Cooperman
In a dreary, industrial outpost of Milan, a businessman with icy blue eyes wearing a pinstriped suit presides over the beauty industry’s Ground Zero, deciding which colors, formulations and textures will find their way to women’s makeup bags around the world.
Since founding Intercos, the world’s leading supplier of color cosmetics, in 1972, Dario Ferrari’s commitment to high technology and client confidentiality has made him one of the most powerful executives in the business.
“I think there’s no beauty company in the world that he doesn’t produce for,” says Dominique Szabo, senior vice president of global lifestyle trend and innovation at Estee Lauder. “We know we can go there and get the best formulas.”
Indeed, in three decades, Ferrari has built an empire, expanding his first Italian plant into five others, and opening Intercos offices in Paris, Barcelona, New York, Osaka, Seoul, Taipei, Singapore and Devon, England.
Last year, Intercos reported volume of $120 million, up 30 percent from 1999. Ferrari expects sales to hit $153 million by 2002.
Intercos produces three million units of color cosmetics — powder products like eye shadow and blush, lipstick, foundation and mascara — annually. If Ferrari has his way, he will double production in the next five years, through a combination of acquisitions and potentially taking the company public.
On a recent afternoon, Ferrari, tanned from a regatta in Key West the previous weekend, discusses his plans in a conference room decorated with mock-ups of Picasso portraits, Klimt’s Kiss and other masterpieces, all rendered in Intercos tins of colorful, highly textured powder.
“We’ve grown for two reasons: we were small but already solid. And at the same time, the market completely changed,” says Ferrari, a modern art collector and sailing aficionado who keeps his two regatta boats — both named for his wife, Madina — at his homes in Portofino and Miami. “The large cosmetics companies, which originally produced everything in house, began to outsource a lot of their products and open their doors. That’s really happened in the past 10 years.”
Ferrari tends to explain his company’s success or failure in geopolitical terms.
In 1991, Ferrari says, the company’s sales suffered, because “everyone was grappling with the Gulf War, with AIDS. Everything was gray and beige and there was so little interest in color.”
But in the past decade — AIDS and other chronic crises notwithstanding — color cosmetics sales have boomed, and Ferrari has profited.
While Intercos’s started out in powders, it now produces the full range of makeup products, from primary materials to what is known in the trade as “full service,” which means that clients can order not only formulas and textures, but also packaging.
“There’s no more time for beauty companies to develop products. They have to be ready immediately,” Ferrari says. “Our mission is to create trends and to have the right products at the right moment.”
To satisfy the growing global demand for color cosmetics, in 1999, Intercos opened a production plant in Malaysia. In January, in a move to strengthen American production, Intercos added a 100,000-square-foot plant in Rockland County, N.Y. The U.S. accounts for nearly 50 percent of the company’s sales.
“In some senses, we’re practically becoming an American company. We’re there as a production facility and also with marketing and local research and development offices,” says Ferrari, who at 58 has only a few streaks of gray in his sandy hair. “The U.S. is our number-one priority.”
Ferrari is also consolidating Italian production, closing three of the existing Intercos factories and opening a modern, 350,000-square-foot plant in the northern Italian town of Dovera.
“We have to consolidate Europe, grow in the U.S. and confront Asia,” he says.
So Ferrari is making the rounds of analysts and says that he will decide by June whether to go public by the end of this year.
“We’re not in a rush, so we can wait for the right moment,” says Ferrari, who owns 80 percent of Intercos. French bank Paribas holds the remaining 20 percent. Most likely, he would float an offering in Milan, although he acknowledged the possibility of going public in New York.
Intercos, which employs 950 people in Italy and 100 in New York, reflects Ferrari’s family approach.
“My mother is a chemist and when I was growing up, she ran a skin care company in Switzerland. It is my mother’s fault – or perhaps credit – that I got involved in cosmetics,” Ferrari says.
At 76, Ferrari’s mother, Nadia Avalle, still maintains her Swiss skin care company, CRB, which Intercos bought in 1983. She also serves as Intercos’s president, with Ferrari as chairman.
As Ferrari speaks about his company, Avalle, spry, blonde and with the same steely blue eyes as her son, walks in to consult about a formula. Ferrari wants a new product that Avalle says is not yet ready in the laboratory.
“Va bene, mama,” Ferrari says, as Avalle returns to her research.
Intercos is a prime example of the family-run Italian business model. In addition to his mother, Ferrari works closely with his wife, Madina, who serves as the company’s creative director and also has her own color cosmetics company, called Madina Milano. Ferrari’s brother, Andrea, oversees the purchasing department.
Ferrari’s daughter from a prior marriage, Arabella, handles marketing, while Madina’s two children from a previous marriage, Matteo and Sibilla, work respectively in the Intercos sales division and for Interfila, a pencil producer that Intercos acquired in 1992. Ferrari’s two younger sisters, Dania and Jo, work with Madina in the Madina Milano makeup company.
Together, the Ferraris have one son, Gianandrea, 18, who is clearly being groomed to enter the family business.
“He’ll be here soon,” Ferrari says, smiling.
Ferrari’s mix of unbridled ambition and smooth Italian elegance make him unique in the beauty industry.
“I remember when he used to come to the offices, every woman in the company was fainting,” recalls Szabo, who has held management positions at Guerlain and Lauder, and has known Ferrari for 20 years. “Now he’s a little older, but he’s still beautiful. He’s totally Italian. He cannot live without pasta, he always has the best outfit and shoes. The whole company is like that. Every single person in that company speaks three languages: Italian, French and English.”
This might be a slight exaggeration, but the comment is indicative of Intercos’s sway — and Ferrari’s remarkable charisma — over even the most experienced executives.
At Cosmoprof, the annual cosmetics trade show in Bologna, directors from the world’s prestige beauty brands can often be found mingling at Intercos’s elaborate stand and cafe, sipping espresso and waiting for Ferrari to grant them an audience. Last year, Intercos wowed buyers with its six-room “trend tunnel,” a two-level extravaganza devoted to associations of sensory pleasure. Rooms ranged from “Secret Garden,” replete with lily pads, a waterfall and a metallic spider’s web encrusted with butterfly-shaped eye shadows, to “Ironic Chic,” a kitchen decked out in psychedelic colors, and featuring plastic food and fluorescent makeup colors.
“Dario’s great success is that he’s an innovative marketer,” says Italo De Vita, director of the international division for Italian make up brand Diego Dalla Palma and a longtime acquaintance of Ferrari’s. “Companies send their project managers there and leave with all kinds of ideas. He’s doing the companies’ homework.”
Last year, Intercos spent $14 million in product development, creating machines that use laser technologies, and sending its employees out in search of the new.
“We have offices all over the world that send us information about the direction of color, trends, what’s working, what’s not working,” Ferrari says.
Laboratories at the Italian headquarters in the Milanese suburb of Agrate Brianza hum with activity. Centrifuges swirl, and researchers mix the formulas that will become next season’s must-have lipglosses, lipsticks and mascaras. Posterboards with the words “environmental” “timeless” and “experience” and various tubes and compacts hang from the walls.
The Intercos headquarters also features an “innovation workshop,” where clients examine new colors and textures.
“They have the technology to use lasers on powders, and it is amazing,” says Szabo. “I always say that everything in make up is like pastries and petit fours: if you look at it and it has an appealing appearance, you want to buy it. The visual aspect is very important.”
Intercos is known for pioneering visually pleasing techniques like overspray, in which eyeshadow and other powder products are given several layers of texture and color, and printing, like the highly detailed, three dimensional Medusa symbol Intercos created on Versace blushes.
But Intercos is also known for its hermetic approach to client confidentiality, and Ferrari implores journalists never to publish the names of any of his customers.
“We have the great fortune to work with the most important companies in cosmetics and we have to manage it very carefully. We guarantee each client that whatever they tell us, whatever they ask us, clearly remains between us,” Ferrari says. “They know that when they come here, we are like the three monkeys: We don’t see, we don’t talk, we don’t hear.”
Beauty company executives — many of whom would only agree to speak about Intercos anonymously — say this confidentiality is key to their relationship with Ferrari.
“You are always extremely well received, and you know that you might be there when Revlon is there. But the people at Intercos are extremely discrete and whoever is there, you don’t see them,” says Szabo. “When we go to Intercos, we never speak about the competition. Never, never, never.”
Intercos provides its client with exclusive formulas, and its biggest customers maintain their own office spaces within the Italian headquarters.
As he weighs a stock offering, Ferrari’s famous discretion may face challenges.
And Intercos’s success might be spreading the company a bit too thin, some say.
“We hired Intercos to develop the entire range of our products, because we were looking for the best technology and quality,” says the managing director of a European beauty firm, adding, however, “Occasionally, the volume of Intercos’s clients causes their customer service to be a little weak.”
Still, like their competitors, this company keeps returning to Intercos, seeking creativity.
“Even the leading companies, with their large research and development divisions, can’t do it all on their own. Money isn’t enough. You must have the culture of innovation,” says Ferrari. “For years, we’ve been coming into work in the morning and saying ‘we have to invent a new product today.’ That’s the basis of our survival.”