Byline: Jackie Cooperman
MILAN — Cosmoprof chief executive officer, Florio Terenzi, is giving an interview in his office here and is working hard to put the right spin on things.
His mission, as usual, is to promote Cosmoprof as the world’s largest cosmetics and fragrance trade show and to bring that message to an increasingly wider audience.
“The fair today remains an indispensable meeting place for a professional public: retailers, manufacturers, hair care specialists….It is the most important place to find distributors. The human contact is invaluable,” Terenzi asserted during a two-hour session in the offices of Sogecos, the company that administers the 33-year-old Cosmoprof.
Still, Terenzi acknowledged, in today’s global economy, beauty companies no longer view the Bologna trade show as their single opportunity to introduce new products. Instead, he said, Cosmoprof functions as a four-day networking and trend-spotting conference. In 1999, Cosmoprof featured 1,553 exhibitors and 129,520 visitors roamed through 688,912 square feet of display space.
“This year we’ll be well over 130,000 visitors,” he said.
Terenzi hopes to expand Cosmoprof’s scope, both by increasing the fair’s physical space and by including a growing number of countries in the annual event.
On the mahogany desk in his office, a plan to add Cosmoprof pavilions in the Italian coastal town of Rimini sits next to an Afro-Brazilian beauty magazine — both symbols of Terenzi’s wish to widen the fair offerings.
In late January, Terenzi, apologizing for sneezing — the result of a cold he developed from riding around Milan on his motorcycle — addressed the issues likely to be hot topics as the world’s beauty business converges in Bologna from April 14 to 17.
Among the foremost challenges: price harmonization, the effect of the euro, changes in distribution, moves toward a unified standard for product ingredients and the impact of the Internet.
“Last year we talked about the importance of the euro, and I think it’s helped to develop small and medium-size businesses,” Terenzi said. “The mentality of the European Union is to push companies to reevaluate the way they operate. Companies are no longer just Italian, just French, just German. Now they’re asking: Who are our customers and distributors in each country?”
Still, he added, the gap between the idea of a united Europe, and the organizational tools needed to realize smooth Continent-wide distribution, remains daunting.
“We have to confront logistical problems in distribution and how to manage the different currencies” while European countries make the transition from their individual currencies to the euro, he said.
“On the level of the perfumeries, it’s a question of changing the consumers’ mentality. It will be very important to get the distributors involved, because they’re the ones who are in contact with consumers using the new currency, and the psychological problem of consumers having to translate the euro into their mindset.”
And, Terenzi said, signs are promising for continued growth. In Italy, the rate of consumption of beauty products in 1999 was up about 3.5 percent from 1998, to a worth of nearly $621 million, according to figures released by Unipro, the association of the Italian fragrance, cosmetics and toiletry industries.
“The euro is a great thing. It’s bringing more transparency of prices, which will give us a European standard….It’s clear that the high-end perfumeries will need to move toward a standard selling approach,” he said. France, Italy and Spain, Terenzi noted, have long traditions of perfumery stores, while the U.K. has historically featured pharmacies.
“This needs to be made uniform,” Terenzi said. “Contrary to what many people believe, I think that perfumery stores will augment their status in Europe, decreasing in numbers of stores, but increasing in the concentration.”
He cited the English chain Boots and the German Douglas stores as examples of the trend to large chain perfumeries carrying both prestige and mid-range products.
But, Terenzi said, as chains like Sephora gain ground, smaller stores are folding, giving rise to franchises — often emphasizing products made with natural ingredients — like England’s Lush.
“I think we’re seeing a lot more of these imaginative kinds of chains,” he said.
Terenzi said these changes are clear in Italy, a land of thousands of perfumeries, which is now undergoing the “smashing of the distribution networks” as Italian chains like Limoni vie for market share against French Sephora and German Douglas.
“Surely, the sector’s destined to have its sales methods consolidated,” Terenzi said. “There’s also the problem of the erosion of margins. Some of the largest perfumery chains are making huge demands on the manufacturers, and that’s hurting their budgets for advertising, marketing, research and development. I know people in the U.S. industry who tell me they work out at the gym to get out their stress after meeting with buyers [from large perfumery chains]. If this keeps up, the industry will have to come up with its own points of sale.”
Another result of consolidation in Europe, he added, was the growing presence of hypermarkets and supermarkets, carrying vast ranges of beauty products.
“Twenty years ago, you found soap and toothpaste in Italian supermarkets. Now you find entire lines of makeup and treatment products. And it’s not just low-end products. In the hypermarkets, you can buy a bottle of Brunello di Montalcino wine and the equivalent level of beauty products,” said Terenzi. “Consumption is up, and beauty products, once considered to be a luxury, have become a daily use purchase.”
But the buzz at Cosmoprof probably will also turn to the ingredients used in the products.
“There’s a growth in the gap between the ingredients and how they’re approved,” said Terenzi, who advocates a European-wide monitoring agency similar to the Food and Drug Administration in the U.S.
“In Europe there’s been a move towards liberalization of ingredients, and we really need to reach a process of unification in our standards.”
The lack of a single standard, Terenzi said, can put European companies at a disadvantage in export.
“While U.S. brands can make claims based on FDA approval,” the European companies — which must submit dossiers on each of their products to their respective national health ministries — lack an analogous mark of approval.
The fair will include two pavilions for Cosmopack, the section dedicated to the packaging industry. This year, Terenzi said, Cosmopack will publish its own guidebook, separate from the Cosmoprof guide and focused exclusively on the Cosmopack offerings.
In fact, Cosmopack is an example of one of Terenzi’s main goals: to render Cosmoprof an increasingly specialized trade show.
“Cosmoprof has to maintain its world leadership in specific sectors: mass market, prestige, professional, hair care. And the way to do that is to evolve,” he said. “The hair care professional has very little in common with the buyer from Bloomingdale’s. We need to address all needs.”
So Terenzi is working on a deal with the trade show space in the seaside resort town of Rimini, hoping to use it to house the professional hair care show in the future. A free train will connect Rimini with Bologna, which is 40 minutes away, Terenzi said, and the Rimini conference space will feature 12 pavilions dedicated to professional hair care and salon furnishings.
“We really need more space to differentiate our products,” he said. In the future, he added, he would like to include a separate Bologna pavilion for the so-called niche or artisan fragrance brands, like Annick Goutal and Penhaligon’s, and more areas for brands based on well-being and spa treatments.
Like the industry it serves, Cosmoprof has taken to the internet. Its Web site provides information about the trade show and press clippings on industry developments. Terenzi said there are plans to develop electronic registration for Cosmoprof participants.
Terenzi repeatedly voiced his determination to open Cosmoprof beyond strictly Western beauty companies. Sogecos has developed Cosmoprof Cosmetica, a Latin American trade show, in Brazil, and Terenzi visited Shanghai last November, hoping to convince Chinese officials to stage an Asian Cosmoprof there.
“Shanghai has had incredible modernization, and we’re all looking at China with great interest. The Hong Kong fair [which Sogecos already stages annually] is one thing, but China has more than 4,000 beauty companies and it’s a major growth sector,” he said.
This year, Cosmoprof has organized a trip for 20 buyers from China’s major department stores to look at the European wares.
With just a few months before he presides, once more, over Cosmoprof, Terenzi said he was optimistic, but mindful of the challenges facing him as the trade show tries to satisfy the volatile world beauty business.
“The competition is tough. We’re really looking to stay on top of all the trends,” Terenzi said. “The fair is born with exhibitors, but it lives with visitors.”