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Cosmetica Italia Assesses Pandemic’s Impact on Italian Beauty Industry

According to preliminary data released by the association, total sales were down 12.8 percent to 10.47 billion euros last year.

MILAN — “Numbers are not comforting us but luckily our performance was slightly better than we expected. This is the moment to react, even if it might take us longer than we thought to return to [pre-pandemic] performances,” said Renato Ancorotti, president of the Italian association of beauty companies Cosmetica Italia during a webinar on Wednesday.

During the event, the organization released preliminary data on the industry’s performance in 2020. Last year, total sales of Italian cosmetics companies were down 12.8 percent to 10.47 billion euros compared to 2019.

Exports — a key driver for the national beauty industry — decreased 16.5 percent to 4.1 billion euros. Italian supply companies were the ones most affected by the contraction in international demand caused by the pandemic, as these firms’ sales were down 17.5 percent to 1.37 billion euros last year.

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Inevitably, the health emergency affected distribution across most channels. Lockdowns and restrictions caused a slowdown in sales generated in professional hair and beauty salons, where revenues decreased 28.5 percent and 30.5 percent, respectively, resulting in a combined loss of 240 million euros.

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Similar performances were registered for direct sales made through door-to-door operations as well as in perfumeries and herbalist shops, with decreases fluctuating between 27 percent and 30 percent and losses of 150 million euros, 550 million euros and 120 million euros, respectively.

Pharmacies and mass distribution, which were able to operate with more continuity throughout 2020, showed greater resilience, each reporting losses of 2.5 percent. In particular, the mass market still represents the prime distribution channel of cosmetics goods in Italy, accounting for 44.4 percent of total sales, followed by pharmacies and perfumeries.

The only channel performing positively was e-commerce, where sales jumped 42 percent to roughly 700 million euros last year, making it the fourth largest, accounting for 7.4 percent of total sales.

Although projections for the first half of 2021 showed that online sales will continue to grow at the same rate, Ancorotti stressed the importance of brick-and-mortar stores, underscoring that the 200 million euros gained in online sales last year “can’t make up for the other losses.”

Yet, in addition to e-commerce, projections for the first half of 2021 show a recovery and positive signs across all channels. Overall, total sales and exports are expected to increase 6.1 percent and 5 percent, respectively, by the end of 2021.

Ancorotti lauded companies’ resilience and their entrepreneurial commitment even through challenging times, as last year firms continued to invest 6 percent of their revenues in digitalization and R&D activities, compared to a national average of 3 percent invested by companies operating in other manufacturing sectors.

“Flexibility and adjusting to the evolving context, digital investments and continuing to secure high-quality standards in production” were three of the positive elements the pandemic revealed in beauty companies, according to Ancorotti. On the other hand, he mentioned the “difficulty in planning activities, budget cuts due to contractions in revenues, the unexpected acceleration in the transformation of distribution models and shifting behaviors of consumers” as the cons of the pandemic for the industry.

An internal survey conducted among the association’s members — which last year rose to include 594 companies, 95 percent of which are small to medium-sized — confirmed the overall optimism, with 46 percent of companies believing a recovery is already in progress and 37 percent of them thinking it will happen in the second half, while 14 percent cautiously predict it will take place in 2022.

“On one hand, companies feel the urge to restart, but on the other they need new and solid conditions to be able to achieve their goals, flanked by a governmental plan that can support them in terms of the promotion of Made in Italy, of innovation, of digitalization and development in foreign markets,” said Ancorotti, who sounded cautious on the latest developments in the national political situation. To wit, his approach clashed with the general sentiment of hope and confidence generated by the appointment of economist and former European Central Bank president Mario Draghi, who last week was invited by Italian President Sergio Mattarella to form a new government following the resignation of Prime Minister Giuseppe Conte due to a government crisis.

On the product front, Ancorotti underscored the ever-increasing importance that cosmetics offering natural and sustainable features will have in the future, while the ones claiming antiaging and multifunctional properties will see a slowdown.

A report compiled by Cosmetica Italia’s study center found that sell-in sales of cosmetics with natural and bio formulations generated 778 million euros last year, while sustainable products totaled 876 million euros, for a combined value of 1.66 billion euros. In particular, hair products accounted for 33 percent of combined sales, followed by skin care and makeup.