The make-up market - Italy

1.2 The Global Make Up Market

The global cosmetics market is a dynamic one. Despite a sharp decline, it was worth $*** billion in **** and is estimated to reach a value of $*** billion by ****, with a CAGR of *.*% from **** to ****.

Growth Index, Cosmetics Sector World, ****-****, % L'Oréal - **** annual report

The sector is largely dominated by Asia, which accounts for **% of sales, followed by North America, Europe and Latin America. In Europe alone, there was an expenditure of **,*** million on cosmetics goods.

Specifically, the make-up segment represents **% of sales in the entire cosmetics sector, preceded only by haircare and skincare products.

Market by business segment World, ****, % L'Oréal **** Annual Report

1.3 The Italian make-up market

The Italian market has been deeply affected by the health crisis, due to the effects on both consumption and cosmetic manufacturing trends. There is a drop in turnover of almost ** percentage points in ****, from €** billion in **** to €**.* billion in ****. However, the cosmetics sector has shown great resilience and once again anti-cyclicality, already starting in January ****, with a slow but steady recovery that is expected to be, at the end of ****, *.*% with a production value of **.*** billion and a sector turnover of **.* billion if we consider the entire supply chain. (***)

In addition, **% of the make-up consumed in Europe is produced by Italian companies, and **% worldwide.

In Europe, Italy is the fourth country in terms of consumption in the cosmetics sector (***), of which *,*** million is for the make-up and make-up sector. These account for **% of the total, compared with **.**% for face and body care products

Percentage weight of the various divisions on total turnover in the cosmetics sector Italy, ****, percentage Source: ****

1.4 Import and Export

in ****, exports fell by **.* percentage points to a total export value of *.* billion euros. As a result of the pandemic crisis, imports also declined by -**.*% which brings the balance between the two dimensions to about *.* billion euros, about *** million less than the difference in ****. However, if we look at the period from **** to ****, the trade balance between exports and imports, as far as the entire cosmetics sector is concerned, has been steadily growing over the years and for the past ** years exports have greatly exceeded imports.

The destinations for the value of Italian exports, exclusively for make-up products, see in first place France (***)

Cosmetic Trade Balance Italy, ****-****, value in millions of euros Elaborated on ISTAT export and import data

The export of makeup products had a value of about *** million in ****, a **% reduction compared to the value of *** million recorded in ****. This sector weighs on the total value of Italian cosmetic exports for a value of **%. With an increase, compared to ****, of *.* percentage points. 

Italian Cosmetic Export Italy, ****, values in millions of euros Source: ****

1.5 Impact of Covid-19

The performance of individual products clearly reflects the new consumer habits, which have been strongly influenced by the health emergency and measures to contain contagions. If, in fact, the reduction in the number of social occasions led to significant falls in some product categories, such as face make-up (***). In particular, liquid soaps recorded a peak: +**%.

The data reported shows, as mentioned, the great resilience of the sector that, already during the first months of ****, is estimated to be able to return to pre-Covid levels of profitability. This has been possible thanks to the innovation of formulations and the service dynamics of manufacturing companies; to this must be added the constant study of trends and consumption patterns that have inexorably changed following the first lockdowns. According to the new trends, in fact, greater importance will be given to skin hydration, very light face make-up and great focus on the eyes.

Pandemic effect on Cosmetic Industry Italy, ****, % ANSA

2.1 Characteristics of the Application

in ****, makeup products show a sharply declining trend, despite the fact that the face was the most exposed part of everyday life and work relationships. Specifically, there is a decline in face makeup, -**.*%, eye makeup (***). There was also a drop in makeup boxes, -**.*%.

Themask effect has strongly hindered the beauty routine of consumers who, over the years, have shown a growing interest in this type of product through mass market distribution formulas and organized perfumery chains. Foundations, tinted creams, cheek concealers, blushes, earth tones and powders suffered more than all other product categories from the drop in consumption (***).

Among all make-up products, those registering the smallest drop were products dedicated to the eyes. Mascara accounts for **% of the market, with a **% drop and a total value of ***.* million. This is followed by outlining products (***)

Lip products also saw a negative trend, down **.* percentage points to €***m. The products with the highest value are lipsticks and lip glosses with a total value of *** million euros, followed by protective products, colourless bases and sun sticks, with a value of ** million euros. These are followed by outliners and pencils with a total value of ** million euros. (***)

Make-Up market composition Italy, ****, values in ...

2.2 Demand Drivers

Italian women are particularly attentive to beauty: according to a study by Survey Lab, Vente-privee's European laboratory, they devote about ** minutes a day to face care and make-up. They look for quality products: they are willing to spend more than ** euros for a beauty cream, *% more than the European average. The web is not only a purchasing tool, but also a space in which to gather information: **% of Italians search online for useful information before making a purchase; **% focus on information related to the benefits of the product.

Beauty products are also characterized by a high frequency of purchase: according to the same study, women between ** and ** years old have an average of ** references in their beauty case, ** more than women in the **-** age range

products most used by Italian women Italy, ****, percentage https://www.modaestyle.it/vente-privee-svela-le-preferenze-beauty-delle-donne/

Regarding the Beauty sector, several megatrends can be identified, divided according to what influences consumers' purchasing behaviors.

Health Beauty: More and more consumers pay attention to their lifestyle and try to improve its quality and that's why anti-pollution, anti-aging products are becoming increasingly important and great importance is given to the advice of experts in the field; Beauty Diversity: over the years, ...

2.3 New trends

Over the last few years, Green Beauty has become increasingly important. This is a trend, constantly growing, for which greater importance is given to products of plant origin and from an organic agriculture, in total respect for the environment and eco-sustainable to the maximum. More and more importance is being given to certain parameters such as:

Low environmental impact in the phases of the life cycle of that product; Production made only with clean energy; Made using little water; As close as possible to the famous km *, that is, not having had to travel too many kilometers from the producer to the consumer.

The same applies to packaging, which, compared to previous years, is given less importance as long as it is biodegradable, eco-compatible, made from recycled or recyclable material. For this reason, the sale of bulk products has also increased.

Another crucial aspect is the wording "Cruelty Free" which is always present on most cosmetics to indicate that the product has been put on the market without any tests on living beings.

[***] Que critérios de sustentabilidade você valoriza ao comprar bens de luxo? Mundo, ****, % Fonte BCG

3.1 The Cosmetics Industry

The cosmetics sector is one of the main sectors of the Italian economy, just think that, among the main sectors of Made in Italy, it is the third sector by value of the trade balance, behind only Wine and Fashion.

The sector generated a turnover, in ****, of **.* billion euros, down *.*% compared to what was recorded in ****, which reaches ** billion by analyzing the enlarged economic system of the supply chain, from production and packaging machinery to packaging, not forgetting raw materials, distribution, logistics and retail

In the sector in Italy there are *** active companies for a total of ** thousand direct employees (***) that become about *** thousand on the entire cosmetic supply chain if we consider the employees related to the channels of aesthetics, hairdressing, perfumery, pharmacy, herbal medicine, large-scale distribution and direct sales.

Analyzing the data of ****, it is possible to notice how the Italian companies operating in this sector register high growth rates. Leading the ranking of Italian industries is Kiko with *** million in turnover. Second in the ranking is EuroItalia with a turnover of *** million and an export share of **% that sees among the main markets the United States, Asia, the Middle East, the United Kingdom, Germany and Russia. Third position ...

3.2 Cosmetics Value Chain

Source: ****

3.3 Distribution Channels

As a result of the pandemic and ongoing lockdowns, consumer buying patterns have changed significantly. There has been a strong acceleration of online sales (***) and professional channels.

main channels of purchase of facial cosmetic products Italy, ****, percentage https://www.cosmeticaitalia.it/documenti/a_centrostudi/***-****-Cosmetica-Italia_Presentazione-IP_**.**.**.pdf

3.4 Competitive Scenario

The Italian Make-Up market is composed of a small number of brands, some of which are widely recognized, with a well-established market positioning. Larger companies benefit from large economies of scale that allow them not only to compete more efficiently on price but also to allocate significant amounts of money to influencer marketing campaigns, which are essential for increasing brand appeal. For this reason, new entrants or smaller brands often decide to focus on a specific market niche (***) or penetrate the lower end of the market.

It is, therefore, a fragmented market but one that tends towards a strong index of concentration in that the top * players will account for **.*% of the total value of the market in ****.

Make-Up Market Share in Italy Italy, ****, % Cosmetics Report - Sole **Ore

3.5 Geographical Distribution of Supply

In ****, the most important concentration of cosmetic companies is confirmed in Northern Italy (***). In the Center-South, in various areas such as Campania and Puglia, new productive realities linked to the territory and specialized in niche activities are being born.

The quadrilateral of cosmetics

In the so-called quadrilateral of cosmetics, between Milan, Brianza, Bergamo and Crema, there are about *** companies with six-figure turnovers in constant growth and export quotas that do not fall below **%. Most of the companies in Lombardy operate as subcontractors. Intercos of Agrate Brianza is the largest Italian company producing cosmetics on behalf of third parties for major international beauty brands with ** plants worldwide, *** million euros in revenues for ****, an ebitda of **% and an export share of **%.(***)

Others include Chromavis in Cremona and Ancorotti Cosmetics in Crema, which produces **% of the world's mascara (***) or under their own brands, such as the Bergamo-based Kiko Cosmetics of the Percassi group, with a turnover of *** million euros in ****, Pupa, Deborah Italia and L'Erbolario.

Even if we consider the level of turnover of cosmetic companies, Lombardy remains the best Italian region (***). A large part of the turnover is due to companies that produce for third parties The total value of this production is ...

4.1 Price level

The prices of beauty products vary greatly depending on the quality of the product. For lipsticks we find in fact products at prices between *.** and * euros belonging to the low end of the market. Among these we distinguish those KIKO products in Italy sold at a minimum price of *.**. Moving into the high end we find, for example, the Armani Lip lipstick line sold at a price of ** euros or those of Yves Saint Laurent.

As for eye pencils we find, in the low end, Kohl's, Rimmel or Gabriella Selvete products at prices ranging between * and *.** euros while in the higher end Sisley products also reach a price of about ** euros. Mascara, the product most sold online, has the same price oscillation and we recognize in the high end players such as Chanel, Armani and Nabla with prices between ** and ** euros.

The nail polish market has among the most important players in the low end brands such as Essie, Astra or Lovren with prices between * and * euros. In the high end we find, among the altir, Dior and YSL with prices between ** and ** euros.(***)

the sales network of supermarkets or hypermarkets is characterized by makeup products with fairly low prices and ...

4.2 Natural and Organic Offer

The biocosmetics sector is constantly developing. In the production of these products are used exclusively organic ingredients (***) and chemicals of natural origin that are selected according to more or less strict criteria of environmental sustainability and healthiness.

The sector has a turnover of about *.* billion and represents about **% of the cosmetic sector. Classification parameters have also been defined on the basis of which the Italian association"Cosmetica Italia" distinguishes between:

Cosmetics with a natural/organic connotation: characterized by graphic or textual elements that communicate its natural/organic connotation, in line with its formulation composition (***). This sector has a turnover of *** million euros; Cosmetics with a connotation of environmental/green sustainability: characterized by graphic or textual elements that communicate the connotation of environmental/green sustainability in areas that may concern the entire life cycle and/or the corporate policies of the company towards sustainability. This sector has a turnover of *** million euros.

**.*% of the consumption of natural and sustainable cosmetics is attributable to the mass market, followed by professional hairdressing and beauty salons (***) also play a significant role, accounting for **.*%.

Packaging is also of crucial importance. * out of ** consumers under the age of ** said they would stop buying a brand's products ...

5.1 Regulation

Cosmetovigilance is the set of activities for the collection and management of reports of undesirable effects attributable to the use of a cosmetic, carried out with the aim of facilitating post-marketing surveillance and ensuring the protection of public health.

Cosmetic products placed on the market must comply with Regulation (***) n. ****/**** and to contrast the distribution and sale of non-compliant cosmetic products.

The alert system is provided for by Directive ****/**/EC implemented in our country by Legislative Decree no. *** of September *, ****,Consumer Code.

Non-compliant products are reported through a rapid information system, Rapex, through which the national authorities of the Member States report to the European Commission products (***) in relation to the seriousness of the risk reported.

Product controls are based on the verification of documentation or analytical and/or microbiological controls.

In Italy, the Ministry of Health is committed to ensuring effective market surveillance for products offered for sale, both online and through traditional channels, through corrective measures to ensure compliance with EU regulations.

The Responsible Person

The key principle of Regulation (***).

For each cosmetic product placed on the market, the Responsible Person shall ensure compliance with the relevant obligations established by the Regulation.

The Responsible Person shall ensure the conformity ...

6.1 Segmentation

• KIKO Milano
• Groupe Rocher (Yves Rocher)
• L'Oréal Groupe
• Estée Lauder
• Sephora
• PROFUMERIE DOUGLAS S.P.A.
• Giorgio Armani
• Deborah Group Srl
• Bottega Verde - SRL
• Collistar SPA
• Micys Company SPA
• Shiseido
• Bourjois (Groupe Coty)
• Rimmel London (Groupe Coty)
• Dolce & Gabbana