The organic cosmetics market - Italy

1.2 A well oriented global market

The global cosmetics market

According to Euromonitor, the global market for beauty and personal care as a whole generates about *** billion dollars. The year **** was the best performing year since ****.

In ****, the region Asia-Pacific alone represented more than one-third of the total market value  . China is considered to be one of the main contributors in absolute terms to market growth, along with the United States and Brazil.

The organic cosmetics industry is an example of a trend-oriented market whose value is strongly influenced by consumer behaviours, as the search for natural products against processed products takes over.

In **** the market grew by more than *% compared to the previous year [***]. According to a Sole ** Ore article, Ecovia Intelligence estimates the world market for organic cosmetics to around €** billion in ****. It is expected to grow steadily, following the upward trend it has experienced in recent years.

The organic cosmetics segment, growing in importance

At a global level, consumer preferences for natural products are obvious: **% of households place more importance on natural products than on traditional products. In addition, an increase of about *% in applications for natural labels for personal care and organic beauty products was observed between **** and ****. [***]

North America and Europe are ...

1.3 Natural beauty in Italy

According to the annual report of the Centro studios di Cosmetica Italia on beauty, the cosmetics market in Italy is estimated at about **.* billion euros in ****.

Share of organic cosmetics in the total market

By order: Total share of cosmetics/Share of organic cosmetics

Source: ****

Indeed, the segment of organic cosmetics is increasingly consolidating its presence, with a share of **% on the entire Italian cosmetics market for a value estimated at a little over * billion euros.

The reasons for this increase can be classified into two categories:

Quantitative factors

The first quantitative factor concerns biological farmland. Organic agricultural land in Italy can be considered as an interesting variable affecting both the growth of the organic industry as a whole but also the organic cosmetics market in particular.

Italy is among the top ten countries that have experienced the largest percentage increase in organic land. It should be noted that over the last * years, organic lands have experienced exceptional growth every year [***]. In ****, the cultivated area represented *.* million hectares. (***)

Increased presence at cosmetic events is a second qualitative factor: Cosmoprof is a world-renowned exhibition bringing together exhibitors from more than ** countries. In ****, the number of visitors was *,*** exhibitors (***) and ***,*** participants.

Qualitative ...

1.4 International trade

UN Comtrade provides data on production and international trade. In ****, for the category "cosmetics, beauty, make-up, skincare, manicure or pedicure, ****", the exports in Italy amounted to approximately *.* billion dollars while the imports totalled *.* billion dollars.

Foreign trade in the cosmetics category, Italy, ****-****, millions of US dollars

By order: exports, imports, coverage rate

Source: ****

In ****, France was the largest export and import partner in the cosmetics market.

Italian exports are mainly directed to France, the United States, Germany, China and Spain, which represent about **% of the total value of exports together in this sector.

Destination of cosmetics exports, Italy, ****, %

By order: France, the United States, Germany, China, Spain, the rest of the world

Source: ****

Origin of cosmetics imports, Italy, ****, %

By order: France, Germany, Spain, Poland, the United Kingdom, the rest of the world

Source: ****

The year **** was marked by a profound transformation of the Italian cosmetics industry. This year marks the highest number of product launches ever recorded in this segment. [***]

Organic cosmetics experienced a real boom between **** and **** - where ***% more activities were recorded . [***]

2.1 Demand that adapts to new trends

According to a study by the French Institute of Public Opinion IFOP (***) in ****, we have witnessed in recent years a profound change in the transformation affecting purchasing decisions. Consumers are giving more and more importance to organic and natural products. This new awareness is influencing preferences and purchasing habits in cosmetics.

Search trend for the word "biological" on Google, Italy, ****-****, base ***

Source: ****

The graph above represents the proportion of research for a given term in a given region over a given period of time, relative to when it was most sought (***).

Thus, a value of ** means that the keyword has been used half as often in the region concerned, and a value of * means that there is insufficient data for this keyword.

Over the past five years in Italy, the interest of Google search for the keyword "organic" progressed positively in all categories. This proves the increasing relevance of the subject in all aspects of daily life.

The following graph shows the considerable importance of organic cosmetics by country:

Global consumer demand for organic cosmetics, ****, %

By order: Indonesia, India, the Middle-East region, China, Turkey, Colombia, Russia, Mexico, Italy

Source: ****

Consumers in Indonesia far exceed those in other countries with at ...

2.2 Determining factors and levers

The rise of consumer awareness

The natural and organic cosmetics market in Italy is strongly influenced by consumer perception and awareness due to the absence of a national regulatory framework. Consequently, the demand for products is subjective, as it is strictly linked to the final consumer.

A study conducted by the group GFK identified three different categories of consumers from a sample of **** women. The different categories reflect the multiple reasons taking place in the purchasing decision process of an organic product:

health care (***): the purchase is motivated by the choice of a healthy lifestyle in general. respect for the environment (***): the purchase is motivated by an understanding of the impact of non-natural cosmetics on the individual and the environment. risk awareness (***): the purchase is motivated by a negative perception of chemicals or processed products that can cause damage or allergies.

A new generation

In ****, the Millennials represented about **.*% of the Italian population. They are mainly concerned with health, environment and the people around them.

According to the article "A rise of green consumerism" in a survey conducted by the Global Web Index from about ***,*** Internet users around the world, the Millennials feel a greater sense of attachment to nature: **% of ...

3.1 Market organization and dynamics

The growth of the Italian organic sector as a whole is one of the drivers of the cosmetics market in Italy. In December ****, more than ** *** organic companies were identified, a *.*% increase compared to the previous year. In addition, there is a significant concentration of companies in the South of the country (***).

According to pharmaretail.it, there are more than *** companies with their main activities in the cosmetics sector in Italy. About **% of them operate exclusively through the supermarkets and pharmacies.

The national cosmetics market is very competitive, but alongside the major international players such as L'Oréal and Lancôme, local actors are flourishing: Kiko, founded in ****, is the leading national company on the market with a turnover of more than *** million euros in ****.

The Italian organic cosmetics market, in particular, has experienced an intense transformation in terms of structure in order to respond to positive consumer feedback. The absence of specific regulations concerning terminology, however, has complicated the process of understanding the nature of the market and its actors. A viable solution to resolve this legal uncertainty is product certification. The market today has a fragmented image, with certified and non-certified companies. The Bio Bank **** Report notes an increase of ...

3.2 Changing distribution channels

The specific growth and expansion of distribution channels illustrate the exceptional growth of the organic cosmetics segment.

Organic shops are representative of a state of mind that has been present in Italy for more than ** years: the opening of the first organic store in Milan dates back to ****.

However, the "natural" products' conceptual framework has experienced a real transformation. In the cosmetics industry, this rapid evolution has led to the creation of multiple types of distribution channels.

For nearly ** years, organic cosmetic products have been sold exclusively in organic stores. Traditional "erboristerias" have been a reference channel for organic cosmetics for Italian consumers, although they have lost market share to single-brand stores. After ****, the different product categories can be found in the following distribution channels:

Herbalist's shop/Erboristerias Monobrand store Perfumery (***) Hair beauty salons Supermarkets E-Commerce

Turnover's breakdown of organic cosmetics products, Italy, ****, %

By order: Perfumery, E-Commerce, Pharmacy, Supermarket, Hair beauty salons, other mass market, Parapharmacy, Herbalist's shop, Monobrand store

Source: ****

Certified organic stores

The number of stores selling organic or natural cosmetics has increased over the past five years. Between **** and ****, there has been an increase of **.*%. [***]

  Organic perfumery

It is a specific category of perfumeries specialised in the ...

3.3 E-commerce, a double-digit growth

The Euromonitor data highlights the exceptional performance of the online retail segment in the personal care and beauty market. The year **** showed a positive double-digit evolution of this channel, around **%.

Purchasing habits significantly adapted to digital technologies. In ****, **% of Italians have made one or more online purchase per month. This change in consumption patterns affects all sectors. [***]

The online sales channel specifically dedicated to cosmetics is also developing at an ever-increasing pace in Italy. Cosmetics represent the largest volume of online purchases made by women **,*%.

Online purchases of goods by women, Italy, ****, %

By order: cosmetics and perfumes, ready-to-wear clothes and accessories, health and well being, telecommunications, watches and jewellery

Source: ****

In ****, there was a **.*% increase in the online cosmetics retailing channel. This increase is higher than that of the e-commerce sector as a whole (***).

The largest online consumers of cosmetics by age group are **-**-years-old and **-**-years-old (***) [***]. These two age groups represent **% of the Italian population.

In Italy, Bio Bank has identified approximately *** e-commerce companies specialized in the organic cosmetics segment.

4.1 The ingredients used

According to COSMOS - the international non-profit organization producing organic standards - organic cosmetics contain five categories of ingredients:

water; mineral elements; physically processed agro-ingredients; chemically processed agro-ingredients; other ingredients.

An agro-ingredient is "any substance of plant, animal or microbial origin from agriculture, aquaculture or harvesting".

Each category of ingredients must comply with specific requirements and different regulations. In addition, it is necessary to identify the percentage of organic products in each category. For more information on this subject, please refer to COSMOS standard pages **-**. [***]

4.2 A greener cosmetics offer

While there is no doubt that demand for organic products has increased, this increase has been accompanied by an evolution of the offer where we find this strong upward trend.

As mentioned above, more than **% of the total cosmetic product launches in **** were presented as "organic" - proof that the organic trend is flourishing rapidly in this sector.

The reported number of organic stores was over **** in ****, of which **** responded to the survey on the category of products they sell. In Italy, **% of organic stores also sell organic cosmetics.

Organic stores, breakdown by product sold, Italy, ****, %

By order: packaged foods, vegetables, cosmetics, household detergents, bakery products

Source: ****

4.3 Various supply trends

A green product across the entire value chain

In view of the interchangeable terminology (***) and the absence of harmonised regulations on organic cosmetics in Italy, it is difficult to have a complete overview of all products labelled as organic.

Not all certified entities take into consideration the entire product supply chain. This last aspect could potentially prove to be a determining factor in a world of constantly changing offers.

Not only are organic ingredients winning the hearts and minds of consumers, but the concept of "go-green" is gradually gaining weight. A new trend is, therefore, emerging on the horizon: sustainability throughout the supply chain. The main dimensions concerned are:

the origin; production, the processing process; the packaging.

"Forever young"

Another trend that is shaping the future of the organic cosmetics industry is found in the "forever young" expression [***]. Older women represent the largest part of this trend, as they await the future results of the combination of technological advances and natural remedies that should lead to favourable results.

The possibility of a virtual customer experience

Since the online business is becoming increasingly relevant in all product categories as a non-traditional distribution channel, it is now possible to make applications to ...

4.4 Structure of the offer and key products

The products of skin care undoubtedly generate the highest turnover. This applies to both the global cosmetics marketplace - which represents about $*** billion - and to the European market - which represents approximately **.* billion euros. [***]

Similarly, promising economic results can be observed for this category of organic cosmetics.

A distinction is made between the different sub-segments of the cosmetics industry. The graph below shows that facial care products represented approximately **% of the "green cosmetics".

Organic cosmetics turnover by category, Italy, ****, %

By order: facial care, body care, hair care, children care, perfume, personal hygiene

Source: ****

5.1 Higher prices compared to non-organic cosmetics

Organic cosmetics generally tend to be sold at higher prices than non-organic cosmetics. Among the reasons that can be given to explain these prices, in addition to a willingness to pay to acquire those type of product, there is also the need to use more natural resources at an increased cost during the production process.

For two products with similar characteristics, there are sometimes significant price differences. For example, the comparison between two creams that are supposed to cover imperfections shows that there can be a real price difference between two rather similar products.

Garnier

**ml

* - * euros

Saponeria (***)

**ml

** euros

5.2 Terminologies that are sometimes confusing

There is a great deal of confusion about the definition and identification of "organic" cosmetics. The first step towards a better understanding of the product is to differentiate between the following categories:

natural cosmetics, which contain extracts of natural origin and/or ingredients of natural origin (***) [***]; organic cosmetics, which contain raw natural ingredients (***) from organic farming; they must, therefore, have a valid certificate attesting to their organic nature. [***]

At a global level, the distinction is fading, while in mature markets such as Italy, Germany and France, it plays a dominant role.

Therefore, to establish the authenticity of the product, it is necessary to read the label (***) and ensure that a certified institution has certified its compliance with the requirements.

In Western European countries, certification plays an important role against greenwashing. [***]

5.3 The various regulatory bodies

European regulation

Cosmos (***) governs organic and natural cosmetic certifications. There are two certifications:

*. Organic Cosmos focus on ingredients used and finished products:

Ingredients: at least **% of physically processed "agro-ingredients" must be organic. Finished products: at least ** % of the total product must be organic - with some exceptions.

*. Natural Cosmos: with no obligation on a certain minimum level of organic ingredients.

Private organizations

Some private organizations monitor the absence of specific substances. The following three can be mentioned:

ICEA (***); CCPB (***); AIAB (***).

Other organizations provide certifications that meet specific requirements: NaTrue the international association of natural and organic cosmetics, identifies * levels of certification:

for natural cosmetics; for natural cosmetics based on organic ingredients (***); for organic cosmetics (***).

6.1 Segmentation

• Sodalis Group
• L’Erbolario
• Davines
• Aveda (Groupe Estée Lauder)
• Lush
• Manetti & Roberts
• Conad
• Coop
• Bennet