The added value of Italian cosmetics

Cosmetics is a standout sector of excellence in Italian industry. Made in Italy cosmetics grew by +4.4% in 2017, with turnover approaching 11 billion euro and a surprising trade balance (2,500 million euro). For 2018, the sector expects to grow by 5%.

Preliminary findings of the economic survey conducted by Cosmetica Italia for the end of 2017 confirm forecasts made in July: the cosmetic sector’s overall turnover continues to grow, nearly reaching 11 billion euro for the year.
This strong performance can be partly attributed to the domestic market, which grew by more than percentage point, and which, according to forecasts, will continue to expand during 2018. However, the clearest boost came from sales abroad, which in 2017 reached 4.7 billion euro, a 9% rise over the previous year.
«Exports have once again confirmed their status as the sector’s growth driver» remarks Cosmetica Italia president Fabio Rossello.
«Made in Italy cosmetics have always enjoyed popularity across the globe, and they continue to win over new markets. In 2017, for instance, non-EU exports rose to a 60% share, while in 2016 they remained stuck at 48%. This is an indicator of the competitiveness of the Italian offer even in less consolidated markets».
 
As for domestic consumption, by the end of 2017 cosmetics purchased in Italy reached a value of 10 billion euro, a result achieved partly thanks to the growth of professional channels – beauty and hair salons – which maintained 2% growth.
Preliminary data on the second half of 2017 show a slow but steady expansion of herbal shops (+0.9%) and pharmacies (+1.2%). Department stores also grew by 1%, selling 4 billion euro worth of cosmetics: over 40% of all cosmetics sold in the country.

Distribution channel performance numbers are significantly affected by the phenomena of single brand stores and drugstores. The cosmetic contract manufacturing sector closed 2017 with over 1 billion euro in turnover, representing +8.5% growth, and is set to repeat this performance in 2018. Sales at perfume shops continue to decline slightly, finishing the year with -0.5%.
Direct sales have seen a significant rise (+7%), driven by e-commerce, which continues to grow by double digits (+25%). Sales volumes continue to remain marginal, however: 820 million euro for direct sales and approximately 300 million for e-commerce.
«There is a lot of talk about digital transformation» explains Gian Andrea Positano, head of the Cosmetica Italia Research Center «but the operators are not as quick to adapt as might seem. The industry is in need of incremental change that affects business practices as little as possible while at the same time generating added value».