Cosmetics and consumption

UPDATES The progress of the channels during the first half of 2012 and projections for the second half, based on economic analysis by the Unipro research center.

The global crisis, which sees Europe unable to develop effective recovery policies, penalizes demand for consumption goods, and the cosmetics sector cannot but suffer from consumers’ reduced purchasing power. In any case, Italians have altered their consumption habits and choices in relation to price/channel, but they have not renounced personal care and hygiene altogether. This is confirmed by projections for late 2012 developed by the research department of Unipro (Association of Italian Cosmetics Industries) and presented last July 12th, outlining a complicated picture that evidences the uncertainty expressed by sector operators during the mid-year economic survey. In terms of rough averages, the first half of the current fiscal year ended with scant 0.6% growth and widely differing results depending on the production sector.

This growth is due mainly to the further growth of international markets and the confirmed good health of the herbal medicine and specialized mass market sectors, which have proven more responsive to changing consumption demand. Under these conditions, which are expected to persist during the next few months, end of year projections estimate 3% growth in turnover for concerns in the sector, valuing approximately 9,300 million euro in total.

Channels on the see-saw. With a 4.5% drop during the first semester of 2012 (-4% at the end of the year), the perfume sector is undergoing the worst shrinkage recorded in recent years among traditional channels, accounting for a total worth of approximately 2,200 million euros. Professional hairstyling also saw decline and is expected to end the second semester with a -3.8% drop and sales not exceeding 680 million.
As for beauty centers, which seem to be going through a slightly positive trend (+1.8%) thanks to the new opportunities made possible by skincare, they too are destined to see losses, with a projected end of year share of 270 million euro.
Herbal medicine, on the other hand, is moving in a decidedly different direction, and this is nothing new. Sustained by the phenomenon of single brand stores and the growing orientation of consumers toward all things green, by the end of the year this channel could mark +5.9% growth, with sales amounting to over 400 million euro. Pharmaceuticals, on the other hand, after years of trends beating the sector’s average, is seeing a slowdown in its progress as it shows the early signs of trouble. This sector ended the first half of 2012 at -0.4% and the second half at +1.1%, with a final turnover nearing 1,800 million euro.
The most important commercial channel for beauty products, finally, remains for the most part stable: retail distribution will end the first semester with about 4,000 million euro, with 0.5% growth, and double that in the second part of the year (in part thanks to the dynamic development of single brand and specialized centers).
The woes of large areas - the study’s authors affirm - will be carefully monitored, considering their weight on the economy of the entire sector.
Lastly, a point well worth keeping in mind: contract manufacturing (a category that straddles all other channels) ended the first semester with +3.5%, with projected 4.5% growth in the second semester.