Cosmetics: 2016 forecasts

With a total turnover of 10.5 billion euro, perfumes and professional hairstyling resume growth. Good signs also from contract manufacturing. Numbers and trends from the economic survey of Cosmetica Italia’s research center.

Increased interest in quality, greater consumer confidence and consolidated business investments. Also natural solutions, safety and ethics, all increasingly marked by the social media: according to Italian cosmetic industry operators, these are the key factors at play in the sector’s immediate future.
The sector continues to stand out for improving economic indicators across the board, in spite of a macro-economic scenario influenced by numerous risk factors (political instability and the impact of Brexit first and foremost).
According to data from the economic survey of Cosmetica Italia’s research center, the total turnover of the sector will surpass 10.5 billion euro by the end of the year (+5% compared to 2015).
Once again, foreign demand will have a positive impact on the sector’s performance, such that by the end of 2016 it is estimated that exports will grow by over 11%, for a value of over 4,200 million euro. On this topic, Fabio Rossello, president of Cosmetica Italia states: «The strong performance of cosmetic exports enables us to estimate another record for the trade balance, which by end of year will exceed 2,100 million euro. Also significant is the slow but positive growth of the domestic market, which will approach 9,900 million euro (+0.7%)».

Sales: e-commerce strong, retail slowing. After suffering in previous fiscal quarters, a few distribution channels are showing signs of recovery: professional hairstyling has seen a trend reversal (it will end the year with +0.8% or just under 560 million euro), as well as perfumes (forecasted at +1%, approximately 2,000 million euro).
Direct sales (in the home, by correspondence and e-commerce) are performing more strongly than other channels, reaching growth of over seven percentage points, with sale volumes exceeding 750 million euro.
Consumption of natural cosmetics has been consolidated: the herbal shop channel is showing consistent growth rates (+2.2% for end of 2016, 430 million euro). While consumption from pharmacies is seeing positive albeit slowed growth (forecasted for end of year at +1.3%, exceeding 1,850 million euro in market value). The only negative signs are related to major retailers and health spas: for the former, forecasts are for a 0.8% drop, even though this channel continues to represent 40% of distribution of cosmetics in Italy, for a value of 4,100 million euro. Health spas are negatively affected by a reduced number of services and treatments (-2.1%, 220 million euro). Promising, finally, are the indicators concerning contract manufacturing, which signal projected growth of 4.3%, or a turnover of over 1,100 million euro.