home  › Business and economy

The cosmetics sector reaches €9.4 bn total turnover in 2014 with exports on the rise

by Marika Gervasio

Foreign markets provide new opportunities for the Italian cosmetics sector, which will end 2014 with total turnover of €9.4 billion, increasing by 1%. Exports played a great role in the rise, as they skyrocketed by 5.5% to €3.35 billion, in the face of a €6 billion domestic market slump, according to figures from trade group Cosmetic's research office.

The 2014 trend is going to stay the same in 2015, with a further 7% export increase, and the domestic market losing 0.3%.

“For the Italian economy 2014 wasn't a good year and the cosmetics sector witnessed a reduction of revenues, too,” said Fabio Rossello, president of Cosmetica Italia, the Italian association of cosmetics companies. “However, the sector can still grow thank to the opportunities coming from the East and the West– like for instance from Latin America, the Emirates and Hong Kong. If you think that the export-production ratio is slightly more than 30 percent, it's easy to understand the potential developments for Italian cosmetics.”

At the end of 2014, the total value consumption is close to €9.5 billion, falling 1.4% (and it will further decrease by 0.3% in 2015 first two terms), as a result of deflation: Italians buy more or less the same amount of goods, but at lower prices. This affects the retailers' profits, as in the case of big retail companies, which accounts for 40% of overall cosmetics sales for €3.8 billion – it is a 1.7% slide, expected to recover by 0.5% in the first six months of 2015.

It is worth underlining that big shops specialized in cosmetics and household products are faring particularly well, to the detriment of supermarkets.

Pharmacies are doing fine too, although over the last few quarters they have been suffering from some minor glitches, after years of spectacularly good performance. The sector will end 2014 on an upward trend (+0.8%) , and it is estimated to grow further in the first six months of 2015 (+1%). The market is worth about €1.8 billion, just below the perfumery sector, which is faltering as “in a period of crisis, this sector is regarded as superfluous as opposed to pharmacies,which are considered as places where you buy more useful and necessary goods,” Rossello explained.

It is telltale that, in pharmacies, the most-sold cosmetics are skin-care products (63% of the market). The sector can count on huge consumer trust, even if many operators believe that there is still room for improvement.

Promotions and special offers are not enough anymore: in the medium term, industry and retailers will have to optimize their networks and cater for the consumers' new needs. This might be achieved by investing in those segments of pharmacy shoppers that are not buying cosmetics yet. They are chiefly people older than 50, a group slated to grow both in terms of quantity and reliability.


© ITALY EUROPE 24 - ALL RIGHTS RESERVED