Cosmetics Valley' Italy : How to get through the most difficult stage?

The clock was set back to a month ago. After the "closing of the country", on March 11, Italian Prime Minister Giuseppe Conte publicly stated that Italy is closing all unnecessary stores except pharmacies and grocery stores. During the corona virus outbreak, the country continued to expand the scope of closure.

 
On March 22, Italy ordered new restrictive measures for production and sales activities, authorized the development of toilet product (toletta), perfume (profumeria), soap and other activities, and continued the production of chemicals including cosmetics. According to the Prime Minister ’s Decree of April 1, 2020, all the above measures were extended to April 13, 2020.

Italy is known as "Make Up Valley". The Italian Lombardy Cosmetics Association released an industry survey statistics report in July 2019, which shows that more than 60% of the world's cosmetics products are developed, manufactured and manufactured in Lombardy, Italy. The northern part of Lombardy, where cosmetics companies are very concentrated, is also the most infected area.

 
According to data from the Italian Cosmetics Center, in 2019, sales of beauty products in Italy amounted to nearly 12 billion euros (about 92 billion yuan), an increase of 2.3% year-on-year; exports were 5 billion euros (about 38.3 billion yuan), an increase of 2.9% year-on-year .

 
If there is no epidemic, the Italian beauty industry should continue to rise steadily. It now appears that everything in 2020 is still unknown.

01 What are the makeup companies doing when closing stores and changing to hand sanitizer?

The plague spread in the city, and all problems came one after another.

 
When people are not encouraged to go out, first of all, offline retail suffers first, and the beauty industry is no exception.

 
"From Friday, February 21, the store's passenger traffic has significantly decreased," said the CEO of Douglas Italia, Douglas Italia, Italy's largest perfume chain. According to the Italian "24 Hours Sun" report, he called for "hope the government to consider the status quo of this industry, the industry is being hit hard". At present, all physical stores in Douglas Italy are closed, and e-commerce and telephone ordering services are retained.

Government decree has caused brands to close stores. Herbal skin care brand L'erbolario Belleo (also translated: Lelio) closed all stores on March 11th (at that time, there were 12,462 confirmed cases of new crowns in Italy), and at the same time stopped including online sales Italian beauty KIKOMILANO also closed 340 stores nationwide; Italian perfume brand Acqua Di Parma Palma Water announced on March 20 that it will temporarily close all boutique stores in Italy; Bologna International Beauty Show in Italy was postponed to 9 this year March 3-7.

The surge in demand for hand sanitizers has prompted retailers to ration rations, while online suppliers Amazon and eaby have been investigated by Italian antitrust authorities for price increases.

 
During the epidemic of the new crown epidemic in Italy, we also saw the same scene as the severe epidemic in China-cosmetic companies urgently aided and joined the production of hand sanitizers and disinfectants.

 
Intercos expanded its facilities in Italy and Poland to supply 300,000 parts of hand sanitizer per day. Some of them were distributed to hospitals in the Lombardy area.

 
Davines Group has started to produce and distribute free hand sanitizers for the new crown epidemic. Since March 3, the company has produced more than 100,000 bottles of disinfectant gels, donated to business partners, customers and partners.

 
LVMH's luxury brand Bulgari announced on social media on March 27 that it plans to pass the original Bulgari perfume in Lodi, one of the towns most affected by the COVID-19 epidemic in the next few months. The production line produces tens of thousands of bottles of hand sanitizers, all of which are donated to all medical institutions in Italy. These hand sanitizers are packed in recyclable materials for easy distribution and disposal.

Then there was the explosion of contactless shopping for e-commerce.

 
Information analysis company Nielsen Italia said that the official report of the increase in confirmed cases of new coronary pneumonia in the media began on February 23. Northern Italy's large retail network sales increased by 73%, and the largest number of confirmed cases in Lombardy increased by 87%.

 
 "In this case, sales of e-commerce are expected to increase by 55% in the future." Cerved, an Italian debt credit rating agency, predicts.

 
02 Italian beauty consumption will generally decline

 
If sorted by time axis, the severity of the black swan incident of the COVID-19 epidemic on the beauty industry also shows a linear relationship with the duration.

 
The first confirmed case occurred from February 21 (Friday). From February 24 (Monday) to March 27 (Friday), the official website of the Italian Cosmetics Association has been in the country for 5 days. Weekly update of beauty consumption. So far, the association has conducted five quick investigations on the impact of coronavirus emergencies on the beauty industry.

To sort out, the following phenomena have appeared in the past 5 weeks:

 
1. Export of cosmetics
 
In the first three weeks starting on February 24, the export volume dropped significantly, and many countries cancelled orders and delayed payment. Until March 16, the fourth week onwards, the contraction of exports was quite different: some markets were firm, thanks to the reopening of China, Singapore and some Arab countries. (Note: On March 16, there were 8976 confirmed cases in China, and 21 new cases were confirmed nationwide on that day; the cumulative number of confirmed cases in South Korea was 8236, and the newly confirmed cases were less than 100 for two consecutive days.)

 
2. Consumer goods
 
Even though restrictions on distribution channels in Italy have affected purchases, domestic consumption of body hygiene products has continued to increase, and cosmetics have continued to decrease sharply, especially the decline in sales of cosmetics and the consumption of perfume.

 
3. Channel
 
The main offline distribution channels of Italian cosmetics are large supermarkets (mass channels), single-brand direct stores and pharmacies (Drogue Store, which also sells drugs and cosmetics), in addition to perfume stores, herbal pharmacies, home sales, and professional channels ( Such as beauty salon SPA) etc.

 
Since the outbreak, public channels have achieved above-average growth, pharmacies have grown, professional channels have been hit hard, door-to-door direct sales have grown slowly, and e-commerce has grown significantly.

 
4. Bidirectional supply and demand constraints
 
For foundries, the industry trends they see have changed from "negativi" (negativi) to "very unfavorable" (molto negativi). Customers who have completed orders will demand that the process be accelerated, which will be detrimental to factory supply; while order cancellation and delayed payment will increase competition.

 
For a factory that converts anti-killing supplies, alcohol and other production raw materials are used as related materials for epidemic prevention and control. The price change may increase the production cost of the enterprise to a certain extent.

 
The latest forecast data shows that globally, the demand for cosmetics is estimated to decline by about 25% this year.

 
03 China's trade with Italian and American makeup is affected to varying degrees

The same around the world. Under the closure of the country, the consumption of beauty cosmetics has generally declined. Can Chinese cosmetics sellers selling to Italy still hold up?

 
"As a foreign trade practitioner, I feel like I am going to be unemployed ... Two customers who frequently return to order, one in the United States, one in Italy, and other countries are now the worst affected areas. This year, foreign trade is over! We still export cosmetics, foreigners Isolate at home, do not go out, do I still need make-up, and it is not a necessity ... "a person in the cosmetics foreign trade industry vomited on the social platform.

 
The situation of importers is relatively better.

 
Shanghai Chongya Trading Company, the distributor of Tesori d'Oriente, the Italian high-end care brand, has resumed work. It is understood that some of the staff of Orient Gemstone's parent company, Italy Conte Co., Ltd. currently work at home, while the factory in Lodi Vecchio, Italy, currently has good production capacity, but it has dropped by about 30% year-on-year.

 
As an agent, Shanghai Chongya told the reporter of "Cosmetics and Finance Online": "The import volume of products is determined by inventory and sales volume. In fact, it has little to do with the epidemic. The comparison (compared with the past) is not much worse." From January to the present, the number of imported oriental gemstone products from Shanghai Chongya has only declined slightly year-on-year.

"The Ogilvy Group has now resumed work, and everything is normal." Ji Chenhui, director of the e-commerce platform channel department of Shanghai Ogilvy Brand Management Co., Ltd., told the reporter of "Cosmetics Finance Online".

 
Founded in 2012, Olitech Group is an import trading enterprise jointly established by Italian overseas Chinese leaders and Chinese investors. It is headquartered in Florence, Italy, and has established many branches in China. Among them, Shanghai Olyde Brand Management Co., Ltd., established in 2017, is Italian brand Rilastil Li Nas (skin care), Acqua Alle Rose (perfume), Vidermina Vidomina (private protection) chilly Qili (private China), L'erbolario, and other exclusive distributors in China.

However, the impact of each Italian makeup brand that has been introduced into the Chinese market is different.

 
"Currently, Rilastil and Vidermina are produced by pharmaceutical factories. The factories are relatively large and the production capacity is normal. A production line has also been dedicated to the production of disposable hand sanitizers. The Acqua Alle Rose production line is in Milan, Florence. In many other regions, the parent company and the average plant are operating normally, with a slight decrease in production capacity; the L'erbolario plant is currently temporarily closed. "

 
Ji Chenhui said, "In the early stage of the epidemic, the Olyde Group participated in the donation of hundreds of trays of medical products, and the group was responsible for all transportation to China. The Acqua Alle Rose parent company also actively participated in international and international production while ensuring production. Italy produced anti-epidemic materials and donated materials to China and Italy many times during the epidemic. "

 
Under the influence of the epidemic, the international trade and logistics situation is extremely uncertain. Some executives of beauty companies predict that the consequences of this crisis will become apparent in the second half of 2020.

 
On April 2, Renato Ancorotti, President of Cosmetica Italia (Italian Cosmetics Association) uploaded a video of thanks. He said that he was particularly grateful to colleagues, entrepreneurs, managers, employees, workers and professionals of cosmetic companies. "The cosmetics industry with a sense of solidarity and responsibility, like everyone, hopes to help win this battle and provides concrete assistance to Italy. The cosmetics industry has taken all possible actions to fulfill its promise: from donating detergents and disinfectants, to Renovate the entire production line in record time, and then raise funds for hospitals and intensive care units. "

 
"Cosmetics is continuing to play its role as an industry beneficial to the Italian country." He finally said.