The Italian cosmetics industry is in good shape
The Italian cosmetics industry is competitive and in good shape. According to a study conducted by Intesa Sanpaolo’s Research Department, during the 2016-2017 period the sector’s companies saw their turnovers increase on average by 9%-10% (by 12% in total), which was among the largest increases of all industries, and this was accompanied by an excellent level of profitability: profits before taxation and financial charges were up almost 9%, which among manufacturing companies within the sector was only bettered by that of the pharmaceutical industry. Also in terms of productivity (added value per employee), the cosmetics industry was among the leading segments.
The analysis was conducted on a sample of over 1,000 cosmetics manufacturers and wholesale distributors, which together boasted a turnover of nearly 11.6 billion euro. More than one half of such companies are small-scale concerns with a turnover of less than 2 million euro, although a good number (15%) are medium-sized and large companies with a turnover of 10 million euro or more.
The growth in capitalisation is a further positive sign: the capital held by cosmetics companies in 2017 accounted on average for 30% of the total assets (greater than the average for the manufacturing sector) of manufacturing companies, and for 21% of the total assets of distributors.
The increase in sales volumes and profitability was considerable. The productive fabric of start-ups is dynamic. Lombardy is the leading region, with a typical district-based organisation and short production chains.
The sector’s quality is confirmed by the considerable number of “champion” companies in terms of growth and profitability. In fact, in 2015-2017 20% of companies saw an increase in turnover of more than 15%, created jobs and reported gross operating margins (EBITDA) of over 8%. Half of them are based in Lombardy, and more than half of them are manufacturing companies. Around 30% of medium-sized/large companies are “champions”. This compares with a figure of just over 10% in manufacturing industry as a whole.
These results are also the outcome of investment in research and development, communications, quality control and other intangibles; investments which in the case of cosmetics manufacturers are four times the average for the manufacturing sector as a whole.
Moreover, the percentage of cosmetics companies possessing internationally-registered trademarks, quality certifications, patents and environmental certifications, is much higher than the average for the manufacturing sector.
The productive fabric is dynamic: together with the consolidation of traditional companies, a considerable number of new enterprises have started up. The almost 200 new start-ups witnessed during the 2010-2014 period experienced a much higher growth in turnover than that of the older, more mature companies operating in the sector.
To complete the picture, the figures show that the companies with more young people on their management teams are the most successful in terms of business volumes and profitability.
Intesa Sanpaolo’s study picked out twelve Italian provinces as leading in cosmetics specialisation. They are, in order of importance, Lodi, Cremona, Parma, Rome, Bergamo, Milan, Florence, Monza and Brianza, Como, Bologna, Turin, Padua. As can be seen, half of these provinces are located in the Lombardy region, and Lombardy is also the leading Italian region in terms of added value.
In fact, a combination of factors has led to the creation of a highly-specialised meta-district. These factors include: a concentration of expertise in the chemical field; the creative interaction with other sectors of Italian excellence (fashion, design); the ability to foresee trends, propose innovative, high-quality, customisable products accompanied by appealing forms of packaging.
Furthermore, in Lombardy the sector can count on a productive fabric organised in the form of a branched production chain based on the kind of supply arrangements characteristic of industrial districts. Lombardy’s companies are situated on average 74 kilometres away from suppliers (compared to the Italian average of 125 km. for cosmetics companies), and in some cases this distance is as little as 38 km. These are very short distances, and as such are similar to those seen in the case of the textile and leather manufacturing districts.
June 2019
