Italian cosmetics companies in the post-Covid era: the study

A new study by the Intesa Sanpaolo Research Department analyses the impact of the COVID-19 pandemic on the Italian cosmetics industry.

The initial evidence seems to suggest that, after years of growth, the pandemic has reduced the turnover of the sector by 12.8%, yet it still seems able to recover ground.

The 2020 results were affected by the drop in domestic demand (-10.2%) and losses in exports (-16.5%). Most of the traditional sales channels are in great difficulty, with the exception of pharmacies, large-scale distribution and e-commerce.

In this context, new consumption habits have emerged: the decrease in alcoholic perfumery products (-20%) has been matched by an increase in “DIY” hair dyes (+30%) and liquid soaps (+38%); lipsticks and other lip make-up products have been penalised in favour of eye make-up; demand for skincare products has also increased. There is also a growing focus on natural and sustainable cosmetics and safe products.

The sector shows that it has the energy to recover, especially thanks to innovation that together with high quality standards, flexibility and adaptation to the context are the decisive strengths of Italian cosmetics. The Italian cosmetics industry engages in intense research and development and has maintained a high level of commitment to innovation even during the crisis: 40% of companies in the second half of 2020 increased their investments in research and development.

The greatest opportunities for growth are offered by international markets, with China and the United States being the world’s top two importers (8.1% and 9% respectively). The recovery path will be slower in Europe and, in particular, in Italy, where – according to the projections of Intesa Sanpaolo Research Department – only in 2023 will it return to 2019 levels.

The presence in Italy of complete, well-established supply chains is key to recovery. The pandemic has severely tested the resilience of the cosmetics production chains: a lengthening of payment times, especially in the Centre-South, has corresponded to a review of purchasing policies, mainly aimed at diversifying and expanding supply markets, as emerges from a survey conducted on the Intesa Sanpaolo network of managers between October and December 2020.