Economic crisis redefines the cosmetics industry

By Katie Bird

- Last updated on GMT

Related tags: Cosmetics

Despite cries of the ‘lipstick effect’, the cosmetics and personal care industry has not been protected from the economic downturn and some analysts argue recent alterations to the market and changes in consumer behaviour might be here to stay.

In an exclusive interview with CosmeticsDesign, president of ITEC France which organises the industry event Beyond Beauty, David Bondi, explained how the crisis has accelerated changes that were already underway in the industry, and how he believes the luxury market is looking particularly fragile.

The tradeshow, which opens in Paris, France on September 13, includes a presentation questioning whether the beauty industry will come out of the crisis unscathed. According to Bondi, the question is not an easy one to answer.

“There are a lot of debates right now on the supplier side of the industry regarding the future,”​ he said.

However, we can be sure that changes underway before the crisis have been accelerated by the fast contraction of the business, he continued, and one such change is the relocation of production to cheaper areas of the world.

“It is now very common for suppliers to the high end market to have factories in Asia, whereas a few years ago it would have been less acceptable to the luxury spirit of the product.”

For Bondi, the downturn is seeing companies trying everything to preserve their resources and protect their market shares but there is no doubt many will be weakened by the unfavourable economic conditions. Having said this, survivors will be in a good position to grab new market share, he conceded.

Regarding the talk of recovery and ‘green shoots’ in the economy, Bondi said: “It looks like things are stabilising and there is talk of new orders, but there are no signs of a fast recovery.”

The slowdown in repeat orders and general destocking trend has left many suppliers in dire need of new business contacts, something that trade shows like Beyond Beauty can help with. “The drop in orders for many companies has continued for over six months now and is beginning to become a real worry,”​ he told CosmeticsDesign.

Companies have cut as many costs as they can; downsizing production at factories and decreasing media spend. Now they have to find new orders, according to Bondi.

The Creative side of the Beyond Beauty exhibition is dedicated to suppliers of the industry and Bondi claims numbers for this event are more robust than for the rest of the show, reflecting the importance of an event like this in the eyes of suppliers.

“For the Creative event we have a smaller reduction of exhibitors than in the other shows. These companies, the suppliers, need to find new business.”

The trade show is a reflection of the industry, he said, but Beyond Beauty’s exhibitor numbers – an expected 505 in 2009 compared to 600 in 2008 – have not contracted as much as the industry itself.

In addition, there are a large number of new exhibitors, particularly in the Cosmeeting space which is devoted to innovative finished products.

“Almost 35 of the 119 companies exhibiting in the Cosmeeting space are new to the show. Buyers need new innovative products they need to keep the consumers attention, especially in today’s increasingly competitive market.”

Despite a drop in exhibitor numbers, the pre-registration numbers suggest that visitors to the show will be similar to last year, although Bondi expressed a concern that some international visitors might decide not to attend at the last minute.

Beyond Beauty opens on September 13 at Porte de Versailles in Paris. For more information please visit the website​.

Related topics: Business & Financial, Financial focus

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