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Amid market challenges, Bormioli Luigi positions for growth

Alissa Demorest

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Amid market challenges, Bormioli Luigi positions for growth

The European energy crisis is proving to be a critical time for glassmakers. Luxe Packaging Insight visited Bormioli Luigi’s glassworks at its Parma headquarters earlier this month and spoke with the Italian company’s management about current challenges and what investments are on the cards for its prestige perfumery and cosmetics division.

“Demand has been incredibly strong in our fragrance and cosmetics business since the beginning of this year,” affirms Marco Azzali, Commercial Director Prestige Perfumes at Italian glassmaker Bormioli Luigi. “While our sales dropped by 30% during the pandemic, the market has turned around and we’re seeing particularly vibrant demand from the US and China markets. For the moment there is no slowdown in sight: our order books are full for the next 12 months.”

Yet like its competitors, Bormioli Luigi is having to juggle escalating costs in light of the energy intensive nature of glass production. The glassmaker estimates that its energy bill has grown five-fold at its Parma site since the Russia-Ukraine conflict began. The shortage of raw materials, and namely soda ash, is putting on additional pressure. All totaled, the company estimates that costs have gone up anywhere from 30% to 50%. “In terms of pricing, we are coming out of a long period of stability when we didn’t increase our pricing. Today, that has to change,” affirms Simone Baratta, Business Unit Director Prestige Perfumes.  “We can’t continue to sacrifice profitability; our industry demands investment and a glass factory without regular investment can’t survive. To come out of the current crisis, we need the support of our clients, but also for the political framework to stabilize prices in Europe,” says Baratta. In a bid to face up to rising costs, the supplier aims to increase its pricing by around 25% by the end of 2022.

Spanish site partially transitions to beauty

Bormioli Luigi had already earmarked an investment of €200m well before both the health pandemic and the energy crisis hit. Its 2019-2023 plan allocated funds for two new IS lines for perfume and cosmetics at its Spanish glassworks in Azuqueca, near Madrid. “We are in the process of transforming a portion of our Spanish site from tableware production to perfume and cosmetics,” explains Azzali. One IS machine has been operational for perfume and cosmetics items since the end of 2021 and two more will shift over by the third trimester of 2023. “Several years ago, when skincare was strong, we decided that the product mix there would be more focused on cosmetics, but today the market has shifted and fragrance is now the motor for growth,” says Azzali. While Parma remains the supplier’s ‘jewel in the crown’ for premium perfumery and cosmetics production, Azuqueca has a more mid-market positioning with a focus on bottles and jars for skincare and makeup, masstige fragrance bottles and home fragrance bottles.

Ambitious targets for in-house decoration capacity

Increasing capacity and the number of processes at AfterGlass, its decoration division in Parma is another area of investment. By 2025, the company plans to decorate 50% of its products in house, versus just 10-15% today (this includes its decoration sites in Parma, Azuqueca and Colummiers in France.) “More in-house decoration will allow us to be more agile and better respond to market demand as many subcontractors are currently in overcapacity. And as we all know, agility is the name of the game in the industry today,” says Baratta.

AfterGlass, founded in 2013 and with sales of around €13m in 2021, has four lacquering lines, of which two are dedicated to its patented Inside technique. An additional lacquering line is slated to launch in January 2023. AfterGlass also offers screenprinting, metallization – a second line launched in March 2022 – as well as Inside Mirror (interior metallization), sparkle coating technique Prisma, and accessories and label application. By the end of 2022, a pad-printing line will be added to the mix.

The glassworks in Spain is also a priority for decoration, says Baratta: “Once the factory is up to capacity, we’ll develop the decoration activity. We already decorate our tableware there, so we’ll do the same for perfumery and cosmetics. We forecast this for 2024”.

What initiatives for sustainability?

The glassmaker outlined its key priorities in terms of sustainability initiatives. From a production standpoint, the Parma glassworks has operated two (cold-top) electric furnaces since the 1990s, and some 60% of the glassmaker’s current production comes from electric-powered furnaces (the Spanish site is gas-powered).

From a product perspective, Bormioli Luigi continues to expand Ecoline, its lightweighted stock glass collection. In terms of its PCR offer, and despite current sourcing difficulties for PCR extra flint glass, it offers up to 15% PCR content for prestige flacons. For its masstige products produced in Spain, PCR content can reach up to 40%. Bormioli’s Your PCR program gives brands the opportunity to increase their PCR content on bespoke projects by up to an additional 10%. Back to Glass, meanwhile, is an initiative to encourage brands to replace plastic components, mainly caps and stoppers, with glass alternatives. And decoration-wise, the supplier now uses only water-based lacquers and is currently working with new lacquers made with up to 30% biomass materials.  

Creating bottles with interchangeable necks is another area of research. While the formation of screw and crimped formats traditionally call for the creation of two separate molds, Bormioli has developed a system that allows the neck component not to be integrated into the mold, allowing for significant cost savings.

Some 50% of the family-owned company’s turnover comes from the French market and the remainder mainly in Italy and the US. Perfumery and cosmetics accounts for around half of the group’s total sales of €500m: the division’s turnover came to €213m in 2021 and is forecast to reach €250m in 2022. For the future, Baratta is optimistic: “glass packaging will be more and more of a protagonist in the beauty market in the years to come.”

Simone Baratta, Bormioli Luigi Business Unit Director Prestige Perfumes Simone Baratta, Bormioli Luigi Business Unit Director Prestige Perfumes 

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