The health of France's fragrance and cosmetics industry as it emerges from the pandemic was a hot topic at Cosmetic Valley's annual summit in Paris on October 14th. Held during the business cluster's Cosmetic 360 trade show, the organization highlighted its road map to boost 'Made in France'.
"We’ve gone from resistance to resilience to a rebound," remarked Marc-Antoine Jamet, President of Cosmetic Valley at the beauty industry cluster’s annual summit. He went on to emphasize that the current context is "accelerating transition" within the sector, be it economic, ecological, digital or regulatory.
While the French fragrance and cosmetics industry is increasingly facing international competition, the country remains the global leader. From the production of ingredients and packaging to distribution, the sector is worth €45bn. The cosmetics industry is France's second largest exporter, behind aeronautics. And while exports declined by 14% in 2020 over the previous year, they increased by 21% in the first half of 2021, with a forecast of more than €16bn in export sales by the end of the year thus exceeding 2019’s record of €15.8bn.
China in the lead
Confirming its continued growth over several years, which topped off at 20% in 2020, China has become the French beauty industry’s largest export market with €1.5bn in sales; the make-up segment is particularly dynamic. This puts China squarely ahead of Germany and the US, which both saw decreases during the health crisis. Cosmetic Valley notes that India is another market to watch as cosmetics consumption in the country could triple to reach €17.8bn in 2025.
These markets will also swell the ranks of major cosmetics producers, at the risk of undermining French leadership. In light of this, the industry is looking to promote “Made in France” not just for its cultural and technological influence, but also for the ecological values it conveys.
Innovation remains the lifeblood of the French beauty industry, known to be one of the most patent-intensive with 1,500 patents filed per year. According to a recent report by Asterès, the companies surveyed spent an average of 11% of their turnover on R&D during the crisis. Some 40% have increased their spend in this area, while 17% say they have made cuts. As for the number of patents filed, it remained the same for 79% of companies and was up for just 4% of those polled.
What future for Made in France?
Localizing supply is a pressing issue as the current tension on transport accentuates the need to shorten the supply radius. Cosmetic Valley is launching a major study with PWC to identify specific segments that can relocate production to France. "We make 80% of our purchases in France and we need to do more, but how?" queried Alexandra Barthélémy, Chief Purchasing Officer at Sisley.
The made in France issue resonates particularly with the packaging community. In a declaration signed at the end of 2020, some major French cosmetics brands reiterated their aim to favor French glassmakers in their supply chain. This came when the decrease in perfume sales threatened the activity of Glass Valley, the cradle of French luxury glass production. As of yet, the impact that this declaration might have had on glassmakers has not been measured.
Made in France has made notable progress in the area of formulas. Greentech, a producer of ingredients derived from plant biotechnology, explained at the summit that demand is turning to active ingredients from France and less from the Amazon or Africa. While this approach is costly as it implies extensive research on plants or on cultivation methods to address climatic constraints, this is perhaps the price to pay.
The shortage of raw materials, along with incessant price increases, but also the issue of stocks are further complicating the smooth running of the industry. A mediator was recently commissioned to work on improving relations between brands and suppliers as an initial survey highlighted the deterioration of commercial relations (according to 84% of respondents) but also the possibility of settling disputes (in 64% of cases). Indeed, smooth relations among local players is a sine qua non condition for the French industry to pull out ahead in the global battle.