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From the Editor’s Desk: French beauty industry voices support for local glassmakers, but at what cost?

Alissa Demorest
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From the Editor’s Desk: French beauty industry voices support for local glassmakers, but at what cost?

With the first anniversary of the coronavirus pandemic's onset fast approaching, the luxury industry is surveying the damage done in 2020, and worriedly looking to its perspectives in 2021. Behind these companies, an entire supply chain is suffering. French glassmakers received a show of support this month from major beauty players* through a series of “commitments” from their clients and industry associations. What exactly does this manifesto offer to a sector in distress?

Reeling from the crisis, French glassmakers continue to face challenges with, for the moment, little to no visibility on the context in this new year. These challenges include — but are not limited to — a significant slowdown in production (some furnaces and sites had to shut down altogether for limited periods), postponed and/or cancelled projects, inventory issues and deferred payments. In light of this, French cosmetics trade union FEBEA and industrial cluster Cosmetic Valley issued a joint statement earlier this month announcing a set of measures by fragrance and cosmetics players to support France’s glass suppliers. “All of the components that make up this exemplary industrial fabric must be safeguarded. Given the current health crisis and its economic fallout, it is important to reinforce resilience by relaunching the sector to insure its future performance,” noted the statement.

The statement, signed by 16 beauty groups* (along with Cosmetic Valley and FEBEA), specifies that the companies will do the following “to the best of their efforts”:

  • Maintain the quality and scale of their cooperation with French glassmakers,
  • Favor French suppliers (in keeping with European regulations),
  • Offer their suppliers as much visibility as possible regarding sales activity and tenders,
  • Optimize payment terms and the duration of immobilizing inventory

Press reports have lauded the initiative, but are these efforts good intentions or actual commitments?

The initiative is not a one-way street. In exchange for their support, the signatories are asking for efforts in return from both their glass suppliers and the French government, while adding that their commitments can be ensured only if the distribution channels for the sale of their products remain open for business.

  • For glassmakers to invest in innovation and quality; to boost availability and the competitiveness of their products and to continue to invest in reducing their environmental footprint,
  • Buying from more French suppliers will mean making significant improvements in terms of competitiveness. Public authorities are asked to align production and qualified labor costs in France with the European average, which is two times lower,
  • French authorities should validate Cosmetic Valley France as the official export label, along with the creation of an Industry Strategic Committee (Comité stratégique filiaire) to signal its importance to the French economy.

In exchange for favoring French glassmakers over their foreign competitors, suppliers are being asked to continue investing in innovation and in improving their environmental footprint all the while being “more competitive”, in other words, investing, while lowering their prices and therefore their margins. How realistic a solution is this for an industry struggling to keep its head above water?

And where does this leave other packaging sectors, who are suffering similar fates? “There is no doubt that glassmakers are in a very difficult position, but their situation is shared by luxury packaging suppliers across the board. Our margins continue to be squeezed year after year, we’re requested to invest to reduce our carbon footprint, and our clients are demanding even further price cuts in a time of crisis. For many of us, this is an untenable situation,” laments one luxury packaging executive. This is, of course, not the case for all suppliers. But it is an opinion that as journalists, we often hear "off record".

As the year unfolds, we will be monitoring the situation. Next month, Luxe Packaging Insight’s Dossier will delve deeper into how luxury glassmakers are facing up to the crisis, both in France and abroad.

*Cosmetic Valley, FEBEA, Biologique Recherche, Chanel, Clarins, Coty, Guerlain, Hermès, Interparfums, Kenzo Parfums, L’Oréal, Parfums Christian Dior, Parfums Givenchy, Puig, Sarbec, Shiseido, Sisley, Sothys

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