Premium Beauty News - The Covid-19 pandemic is an unprecedented crisis. How did IL Cosmetics react?
Jean-François Harpès - I am surprised at our countries’ absence of preparation for a crisis that started in December in China. Our governments did not take advantage of the two or three months before the epidemic spread outside Asia to take the best-adapted preventive measures. As a matter of fact, Taiwan’s example shows the efficacy of an early, adequate reaction.
As far as IL Cosmetics is concerned, our contacts with our Asian customers and suppliers helped us anticipate the risk earlier and get ready. Our priority was to protect our employees. Starting from mid-March, we implemented a whole series of preventive measures: quarantine, working from home everywhere possible, temperature checking, importation of masks directly from China, spacings and protective separations between the different workstations, reinforced disinfection and hygiene procedures, detection of Covid traces…
Thanks to our teams’ motivation and dedication, all these measures were implemented in record time in our bulk and packaging plants, laboratories and offices. It helped us prevent people from being contaminated on our premises and keep working without any interruption.
Premium Beauty News - IL Cosmetics also contributed to fighting against the epidemic.
Jean-François Harpès - We made hand sanitizers for hospitals in Luxembourg. We had alcohol stocks available, which was an advantage. And like other companies in our sector, we adapted our chains to respond to the emergency situation.
Premium Beauty News - What is the current situation at the different IL Cosmetics sites?
Jean-François Harpès - We remained operational throughout the lockdown period in our three plants, in Luxembourg, Poland, and Bulgaria. Only our R&D division was impacted, in particular because we had to reorganize the tests with our consumer panels, so they could be carried out at people’s homes.
Premium Beauty News - What do you think the economic situation will be like in the short term?
Jean-François Harpès - If our production capacities were not impacted, obviously demand was, due to many points of sale closing. The orders delivered were stored by brands, so now the products need to be sold. But the missed consumption opportunities will not be made up for and we will not get the consumption months lost back. As a result, we are anticipating a business slowdown. Based on our exchanges with our customers, we can expect a market downturn of -10% to -20% in 2020. But I think we will get back to the same consumption level as before the crisis as soon as 2021.
We are lucky because we are very strong in relatively less impacted areas. In Germany, the Netherlands, and in several countries in the North of Europe, distribution was not completely interrupted. Likewise, Asia represents a significant part of our sales, and the crisis was less violent in China, Japan, and South Korea.
IL Cosmetics is doing very well. We had implemented significant streamlining measures which have already brought positive results, and we had foreseen a very high growth rate for 2020. In the end, we will probably achieve a stable turnover: given the circumstances, it will be a great result and a real advantage.
Premium Beauty News - How will the pandemic impact the different makeup categories?
Jean-François Harpès - The first statistics we got from the distributors that remained open during the crisis confirm the fact that the nail and eye categories are on the rise, while lip and face products have declined. This trend should keep developing, since the latter are less adapted to mask wearing.
A crisis is also a powerful innovation driver! To meet new needs, we developed disinfectant products in record time with our makeup lines.
Our creation process, which places consumer feedback at the core of formula validation, is also an asset. We very quickly implemented a home testing system to preserve our research and development dynamics and keep offering our customers innovations.
Premium Beauty News - What will be the impact on cosmetics subcontractors?
Jean-François Harpès - The decline of consumption – over one or even several years – will obviously have an impact. The companies which were struggling before the crisis will also struggle to survive, and the concentration movement of subcontractors will intensify.
It probably means we will have new external growth opportunities which will help us keep diversifying our activities – we started a few years ago. We come from nail varnish, we benefit from a solid growth in the eye and lip categories, and we are interested in complementary categories or markets we are not serving yet.
Premium Beauty News - Consumers seem to have strong expectations for the future as regards sustainability, ethics, and production relocation. How do you think the crisis will end?
Jean-François Harpès - What is for sure is that the past two months have changed consumption habits. But it would be presumptuous to pretend to know so soon what dimensions consumption will have after the crisis.
Generally speaking, product safety will remain a key concern. This trend applies to formulation, production processes, and applicators: all manufacturers are aware that this cannot be negotiated and that expectations get stronger and stronger.
Ethics and environmental protection are and will remain key issues.
The crisis revealed the weaknesses of very complex global supply chains. From this standpoint, the relocation movement will keep developing: it had already emerged before the pandemic, in particular to meet reactivity and agility needs. The system had shown its limits. And yet, it would be naïve to think there will be a complete return to the past situation. Quality, efficacy, and production costs remain essential issues. So, I do not believe in production fragmentation into a very high number of small plants. The concentration trend will keep spreading.
Premium Beauty News - In conclusion, what would you like to tell your customers?
Jean-François Harpès - See you tomorrow! We are 100% operational and cannot wait to introduce our latest innovations during one of our webinars!