According to the study, carried out on behalf of the French beauty federation (FEBEA), the turnover of cosmetics sector dropped by 10% during the first six months of the year, however, sales recorded strong disparities between product categories. Indeed, while sales of beauty products have fallen by 25%, those of hygiene products have doubled, driven by the health concerns linked to the outbreak.
A resilient sector considering the unprecedented context
As far as French exports are concerned, the drop reached 14% in the first half of the year for cosmetic products, compared to 18% on average at the national level.
Over the entire year, the cosmetics sector should suffer less than the French economy as a whole, according to Asterès. Indeed, the consulting firm anticipates a 5% drop of the industry’s net sales in 2020. A figure to be compared to the decline of total household consumption in France, which is estimated at 7%.
In detail, hygiene products could register an annual increase of 30%, while sales of beauty products could fall by 17%.
Regarding investments, the drop reached 12% for cosmetics on the first half, versus 16% on average at the national level.
As for cosmetics exports, they could fall by 9% in 2020, less than total French exports (-17%), the study forecasts. In this area also, there are strong disparities since French exports of cosmetic products might drop by 10% in the Americas but are expected to rise by 3% in China. Th situation is also at a stalemate in travel retail, in the wake of the collapse of air transport. According to Asterès, sales of cosmetics in travel retail outlets should register a fall of at least 65% in the year 2020.
In the end, the French cosmetics market is expected to return to its pre-crisis level in 2022. However, as far as exports are concerned, the rebound could be slower, especially in the most affected regions (the United States and India, in particular), with a return to the 2019 level expected only in 2023.
Several weakness points
If the French cosmetics sector as a whole benefits from an overall solidity, "very small businesses and SMEs, which represent 85% of the cosmetics sector, are clearly more vulnerable", notes the FEBEA. Very small businesses, in particular, suffered a 54% drop in turnover, compared to 35% for large companies, during the first half of 2020.
Beauty salons and prestige retailers (perfumeries and department stores) are also among the most impacted sectors. According to Asterès, they should see their annual sales fall by 25% and 23% respectively.
On the other hand, sales in supermarkets and drugstores, fully benefiting from the boom of hygiene products, are expected to grow by 2%. In addition, online sales are expected to skyrocket (+38%), but their weight remains too low to impact the entire sector.
Despite the sector’s strengths, the FEBEA therefore insists on the importance that public policies will have to limit damages and ensure a fast recovery of the most vulnerable companies. The trade organisation therefore pleads for a tax credit supporting the digitization of production tools. According to Asterès estimates, in the cosmetics industry just one more robot per company would increase the overall productivity by 3.5%.
For Patrick O’Quin, president of FEBEA: “The cosmetics industry remains a high-performance sector, with all the assets needed to face the crisis and accelerate its transformation. However, the sector’s SMEs, which create a great deal of employment throughout France, deserve specific support during this period."