A lot of the financial results that have been announced by companies in the few
months, both from suppliers to the cosmetics industry and manufacturers, look
pretty promising, even showing double-digit growth in some cases. The luxury sector
is looking particularly upbeat; Estée Lauder for instance says it has seen
its best increase in operating income since going public in 1995. And some companies
have been revising their profit estimates upwards for the full year. So perhaps
the concept of ‘the lipstick effect’, often dismissed in this latest
recession, isn’t too wide of the mark.
Not such good news is the fact that a number of ingredient and packaging supply
companies are having to increase their prices, largely as a result of increases
in material costs but not helped by the fact that many companies are demanding
longer payment terms.
And while some companies are continuing to tighten their belts, often for fear
of the prospect of a double-dip recession, others seems to have money burning
holes in their pockets. This means continued consolidation among suppliers, which
inevitably decreases the choice of supply available to manufacturers, and continued
consolidation among manufacturers, which unfortunately seems to result in a decrease
in variety and innovation
It has been a tough couple of years for the industry and many sacrifices have
had to be made in pursuit of leaner businesses that are better equipped for survival.
And while everybody would like to be enjoying this moment, and the general outlook
can realistically be termed optimistic, caution will undoubtedly remain the watchword
for the foreseeable future.