From plastic bottles to transportation, Iran war raises costs for beauty industry

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The Cosmoprof Fair attracted 3,100 exhibitors from 68 countries and 255,000 visitors from 150 countries, from companies seeking packaging solutions to retailers scouting new products.

Cosmetics companies are primarily concerned about rising raw material and transportation costs due to rising oil prices and transportation disruptions, five industry executives told Reuters.

“We are starting to see an increase in costs due to energy price inflation, which is exacerbated by delivery delays,” said Simone Dominici, CEO of Italian cosmetics group Kiko, who estimated that the group’s additional logistics costs would be around 1.5 million euros ($1.7 million) a year.

Kiko sells lipsticks from €5 and mascara from €7.50 and operates more than 1,000 stores worldwide.

“With so many containers stuck in the Middle East, the supply of containers is tight and goods are not being moved efficiently,” Dominici said, adding that rising prices for some chemical components and packaging materials, many of which are sourced from the Far East, would add further pressure.

alternative route

Dominici said that in addition to higher costs, the industry could also face slowing demand from consumers whose purchasing power has been eroded by inflation.

“It’s a perfect storm,” he warned.

“As routes get longer and ports get busier, lead times are getting longer. What used to take eight weeks can now take 12 to 14 weeks,” Ancolotti CEO Roberto Bottino said.

Bottino added that some customers are using rail transport to reach Asia.

The Ancolotti Group generates annual revenues of approximately 220 million euros from the sale of products to beauty brands around the world.

Bottino said it’s hard to imagine that rising costs in the supply chain won’t eventually be passed on downstream.

“Customers in the Middle East value quality and are willing to pay a premium for added value, so not being able to access these markets could have a negative impact,” said Fabio Francina, chairman of hair care product maker Framesi.

Francina said the company’s distributors in the region are exploring alternative delivery routes.

“They are considering (options such as) shipping to Jeddah and then transporting the goods overland instead of going through Persian Gulf ports,” he said.

Some goods are now shipped by air rather than by sea, further increasing costs, he added.

According to industry association Cosmetica Italia, Italy will produce 18 billion euros of cosmetics in 2025, of which 8.4 billion euros will be exported, making it the world’s fifth largest exporter of beauty products and one of the leading producers of hair dyes, eye make-up and fragrances.

(1 dollar = 0.8623 euro)

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