BW Confidential - Issue #4 - October/December 2010 - (Page 81)

Sector outlook Packaging A recovery—but for how long? The packaging business has come back, but much of the activity is due to restocking and there is still little visibility for 2011. Three suppliers talk about the market, innovation and the challenges ahead by Laëtitia Bonnet-Mundschau The market: We are seeing sustained demand in France, partly due to re-stocking and successful launches from our main clients, especially in the selective market. In Europe SGD has seen 15 to 20% growth over 2009. The market in Asia and South America continues to see double-digit growth rates. North America is suffering the most, despite the restocking—in the US, business was weak in the first quarter, but saw an increase in the second quarter. At the end of the day consumption is still weak. The challenges: Our clients are becoming more dynamic on the launch front: demand is strong and the industry is holding firm from a supply-demand point of view. However, since 2009 there is also a lot of caution in the market and the launches are not as a big in terms of volume. Innovation: There are two types of clients today: those who go for a reduced range, while reinforcing their communication, marketing and their partnership with the retailer and those who continue to be dynamic in terms of launches. Glassmaker SGD perfumery and cosmetics division managing director Raymond Sinnah on: The market: The US is a strong market for us and we are up 50% from last year, while in Europe, we are up about 20-25%; but this is partly due to restocking and we don’t know how long it will last. There is much more activity from retailers than brands in terms of launches. Supermarkets, perfumery stores and other retailers—for instance Topshop in the UK—are starting to launch cosmetics. This makes the market more competitive and puts pressure on brands. The challenges: Brands are now competing more with retailers. And although the brands have the heritage, strong names, and can spend more on advertising and R&D, they will have to create much more technical and innovative products to compete with retailers. As for retailers, they don’t have the infrastructure to create innovative products, but they have more margin because they have more flexibility on pricing so they can spend more on the product. Mass-market pricing should go up, as consumers have to pay more for innovative packaging. Innovation: Traditionally brands used to innovate, but now they’re letting suppliers innovate more as we can do it faster, be more flexible, and we know what is possible. Brands are letting suppliers manage this process more and they have to pay for it. To succeed as a supplier, you have to do more than just packaging: filling, labels, graphics, design, logistics. If you are just a pack company, it’s tough to grow. October-December 2010 - N°4 - BW Confidential Pack manufacturer HCT Packaging Europe & Asia managing director James Thorpe on: The market: Only the big groups are allowing themselves to embark on launches of over one million units. The others have reduced volumes to around 300,000 to 600,000 units. Due to profitability worries and after the 2009 crisis, a lot of clients are playing the security card by launching flankers. The challenges: Brands need to find products and stories that consumers can make their own. Brands have got into the habit of offering a one-size-fits-all type of product. But today the niche market is expanding and our clients have a more humble approach. Even the big groups can segment their offer through licenses, like what L’Oréal did with designer Martin Margiela, or through launching more complex products. Innovation: Brands had lost their closeness to consumers, although I think they are becoming aware of this. Today our clients are looking to differentiate themselves through innovation and integrate environmentally friendly aspects into their projects. Everyone wants to innovate to differentiate themselves and bring out an original product before their competitors. But you need to make the difference between a good idea, which has advantages in terms of marketing, and a breakthrough innovation, which is so different that it needs to be patented. As for innovative products of the future, I think packaging will serve the role of a container, but will also have a direct action on the product formula. n 81 Component supplier Jackel France managing director Thomas Diezinger on:

Table of Contents for the Digital Edition of BW Confidential - Issue #4 - October/December 2010

- Brand & retail news recap
- Digital digest
- Companies on the move
Take note
- Market facts, figures & trends
Best of BW
- Highlights from our e-publication
- The latest in fragrance, skincare & make-up
- BPI president Rémy Gomez
Insight: fragrance
- Category overview
- Retailing
- Industry viewpoint
- New opportunities
- Launch roundup
- Airport Spas
- Spa case studies
- New store concepts
Travel retail
- Market overview
- Retail strategies
- Interview: World Duty Free & Aldeasa
Show preview
- TFWA World Exhibition
- Six up-and-coming beauty brands
Market watch: India
- Country overview
- Industry roundtable
- Retailing analysis
- Sector outlook
- Sustainability
Last word
- Mintel head beauty consultant Nica Lewis

BW Confidential - Issue #4 - October/December 2010