Spreading Clean Beauty

Keys to success in the current Spanish cosmetic market, by Ivan Borrego (Beauty Cluster)


With a degree in Chemical Engineering, a postgraduate degree in general management (ESADE) and a master’s degree in business communication (UB), Ivan has been the General Director of the Beauty Cluster since its foundation in 2014. A results-oriented executive with a transversal vision and deep knowledge of all business areas (operations, innovation, marketing, corporate, etc.), he is also passionate about communication, public speaking and persuasion and, for this reason, he combines his work as a manager at the Beauty Cluster with his work as a lecturer at various universities and business schools.

The Beauty Cluster is the largest transversal organisation in the beauty sector in Spain. Made up of more than 200 companies, it works to boost the competitiveness of the sector through innovation, internationalisation, networking and training throughout the entire value chain of the beauty and health sector. First of all, could you explain a little more about what the Beauty Cluster is? Tell us about its history, methods, objectives, challenges, etc.

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An association made up of more than 200 companies, the Beauty Cluster promotes, above all, collaboration. Collaboration between all the players in the industry is important in order to promote sustainable development, competitiveness and innovation in the ENTIRE value chain of the cosmetics, perfumery and personal care sector. We promote innovation, internationalisation, training and digital transformation. All of this is based on specific values: dynamism, generosity, integrity and transparency. In addition, we are increasingly focused on moving towards the sustainable development of the industry. Currently, any development has to have a sustainable environmental and socio-economic impact.

The Beauty Cluster was born in 2014 with very clear drivers: innovation, internationalisation, networking and training. Moreover, in 2018 we made a leap towards digital transformation. That does not mean we did not take it into account before, but it was not until 2018 that it became something strategic. We decided that the priority area for the digital (hybrid) format was the cluster itself, and that we also had to offer powerful information and knowledge (with experts, studies and other tools) to help the fundamental digital transformation of any industry that wants to be competitive globally.

Values ​​are also critical to the cluster. Our partners, namely, the companies, are our main source of income, and the companies pay for a reason, so dynamism is essential in our business. One of our main challenges is the speed of change in this society and innovation in this industry. And then there is generosity. The cluster is based on collaboration, on sharing information, and this is something that is not only evident among partners but in our team as well, a team always ready to help and collaborate. And, last but not least, comes integrity. Collaboration requires trust, and trust is not possible without full transparency, and of course confidentiality. Therefore, our partners must have the confidence that participation is equal. They can see everything we do to help them – in terms of numbers, actions, etc. This integrity and transparency is what makes companies with a great collaborative vision feel especially comfortable with us.

With your extensive knowledge of the industry, we would love to hear your thoughts on the future of post-pandemic cosmetics. What can we expect from the beauty sector in the next 2 years?

Historically, the cosmetics sector has been very resilient. It has emerged from crises stronger due to innovation, and support from consumers during many of its key moments, either on a health level or an aspirational level. An example of this is what happened after the financial crisis of 2008, during which the sector experienced a drop of between 20 and 30% in turnover, yet quickly returned to a pattern of growth. With regard to consumption, the suspicion is that the road will be straightened as soon as there is a certain level of normality.

It is also a sector with substantial room for improvement in terms of online sales. Right now, online sales in Spain are below 10%. So, compared to other sectors, it still has a long way to go, and e-commerce represents a great opportunity.

In terms of the strategic vision, I think it is also very important to know how brands are going to transform with regard to the company typology. What we foresee at the end of the value chain, that is, in brands, is that the cake will be a little smaller, but there will also be fewer players in some specific areas. The crisis will affect very large companies with inflexible structures in particular, but those without financial muscle will find it more difficult to remain competitive internationally. So, the feeling is that we are going to see many mergers, leaving a market with fewer players, and with very clear distribution channels. For example, multi-brand sales seem to be declining, while the mono-brand channel is growing. One example would be the perfume group Júlia, launching stores where they only sell their own brand (Júlia Bonet) adapting to this new trend, exploring a segment that is growing substantially. We’ve already seen positive behaviour from Lush, Rituals, etc. We believe that this brand-store integration will be an important part of the change in coming years, leaving a market with more mono-brand and fewer multi-brand channels.

As for the Spanish cosmetics market, how would you describe it in a few words? How is it different from other markets in Western Europe, for example?

In Spain, internationally, we have never positioned ourselves with a single vision. For example, no one in the industry would question that when we talk about France we’re talking about perfume, or that when we think of Italy, we automatically think of makeup. The perspective from the Beauty Cluster is that Spain is internationally associated with science. When we think of the Spanish cosmetics industry we think of dermatology, cosmetology, innovative active ingredients and assets, etc. Even internationally, this perception is beginning to be recognised thanks to the large number of Spanish companies that are winning prestigious awards at international trade fairs, active ingredient companies with highly scientific approaches growing more and more, and generating that technological vision provided by final product laboratories that already enjoyed pharmaceutical prestige. All this is underlined by the breakthrough in China of Spanish online dermocosmetics sales platforms, thus generating an international perception of Spain as having a scientific and innovation focus. When we talk about Spain, we could say that we are talking about the biotech and pharma hub of the Mediterranean, we are talking about innovation and science. And personally, I believe that it can lead us to a promising future and that it is the part that we should continue to strengthen, much more than the idea of Spanish ‘charm’. What people expect most from Spanish cosmetics, both suppliers and the final product, is powerful R&D.

Let’s talk about one of the biggest consumer concerns: the claim that products are ‘natural’. What does this mean for the Spanish consumer? When looking for a natural cosmetic product, how much do you think the consumer values ​​the extent to which its ingredients are natural?

There are studies that quantify consumer awareness in this regard, but you have to be very careful with the studies, because the consumers’ concern for naturalness and sustainability is real, but it is not reflected in their buying behaviour. In fact, the Spanish consumer’s purchases are basically influenced by price. Of course, there is indeed a growing number of ‘concerned’ buyers. They are concerned about their skin, about nature, the planet, etc. And here’s where all these trends come from that are booming today. I think that, due to consumer-industry traction, we shall see a change in a few years. Following the example of the food market, it will begin by pulling the points of sale that in turn will be pulling on the different points of the value chain of the entire industry, initially creating ad-hoc products, but gradually shifting from historical to organic products, to natural certificate, to km0, to sustainable, or whatever. In cosmetics, we are already moving in that direction. We are beginning to see big brands with big initiatives in this regard, and there will come a time when the segments will end up coexisting, with a greater presence than the natural segment has historically had. This will of course depend a lot on economic cycles, because a good economic cycle allows consumers to buy consciously, and with a crisis it is more difficult. However, the natural product is not necessarily more expensive, safer or less effective, it depends on many factors, this is clear.

Leaving the economic factor aside, the consumer greatly prefers natural products, although they sometimes find it difficult to understand what is natural and what is not. According to a study we carried out with the University of Barcelona, ​​we realised that the consumer valued certification marks highly, but did not understand them clearly and also everything that looked like a mark was a mark. No doubt for this reason, there is now an increased interest in product rating apps (e.g. Yuka). Given that the information these apps absorb may or may not come from reliable sources, the French Employers’ Association (FEBEA) has even launched its own app, Claire, to try to combat this problem. Even so, we believe that the marks are useful for certification, even though sometimes the consumer does not understand their exact meaning.

We are experiencing what some are calling the Reawakening era, where consumers are judged for their empathy and civic attitude. How do you think this affects cosmetic brands?

Brand image is very important today and, above all, far more sensitive to any errors or inconsistencies. Brands now have an impact on networks, which emerges in a matter of 10 minutes and lasts forever. A brand will only overcome controversy and have the capacity to recover if it already has a very solid foundation and a reputation behind it. It is essential to earn the trust of consumers, and it is even more important to maintain it.

In addition to emotional and environmental well-being, scientific efficiency and innovation constitute one of the pillars in product development. At Provital, we try to harness this with each of our releases. With the current situation, however, it can be more complicated. How do you think the business-to-business relationship in the sector has changed? In your opinion, what would be the right way to increase visibility today?

The fact that face-to-face events have ‘gone into a coma’ for a while hinders the visibility and commercialisation of brands, since it is very difficult maintain a top-of-mind position with the noise that digital medium is currently making. With so much competition and so many online events, the level of attention is lower, and engagement can be lost. In this regard, I think that social networks are a layer that has to exist, reminding us in some way that the brand or company in question is there, active and has certain values, and that enables the consumer to be informed too. However, it is also important to differentiate yourself through your own actions, which your clients want to participate in. This applies to both dermocosmetics and perfumery, and these actions should not only consist of presentations or online events, given that both the continuous interaction and sensoriality aspects are lost, two fundamental attributes of our sector. That is why I think that any idea that also reaches the customer in a sensory way is a good idea. We saw this for ourselves through a small initiative that we started with our partners, sending them masks that allowed for the proper identification of different olfactory notes and therefore permitted them to detect fragrances. The perception and return of this action is much greater than any mailshot, e-mail, etc. We are very proactive in the digital content area, but right now the hybrid format seems to be the key. Whether through exclusive events with VIP clients, shipments of samples or packs, events at the client’s facilities, etc., anything that makes you heard above all the digital noise and, above all, allows you to increase the sensoriality of your actions will have a significant impact.

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