Italy Key Figures 2011 1
General information 2011 Population: 61,016,804 (growth rate 0.42%) GDP per capita: 24,400 Population over-40: 55% of population Population with visual defects: 61,4% Number of optical shops: 10,121 (-2.1% vs 2010) Population/shops: 6,029 Population data: ISTAT GDP data: IMF Optical shops data: GfK Others data: C.R.A., Anfao 2
Italian eyewear 2011: main figures 903 companies (-2.6% over 2010) 16,120 people employed (-0.2% over 2010) 2,650 millions euro production (+8.2% over 2010) 2,451 millions euro export (+10.9% over 2010) 807 millions euro import (+5.7% over 2010) 1,006 millions euro domestic market (+0.4% over 2010 sell-in value) 3
Italian eyewear industry: details of last years 2007 2008 2009 2010 2011 Million value Euro var.% Euro var.% Euro var.% Euro var.% Euro var.% Output 2,774 10.9% 2,634-5.0% 2,252-14.5% 2,448 8.7% 2,650 8.2% Export 2,316 11.6% 2,239-3.3% 1,873-16.3% 2,210 18.0% 2,451 10.9% Import 691 4.8% 688-0.4% 638-7.3% 764 19.8% 807 5.7% Domestic Mkt 1,148 5.9% 1,083-5.7% 1,016-6.2% 1,002-1.4% 1,006 0.4% In 2011, Italian eyewear production totaled 2,650 million Euros increasing by 8.2% over the previous year. The increase in production owes to the export trend which remained positive with double-digit growth figures throughout the first semester, while values for the domestic market remained stable. Exports of frames, sunglasses and lenses, which by now account for about 90% of production in the sector, rose by 10.9% over 2010 and exceeded their maximum pre-meltdown level of 2007 by almost 6 percentage points. 4
Italian eyewear industry structure YEAR OUTPUT (million value) EMPLOYEES (number) FIRMS (number) INDUSTRIAL FIRMS (employment contract: industry) 2011 2,650 16,120 903 172 2010 2,448 16,150 927 175 2009 2,251 16,600 950 178 2008 2,597 17,500 1,005 185 2007 2,774 18,500 1,050 195 Output has been supported by more than 900 companies and more than 16,000 employees, without counting workers on temporary contracts (about 1,000): this figure was basically the same as in 2010, and was once again impacted by falling numbers of small artisan companies that experienced the most difficulty in countering the market turbulence and credit crunch. 5
IMPORT-EXPORT 6
Italian eyewear industry: 2011 export performance Percentage changes by value 7
Italian eyewear industry: 2011 export value PRODUCTS 2010 2011 2011vs2010 LENSES OF GLASS 13,922,788 15,456,033 11.0% LENSES OF OTHER MATERIAL 43,712,174 41,022,633-6.2% LENSES 57,634,962 56,478,666-2.0% FRAMES 703,436,444 760,741,346 8.1% SUNGLASSES 1,449,385,089 1,633,925,658 12.7% FRAMES+SUNGLASSES 2,152,821,533 2,394,667,004 11.2% TOTAL EYEWEAR 2,210,456,495 2,451,145,670 10.9% value 8
Italian eyewear industry: 2011 export value During 2011 however, the export trend changed radically from the first to the second semester: a steady double-digit increase (monthly average +15%) for the half-year, followed by a lower single-digit increase (monthly average +7%), with a slowdown in the last quarter and with frames even posting a downturn. 9
Italian eyewear export: geographical details Considering exports as a whole, that is sunglasses and frames, we can see that: the main export market for the industry in 2011 was once again Europe, claiming a share of more than 50% of all Italian eyewear exports and growing by 9.9% over 2010 (+11.8% for sunglasses, +6.7% for frames). The share of exports to America in 2011 was 28%, with a 10% increase in sunglassframe exports versus 2010. Within the two main areas, the increases were very different: North America posted a +7.3%, and in Central and South America exports of sunglasses and frames achieved +21% over the previous year. Asia, anareathatnowclaimsalmost18% of Italian exports of sunglasses and frames, posted the best result in 2011: +18.4% versus 2010. 10
Italian eyewear export 2011: first 10 mkt and share Sunglasses Frames 1 Stati Uniti 22.4% 1 Stati Uniti 19.5% 2 Francia 12.0% 2 Francia 18.8% 3 Spagna 8.1% 3 Germania 7.2% 4 Regno Unito 4.6% 4 Spagna 6.8% 5 Germania 4.5% 5 Regno Unito 6.5% 6 Hong Kong 4.0% 6 Hong Kong 4.2% 7 Emirati Arabi Uniti 2.9% 7 Paesi Bassi 2.5% 8 Corea del Sud 2.6% 8 Portogallo 2.1% 9 Australia 2.4% 9 Cina 1.7% 10 Turchia 2.3% 10 Messico 1.7% The first 10 export markets count about for 66% of the total Italian exports of sunglasses and 71% for frames. 11
Italian eyewear export: countries details In the United States (the leading export market for the industry with a 21.5% share) overall exports of sunglasses and frames were +8.2% on 2010. Noteworthy here is the fact that the slowdown in the country s growth had an impact on frame exports mainly (+0.9%) whereas sunglasses drove the increase at +11.5%. In Europe the leading market outlet for Italian exports of sunglasses and frames in 2011 was Germany, where the ophthalmic market was already posting a positive trend that was boosted by a veritable boom in sales of sunglasses. As a result, Italian exports of eyewear to Germany grew by 22.2% over 2010 overall, with +27.2% for sunglasses and +16.1% for frames. In Holland (+24%) 2011 exports of Italian sunglasses and frames followed a similar pattern to Germany, with sunglasses at +25.5% and eyewear at 21.3%. Italian exports also did well in France (+11.6% overall versus 2010, and with +12.2% for sunglasses and +10.7% for frames), Spain (+6.3% overall versus 2010, with +7.9% for sunglasses and just +2.3% for frames) and Belgium (+11.4% overall, with +12.1% for sunglasses and +10.6% for frames). Instead the sovereign debt crisis and falling consumption levels had a negative impact on 2011 exports of Italian sunglasses and frames to Greece where the decrease was 17% (-17.7% for sunglasses and -14.7% for frames,) and in Portugal where the downturn was -5.1% (-12.4% for frames and with a slight +1.1% for sunglasses). 12
Italian eyewear export 2011: USA Percentage changes by value 13
Italian eyewear export 2011: main EU Countries Percentage changes by value 14
Italian eyewear export 2011: emerging countries 2011 vs 2010 Export Growth Rate Sunglasses Countries + Sunglasses Frames Frames Arab Emirates 23.2% 20.8% 35.2% Australia 8.1% 8.7% 6.0% South Korea 9.2% 8.9% 12.9% Brazil 7.2% 7.0% 7.7% Mexico 15.7% 18.4% 10.3% Russia 28.4% 21.2% 49.9% Saudi Arabia 26.0% 27.7% 22.0% South Africa 12.7% 14.8% 6.9% Thailand 30.8% 29.1% 38.1% India 22.7% 23.4% 21.2% Chile 28.6% 28.5% 28.8% In the era of global competition it is fundamental to take advantage of every opportunity. Italian eyewear also has an important foothold in emerging countries that are of growing interest to the sector. These countries are still clearly potential markets for eyewear, in other words their share of total Italian exports by the sector is still very low. However, these are areas that could become important in the near future, when traditional markets will no longer offer significant growth prospects. 15
Italian eyewear industry: 2011 export volume 90 million More than 90 million pairs of glasses, of which 61 million were sunglasses (approx. 68%) and 29 million were frames ( 32%) were exported in 2011. Volumes also increased, +7.8% overall versus 2010 and nearly always fueled by sunglasses (+0.3% for frames, +11.7% for sunglasses). 16
Italian eyewear import 2011: 10 leading suppliers Sunglasses Frames 1 Cina 44.1% 1 Cina 78.2% 2 Stati Uniti 17.4% 2 Germania 2.9% 3 Francia 7.6% 3 Austria 1.9% 4 Germania 4.7% 4 Hong Kong 1.5% 5 Regno Unito 3.5% 5 Giappone 1.2% 6 Taiwan 2.8% 6 Francia 0.9% 7 Irlanda 2.8% 7 Regno Unito 0.8% 8 Svizzera 1.8% 8 Svizzera 0.8% 9 Singapore 1.1% 9 Stati Uniti 0.6% 10 Spagna 1.0% 10 Romania 0.5% China is the leader supplier for both sectors. A testament to the dinamism of the sector in the international marketplace are imports, climbing 5.7% over the previous year to 807 million Euros. 17
DOMESTIC MARKET 18
2011 Italian retail market structure: organization Optical Shops 2007 2009 2011 TOTAL POS 10,720 10,336 10,121 chain and groups pos 5,138 6,059 6,346 independent pos 5,582 4,277 3,775 Turnover per pos 319,000 317,000 317,000 The number of optician point of sales decreased about 2.1% compared to 2009. Turnover remained constant. 19
Italian eyewear in Italy The situation remains difficult on the domestic front. Although the critical areas, past and present, are still less than for other durable goods, consumption levels are still struggling to return to positive levels and remain basically stable. The domestic market in 2011 amounted to 1,006 million Euros (sell-in values), slightly up by 0.4% over 2010. Although the increase in the sell-in volumes for both frames and sunglasses was more significant (about 4 percentage points), the low spending power also led to a move away from luxury brands to more affordable ones (designer brands vs house brands) which downsized the values. The market for ophthalmic lenses was stagnant and closed 2011 with a slightly negative sell-in in terms of volumes (about 1 percentage point less than in 2010) while values remained basically stable. The high added-value segment of progressive lenses, which continues to have good potential, felt the effects of the overall climate and posted a zero or even negative growth rate in 2011. 20
2011 Italian eyewear industry sell-in by units Products 2010 2011 11vs10 Frames 5.40 5.63 4.3% Sunglasses 8.80 9.20 4.5% Lenses 17.59 17.37-1.3% Pal 2.73 2.72-0.4% Single Vision 14.86 14.65-1.4% millions unit 21
2011 Italian eyewear industry sell-in by value Products 2010 2011 11vs10 Frames 237.59 239.73 0.9% Sunglasses 417.91 417.89-0.0% Lenses 245.25 247.13 0.8% Pal 116.79 118.08 1.1% Single Vision 128.46 129.05 0.5% Millions 22
Italian retail market: renovation period The renovation period in eyewear products reflected consumption s reduction. 23
Frames and sunglasses: 2011 sell-in market share by value by units In 2011 prescription frames and sunglasses shared the domestic market sell-in with a share of 38% and 62% respectively by units. Sell-in market share by value take into account lenses too: the share of frames and lenses was 27% for both, the share of sunglasses was 46%. These data are equal to 2010 ones. 24
Frames and sunglasses sell-in: plastic and metal 2010 2011 As regards materials the market share in 2011 shows an increase in plastic for frames. 25
Frames and sunglasses sell-in: brands 2010 2011 Due to consumers lower spending power, in 2011 house brands maintained a strength position. 26
Frames and sunglasses sell-in: retail channel 2010 2011 As regards retail channel, in 2011 chains gained market share both in sunglasses and frames sector. 27
Lenses sell-in: materials market share The market of ophthalmic lenses is focused on plastic. 28
Plastic lenses sell-in: geometry market share Single vision and progressive lenses share the lenses market. Pal represent only 16.3% in term of volume, but count for about 48% of turnover. In 2011 the market share still remained on 2010 s level. About PAL position, Italy is yet at a low level. 29
Lenses sell-in: progressive lenses type As regards Pal type, the traditional geometry is constantly losing its market share. 30
2011 Italian eyewear industry sell-out by value Products 2010 2011 11vs10 Frames 472.89 481.35 1.8% Sunglasses 713.59 728.51 2.1% Lenses 1,328.41 1,299.00-2.2% Millions 31
2011 Italian eyewear industry sell-out: average price Products 2010 2011 11vs10 Frames 112.92 113.57 0.6% Sunglasses 117.41 115.83-1.3% Lenses 93.66 92.95-0.8% 32
2012-2013 SCENARIO 33
Forecasts for 2012-2013 Anfao has recently carried out a short-term forecast for the sector which definitely shows concern about the future, but also provides an indication of which direction to follow in order to compete in the global market. 34
Forecasts for 2012-2013: international level World GDP is estimated to slow down to a mean annual rate of almost 3.5% during 2012-2013 (versus approx 4.5% in the early 2000 s). Growth will be weak in the Eurozone countries (with currency stability still threatened by the danger of the debt crisis spilling over to the other economies) with periods of recession. A difficult job market and uncertainties about fiscal policies mean that prospects for development in the United States remain cautious. The expansion of the emerging economies is also expected to slow down. 35
Forecasts for 2012-2013: Italy The fiscal measures introduced by the new government have generated an initial return to confidence about the public deficit. However, the problem of our competitiveness remains unresolved and continues to thwart the growth of our economy which is expected to be recessionary in first semester 2012. Most importantly, consumption levels are weak, the real income of families is falling. Companies are being weakened by the credit squeeze by banks. 36
Forecasts for 2012-2013: eyewear With the deterioration in the macro economic scenario, there will be a sharper slowdown in worldwide demand for eyewear in 2012 (growing by an estimated 2.8%), and posting lower growth rates than the historical average in 2013 as well. 37
A glance at 2012: I quarter export value PRODUCTS IQ 2011 IQ 2012 IQ12 VS IQ11 LENSES OF GLASS 3,453,482 3,311,003-4.1% LENSES OF OTHER MATERIAL 10,210,724 11,428,998 11.9% LENSES 13,664,206 14,740,001 7.9% FRAMES 195,129,795 206,299,171 5.7% SUNGLASSES 442,395,835 468,172,647 5.8% FRAMES+SUNGLASSES 637,525,630 674,471,818 5.8% TOTAL EYEWEAR 651,189,836 689,211,819 5.8% The first quarter of 2012 confirms the forecast: Italian eyewear exports growing at a slower rate. 38
A glance at 2011: I quarter domestic market PRODUCTS UNIT VALUE FRAMES -11.4% -7.7% SUNGLASSES -7.3% -4.4% FRAMES+SUNGLASSES -9.5% -5.8% LENSES -9.0% -7.5% PAL LENSES -8.8% -6.4% TOTAL MKT -6.3% The domestic market shows signs of recession: -6.3% the loss in value. Consumption is stagnant and unable to rebound in both the sunglass and the vision wear sectors. 39
Forecasts for 2012-2013: opportunities for eyewear Greater opportunities for growth will come from Eastern Europe, Asia and Latin America, while the traditional markets for Italian exports (Western Europe and NAFTA) will be among the most hard hit by the slowdown in demand. In all likelihood this scenario will force Italian companies to step up and adopt a new market approach, entailing new risks and challenges. In order to successfully meet these challenges, a different success strategy and a foothold in new markets by means of actions and measures essentially designed to take advantage of opportunities appear to be what is needed. 40
Thank you for your attention! info@anfao.it 41