Italian eyewear 2021 and this year's forecasts.
2021
The outbreak of the pandemic, with the resulting stoppage of production activities in most economic systems, forcefully and immediately impacted the international exchange of goods. The resumption of manufacturing beginning in the Q3 of 2020, which in turn was favored by the delivery of vaccines, provided new impetus to world trade, which achieved, by late 2021, pre-crisis levels in many production sectors, recouping previous trends.
Specifically, over 2021 the Italian manufacturing sector reclaimed the activity levels it had prior to the onset of the pandemic, becoming one of the primary drivers of Eurozone industrial growth. Despite a less drastic fall in production volumes during the most critical months of 2020, full reabsorption of the shock was much slower in Germany and France.
Notwithstanding these positive elements, mainly linked to international trade, significant demand-related issues and supply bottlenecks persisted during 2021. On several occasions, new virus variants, first Delta, then Omicron, undermined confidence of consumers and investors alike while supply chain restrictions led to a global jump in inflation.
Thanks to its strong international propensity, Italian eyewear adhered to the same dynamic. Nevertheless, it was among the sectors that were able to react best in 2021, bringing its values back to pre-crisis levels. However, inflationary tensions and uncertainty in the domestic market still weighed heavily on demand, especially for sunglasses.
In 2021, Italian eyewear production reached 4.17 billion euros: up 35% from 2020 and 4.5% from 2019.
The total balance of manufacturers dropped slightly by about a dozen units, totaling 848 companies nationwide: 1.4% less than the previous year. Examining pre-pandemic levels instead, the decline was slightly more pronounced with about 30 fewer companies (3.5% lower than in 2019).
Nevertheless, ending the year on a good note from the standpoint of employment, the industry essentially closed with a workforce numbering 18,000. The negative balance was 100 workers (-0.6% compared to 2020 that benefited from the government-imposed employment freeze).
2021 EXPORTS
Exports of frames, sunglasses, and lenses, representing 90% of the sector’s overall production, were up by 39.2% over 2020, and by 3.4% over 2019, barely topping 4 billion euros.
From here on, we will only be commenting in detail on the sector changes compared to 2019, which were more significant than those in 2020, marked entiìrely by lockdowns and production stoppages related to the pandemic.
Exports of sunglasses in 2021 showed a 1.6% rise in the trend coming to more than 2.6 billion euros. On the other hand, frame exports grew by 8.1%, totaling 1.3 billion euros.
Issues concerning the procurement of raw materials, delivery times and progressive backshoring already initiated affected imports, which stopped at 1.1 billion euros, down by - 4.5% compared to 2019.
The Italian eyewear industry’s trade balance continued to increase its surplus (sending the 2021 export-import balance to 2.664 billion euros).
EXPORTS BY GEOGRAPHIC AREA AND COUNTRY
Looking closely at the two product macro-segments – sunglasses and frames – by geographic area, we can see that:
Ø The primary market for eyewear exports in 2021 continued to be Europe (claiming just under 50% of all eyewear sector exports) for an upward growth trend of 5.6% compared to 2019 (+3.2% for sunglasses and +9.8% for frames).
Ø In America, the Italian eyewear export share increased in 2021 to the point of absorbing more than 36% of the sector's entre exports. Exports of sunglasses increased by 13.9% compared to 2019. Driving this growth was the excellent +15.2% performance of exports of sunglasses together with +10.9% of frames.
Ø Asia was forced to endure the reduced international mobility as well as the shipping cost increases that characterized much of 2021. Thus, the Italian share of exports to Asia was stopped at 12% (it was over 16% in 2019). Therefore, the export trend variation in 2021 was negative: -22.7% compared with 2019 (-5.3% for exports of frames and -28.8% for sunglasses).
Ø Although Africa claims less than 2% of current sector exports, it shows good potential for growth, which is as yet untapped. In 2021, total exports of Italian eyewear to the area returned to the same levels as in 2019, increasing by just +0.1%.
Ø In Oceania, which is still marginal, with less than an 0.5% of market share, Italian exports of sunglasses and frames grew in 2021 by 9.4% in value compared to 2019.
The export analysis by individual country shows that:
Ø in the United States (which has long been the eyewear industry’s primary export market, with an almost 31% share in 2021), overall exports of frames and sunglasses increased by + 20.6% over 2019. Growth occurred in both sectors: the value of frame exports increased 15.1%, and exports of sunglasses 22.7% still compared to 2019.
Ø Obviously, the performance of Italian exports to the various countries in Europe performed very well compared to 2020. However, considering the 2019 benchmark, the performance was affected by the different countries’ recovery rates, which was especially penalizing in Spain. In France, 2021 exports of the sun-optical sector showed +3.5% growth over 2019 (+8.4% for frames and -0.1% for sunglasses). The outcome achieved by Italian eyewear exports to the United Kingdom went beyond expectations. Overall, exports recorded a +16.8% rise in value over 2019 (+19.8% for sunglasses and +9.7% for frames). Germany’s overall growth came in at +5.6% compared to 2019: broken down into +6.3% for exports of sunglasses and +4.6% for frames. Italian eyewear exports to Spain were still very far from 2019 levels, where the trend variation was -20.4% compared to 2019, with an especially poor performance by sunglass exports (-27.4%) and a substandard trend for frames (-3.7%). Italian eyewear exports to Northern and Eastern European countries showed pleasantly surprising performance: Sweden (+60.1% compared to 2019), Poland (+32.1%), Croatia (+12.3%), Austria (+13.1%), Norway (+30.6%), Denmark (+7%) and Finland (+35.6%).
Ø Concluding with the eyewear export trends to the BRICS, where altogether in 2019, about 8% of the industry’s exports were absorbed, the share dropped to just north of 6% in 2021:
- Brazil, -38.4% (-41.2% sunglasses and -34.4% frames) compared to 2019
- Russia -3.7% (+1.2% sunglasses and -11.5% frames)
- India, -41.9% (-58.8% sunglasses and -6.3% frames)
- China, -16.6% (-22.8% sunglasses and +0.9% frames).
THE ITALIAN GLOBAL EXPORT MARKET SHARE
Based on the global export market for sunglasses and frames, which in 2021 was worth just under 18 billion euros (-1.3% compared to 2019), the Italian market share was valued at 22%, second only to China. If only high-end product exports were considered, exports to Italy would still be in first place with a share value of just over 70%.
EXPORTS BY VOLUME
The Italian eyewear industry exported about 105 million pairs of eyeglasses in 2021, slightly more than in 2019 (+1.9%).
Of the total number of pairs exported, 64 million were sunglasses (61%) and 41 million optical frames (39%). In particular, the volume of exports of sunglasses decreased by 3% while exports of frames increased by 7%, compared to 2019.
THE DOMESTIC MARKET
Comparing the international and the domestic markets, it could be stated that Italian eyewear has returned to pre-pandemic levels only internationally. If in fact exports exceeded 2019 values, considering the domestic market, despite the great recovery over 2020, 2019 values still remain higher. Moreover, it should not be forgotten that the domestic market trends were already not especially brilliant in the years prior to the pandemic.
Consumption, monitored by GfK in the specialized optical channel, showed excellent performance trends compared to 2020 (+17%) and a slight dip compared to 2019 (-0.5%) stopping at about 3 billion euros.
Looking more deeply into the data however, it becomes apparent that the problem is linked to sunglasses, whose consumption in 2021, in the optical channel, showed a -23% drop in value compared to 2019. On the other hand, prescription eyewear components showed an excellent recovery compared to 2019: frames (+6.3%) and ophthalmic lenses (+9.1%). It should be noted that ophthalmic lenses now account for more than 56% of turnover for stores.
The pandemic changed consumer attitudes in many directions, including in the world of eyewear. The phenomena we witnessed, especially in the domestic market, in 2021, were certainly linked to increased use of digital screens (of all sizes) and greater attention to consumption linked to personal care and healthcare.
In this sense, this clarifies the greater demand for prescription eyewear, which has been more often than not, premium quality. Consumers are no longer willing to just pay the lowest price. Rather, when it comes to their wellbeing, they seem to be making more and better-quality choices that actually meet their needs.
Sunglasses have been penalized in these two years of pandemic mainly due to the reduction in outdoor life, travel, and participation in sports, all of which were othen the source of sunglass purchases. It is an enterely different market where impulse counts more and where the luxury-price polarization is more marked. It is also a market where many more distribution channels come into play, made more problematic by the increasing importance of e-commerce and online purchasing
2022
Russia’s aggression toward Ukraine this past February 24 suddenly changed the global outlook, already marked by uncertainty linked to new variants of the Covid-19 virus.
While in fact, the world economy has continued to seek a new equilibrium after two years of pandemic, the attack, in an attempt to bring the Ukrainian people to their knees, has led to a severe recession in Russia. Significant price rises for many raw materials has resulted in tensions causing consequential trade blockages as well as appreciable uncertainty about future prospects that weighs on households and businesses.
In general, Russia was not, and has never been, a “core” market for Italian eyewear (in terms of value, its weight in terms of exports of both frames and sunglasses is less than 1%). The biggest backlash at the sector level, especially retail, will be in terms of a decrease in purchases by Russians in Italy and in the other European countries.
Then there is the important theme of the energy crisis. The rising costs of energy and commodities, which already affected production costs in 2021, is worsening quite significantly. Because of the war in Ukraine, gas and electricity costs have doubled, which, together with increases in transport, logistics and packaging, just to mention the most important items, will weigh heavily on companies’ budgets.
Unfortunately, the war in Ukraine could open a new critical phase for the Italian economy. Inflation (+5% in 2022) could undermine the spending of households and businesses, global supply chains could come to a halt, central banks might change their approach and implement more restrictive policies, financial markets could very well become hostages to the growing uncertainty. All of which would result in a decrease in GDP.
2022 EYEWEAR FORECAST
Based on the data available to date, ANFAO’s forecasts for exports project positive monthly results, but foresee lower figures from April onwards.
H1 of 2022 could close with around 9 to 10% more in exports than in 2021 (around 222 million more in terms of value).
Considering that H2 of 2021 was very good for exports and that currently, international conditions are very uncertain, it seems difficult to think that last year's values can be surpassed by much. H2 of 2022 could show a +0.5% increase in value for exports compared to 2021.
Overall, the forecast for Italian eyewear exports in 2022 could show growth of around 4 to 5%.
As far as the domestic market is concerned, considering the previous and current general difficulties, the forecast for the end of the year is one of substantial stability compared to 2021 (+0.5%).
Likewise, production could see growth of 4-5 percentage points.
“In terms of recovery of pre-pandemic values, we saw a particularly important 2021. Unfortunately, we still have to deal with a great deal of uncertainty, exacerbated by the conflict in Ukraine, and the resulting international tensions,” stated ANFAO President, Giovanni Vitaloni. “The forecasts we have made, however, reflect a vein of optimism that seems to imbue the sector, which we hope to be a good omen for the MIDO 2022 event, and which should represent the real and definitive relaunch of the sector.”