Italian cosmetics firm makes India its 1st foreign stop

Officina Farmaceutica Italiana mainly deals in large-scale contract manufacturing for cosmetics and drug majors

After high-end fashion brands such as Gucci, Versace, Armani and Zegna, Italian cosmetics players are now tapping India to expand their business. Italian companies are showing high interest in the Indian single-brand retail market, which allows up to 100 per cent foreign direct investment.

Engaged in large-scale contract manufacturing for cosmetics and drug majors, Officisna Farmaceutica Italiana (OFI) is awaiting a nod from the Foreign Investment Promotion Board (FIPB) to start single-brand retail business in India, along with local joint venture partner San Pellegrino Cosmetics. The Italian company would invest 51 per cent in the joint venture.

OFI is considering a foray into India, as a test case for international expansion. The company would set up stores for its brand Bottega di LungaVita here and plan expansion in other countries depending on the success here. So far, it has three flagship stores in Italy.

About 70 per cent of its business, estimated at about  euro 250 million (about Rs 1,775 crore) is focused on contract manufacturing for brands such as Revlon, Merck and Sanofi in key markets, according to OFI president and chief executive Alberto Donati.

The company is likely to set up five standalone stores and at least 200 counters across outlets in India through the next five years. It would begin with an initial investment of  euro 2 million (about Rs 14.2 crore) through 18 months and step up funding subsequently, Donati said. Apart from metros and other major cities, the company is also trying to tap markets such as India’s Northeast.

OFI is also exploring the option of setting up a manufacturing and packaging base in India. It is already scouting for the right locations for contract manufacturing in the country. Though the company does not have to necessarily source from India, it may consider substantial sourcing of natural products for its anti-ageing skin range, as well as other wellness products.

Currently, OFI operates across three segments - cosmetics, medical devices and food supplements. The company has submitted applications to various authorities, including the Ministry of Health and Food Safety and the Food Safety and Standards Authority of India.

Donati said the company was targeting neither the niche, nor the lowest strata; it would price its products at Rs 600-3,000.

The cosmetics market in India is estimated at Rs 26,400 crore (Rs 264 billion), while the market for anti-ageing stands at Rs 1,400 crore (Rs 14 billion), growing 30 per cent a year.

According to reports, other major Italian brands, albeit in the luxury fashion segment, lining up for an India foray include Alberta Ferretti, Pollini and Gattinoni, among others, according to reports.