ANFAO - (Italian Optical Goods Manufacturers' Association) 20.05.21 (Z1493)-1
FIRST HALF OF 2021 EYEWEAR DATA – ITALY: FORECAST IMPROVED, APPROACHING 2019 LEVELS

Milano, September 30, 2021

The first half of 2021 has raised the confidence of Italian eyewear players: ANFAO data from the January-June period improve expectations and anticipate a complete return to 2019 levels as early as year’s end.

Key features:


  • Above all optical frames for exports and ophthalmic lenses in the domestic market are leading the recovery.

  • The main export markets for Italian eyewear are all showing revival. For some of these, eyewear sales have already returned to pre-covid levels.


DATA

2021 is likely to be crucial for the recovery for global economies, also due to the massive influx of Covid vaccines.
China and the United States were able to react immediately to the crisis and were the first to meet the recovery head on, as early as last year.
In terms of infections and resumption of business as usual, the vaccine has certainly played a key role in Italy. Confidence among households has taken a positive turn while spending levels have also risen. Investments, production and exports, especially in the manufacturing sector, have shown fast reaction times and are on their way to a strong recovery. Even the outlook for public accounts appears to be better than expected.

Nonetheless, there are still some critical factors that could undermine this general recovery, starting with the substantial uncertainty instilled by variants of the virus and by the course of the pandemic and vaccination campaigns.
In Italy, inflation trends and the announced increases in energy prices, the boost to the recovery given by the construction sector (will this be sustainable over the medium- to long-term?) and, above all, compliance with the conditions imposed by Europe for Italy’s Recovery and Resilience Plan, will all require close monitoring.

In this general setting, Italian eyewear is also following this track, with a recovery that appears to be exceeding forecasts for early 2021.

2020 was an extremely challenging year for the sector and for our entire ANFAO System - both for the Association and for our industry-leading trade fair: MIDO,” stated President Giovanni Vitaloni.“We had anticipated that 2021 would be a somewhat subdued transition year, as we waited to see a recovery of pre-Covid values only in 2022. The first half year’s data, from both domestic consumption and above all from exports, have instead allowed us to adjust our forecasts for the better, to the point of believing we might just reach 2019 levels by the end of this year.

Even at the trade fairs that are finally popping up again on the markets: take for example, DaTE or SILMO, held just a few days ago, where there were clear signs of recovery and a strong desire to start back anew. From this standpoint, I am viewing the next MIDO with great optimism. Even though there is still an atmosphere of having to coexist with the pandemic, this trade fair truly offers an invaluable opportunity for relaunch.”

 


EXPORTS

Exports, which we should recall make up around 90% of the sector’s production,stood at €2,034 million, up over 52% against the same period in 2020, and only 4 percentage points below 2019 levels.

This acceleration was more markedlyobserved in the frames segment, whose exports in the January-June 2021 period surpassed the levels of the same period in 2019
Less enthusiastic were the exports of sunglasses, which recovered nicely over 2020, but which still remained negative compared to 2019 (-6.7%).




Encouraging data come from the monthly export trends for the first half of 2021 that were actually very similar to those from 2019 and even exceeded those levels in April and June.


However, by far the most interesting and encouraging analysis for Italian eyewear is by geographical region and country.
Exports recovered nicely in all geographical areas compared to 2020.
The most significant figure, however, was the result in value achieved compared to the same period in 2019 for exports to Europe and America, which together claim well over 80% of the sector's total exports:

  • exports to Europe +55.6%
  • exports to America -4%.



Even greater optimism arose from the export analysis to individual countries, which shows that among the main markets for Italian eyewear the gap compared to 2019 was either partly or totally closed, except for Spain.



THE DOMESTIC MARKET

In the first half of 2021 there were encouraging signs even on the domestic market for Italian eyewear.

Though the recovery was clear compared to 2020, where sales in the eyeglass channel for the first half of 2021 grew by more than 30 percentage points, they were still about 4% below the levels of the same period in 2019.

This dynamic seems to be following the general Italian eyeglass market trend from recent years: growth propelled by ophthalmic lenses (and within that, moved by the segment with the highest added value - progressive lenses) and partly by frames. Sunglasses, which recovered well from 2020, remained somewhat sluggish and still far from 2019 levels.

In this context, it will also be necessary to monitor the online channels, which are seeing significant growth for the sunglass sector, also due to advanced digitalization, greater familiarity with digital tools and almost immediate availability.

2021 FORECAST

Based on the first half year’s results, ANFAO revised its forecasts for 2021 upwards. If the trends were to remain constant, the sector would close the year at a slightly higher value (between 0.5% and 1%) than in 2019, both for exports and for production.


ANFAO - (Italian Optical Goods Manufacturers' Association) 20.05.21 (Z1493)-2

EYEWEAR: 2020, A DRAMATIC YEAR
SIGNS OF GROWTH FOR 2021, BUT FORECASTS STILL AT A LOSS COMPARED TO 2019.
TO RETURN TO PRE-COVID LEVELS, THE SECTOR LOOKS AT 2022


The ailing Italian eyewear industry is looking towards the early signs of 2021 to relaunch itself: this is revealed by ANFAO data referring to 2020, presented today at the press conference of MIDO Digital Edition, the world eyewear show, this year with an exceptionally virtual format.

Some highlights:

  • Exports of frames, sunglasses, and lenses, representing around 90% of Italian production in the sector, plummeted by 26% compared to 2019, with the sunglasses segment suffering the most (-27%). 
  • Sharp drop in production of 22.6% compared to 2019.
  • The number of companies and employees working in the sector remains stable, but this should be reassessed in 2021, taking into account the effects of the Italian Law Decrees on economic restoration.
  • In the early months of 2021, only a few signs of recovery are expected, with more encouraging signs to come only during the second half of the year.


THE DATA

The year 2020 saw significant impacts of the pandemic on the global economy, with China partly involved as early as late 2019 and countries in the rest of the world progressively implicated in parallel with the worldwide spread of the contagion, for the duration of at least 10 out of 12 months.
Therefore, on a global scale, the impact has been strongly asymmetric both geographically and on the different economic and production segments based on their position within the essentiality chain.

If at the onset of the global health emergency, the two economies driving the growth were the US and China, the spread of Covid-19 has marked the gap even further and has, for example, widened the growth gap between Europe and the US. At the same time, significant differences emerged between all the players in the manufacturing sector in particular, based on their ability to integrate cross-cutting transformations, from digital to automation, from health protection to environmental sustainability.

In Italy, 2019 already showed a critical downward trend in global economic growth, and 2020 saw the emergence of further difficulties: manufacturing activities suffered a sharp slowdown and an immediate and violent impact from the pandemic.

In particular, the situation has been erratic in the industrial sector, with a V-shaped trend and the hope of recovery only in the second half of 2021; instead, the expectation of returning to pre-Covid levels is currently stretching to 2022.

In this troubling scenario, the eyewear sector is no exception, where production and exports have returned to 2013 levels: production in 2020 was 3.089 million Euro, a drop by 22.6% compared to 2019, exports closed at 2.882 million Euro, a decline of around 26% compared to 2019. In just one year, around 1,000 million euros were burned in terms of both production and exports.

During the lockdown periods due to the pandemic, eyewear companies manufacturing medical devices (eyeglasses) and personal protective equipment (sunglasses) could carry on their activities after securing their sites, since they were a critical part of the supply chain for producing essential goods. Similarly, opticians have been allowed to re-open their shops once they have implemented the necessary anti-Covid measures.

Despite this, the sector suffered greatly due to the lack of international mobility, which held back exports, and due to a general decline in consumption, which penalised sales, especially of sunglasses.

A realistic assessment of the production sector and the workforce can only be carried out after the gradual return to normality with the phasing out of social shock absorbers and the end of emergency measures such as the ban on redundancies. The relaunch of exports should allow previous employment to be maintained.

EXPORTS IN 2020

Exports of frames, sunglasses and lenses, which account for around 90% of the sector's production, stood at 2.882 million Euro, a drop of around 26% compared to 2019.

The segment that suffered the highest loss was sunglasses (-27%), which stood at 1.871 million Euro.Exports of frames, on the other hand, fell by 22% to approximately 936 million Euro.

At the monthly level, exports showed the V-shaped performance: an extremely critical trend since the beginning of the year, with the figures falling sharply to a low point in April 2020 (-70%), only to recover to acceptable levels, but still below 2019 only from July onwards.

EXPORTS BY GEOGRAPHICAL AREAS AND COUNTRIES

By focusing on the two product macro-segments as a whole, sunglasses and frames, in relation to the geographical areas in detail, we can observe that:

  • The reference area for eyewear exports is still Europe (in 2020, it accounts for 51% of all exports in the sector), and in the Old Continent, the sector has seen an average drop of 23%, with a higher impact on sunglasses.

 

  • By 2020, exports to America (the target market for about 33% of Italian eyewear) dropped more than 26%, with even greater loss frames.
  • In Asia, reached in 2020 by more than 14% of Italian exports, the decrease was about 34%, with the most severe impact on the sunglasses segment.

 

  • Africa remains a small market for the sector, with 1.3% of exports, although in 2019 it proved to be a growth area with good potential.
  • In Oceania, which is still a very marginal area with a 0.5% share of the Italian market, exports in 2020 reveal a slightly bigger drop compared to the previous year (-14.5%).

The analysis by individual countries of export shows:

  • The United States accounted for the largest market share (over 28%), but overall exports fell by over 21%.

 

  • Next in line, among the largest market shares, are two European countries: France, where exports decreased by around 23%, and Germany, where Italian exports dropped by 15.6% in 2020. Other European countries followed with major decreases: The United Kingdom (-29%) and Spain (-40%).
  • Finally, we conclude with the trend in eyewear exports to the BRIC countries, which together account for over 10% of the sector's exports, with one country, China, alone representing 4.3% of the market.  In 2020:
  • Brazil -49%
  • Russia -22,7%
  • India -49,5%
  • China -35,4%.

THE DOMESTIC MARKET

According to the sales data of the optical channel, monitored by GfK Retail & Technology Italia, the domestic market in 2020 suffered a strong downturn: - 14.4% in value compared to 2019 for a total of 2.500 million Euro. A loss of approximately 400 million.
The most significant drop was recorded in sunglasses sales (-32%), followed by frames (-8.5%) and finally, ophthalmic lenses (-7.9%), which are obviously more related to the actual need to adjust one's vision defect and less likely to be purchased.

OUTLOOK 2021

2021 began amid the third pandemic wave and, simultaneously, with the arrival of vaccines and the hope of national and international recovery.
However, due to limited international mobility, restarting production did not coincide with the revitalisation of exports, nor did it lead to the recovery of all consumption, which was still too shrouded in a climate of mistrust and uncertainty. Specifically, the postponement of medical examinations also had the effect of slowing down the recovery of the eyewear sector and the sunglasses sector, which is more linked to the fashion world.

Exports in the first part of the year were still lacklustre, too tied to limited international mobility.
On the other hand, the domestic market showed a slight recovery compared to 2020, especially for frames and ophthalmic lenses, which returned close to 2019 levels.

The situation of the first quarter of 2020 as a whole was therefore very delicate. Finally, in April, the Italian economy saw some positive signs thanks to the change of pace brought about by the national vaccination plan and the progressive opening plan that boosted consumer and business confidence.
In contrast, the world seems to be recovering, and international trade is already growing above pre-Covid levels. Such growth is still led by Asian countries, China above all, and the United States.

Based on current evidence, we have estimated that exports in the sector will increase in value by 10% compared to the first half of 2020 and 19% compared to the second. As a result, by the end of the year, the sector will record an overall export growth of 15% compared to 2020, but still 14 percentage points lower than the growth reported in 2019.

The actual revival with the achievement of pre-pandemic values will most likely take place in 2022.
At that point, we will be able to continue to reaffirm and consolidate what have always been the records of the Italian eyewear sector:

  • Europe leading manufacturer of sunglasses and frames
  • Europe leading exporter of sunglasses and frames
  • the World second-largest exporter of sunglasses and frames
  • the World leading manufacturer and exporter of high-end sunglasses and frames.

 

 
ANFAO - (Italian Optical Goods Manufacturers' Association) (Z1412)-3

AFTER A REASSURING 2019 IN TERMS OF EXPORTS, REVENUE AND JOBS, THE 2020 PANDEMIC-RIDDEN FORECAST FOR iTALIAN EYEWEAR IS GRIM


2019: PRODUCTION +3.3%, EXPORTS +3.9%, JOBS +2.3%

2020: EXPORTS FORECAST -25%, PRODUCTION FORECAST -15%



2019

The global economy experienced an overall slowdown in 2019. Trade tensions with China, lackluster performance from the United States and Germany, and exhausting Brexit-related concerns led to a downward trend in global economic growth; the weakest in recent decades.
In Italy, 2019 unfolded against the backdrop of an ailing domestic market and a sluggish economy.

Despite these difficulties, 2019 was a fairly decent year for Italian eyewear, with reassuring results.

Indeed, Italian eyewear production in 2019 totaled 3,991 million euro, 3.3% higher than in 2018.

The number of companies stayed fairly constant with 879 businesses nationwide, up 1.4% compared to the previous year.

In terms of jobs, the year ended on a good note, although the first signs of trouble from some of the large groups appeared ominous: at year-end 2019, jobs numbered 18,082, a 2.3% increase over 2018.

2019 EXPORTS

Representing 90% of the sector's overall production, exports of frames, sunglasses and lenses grew by 3.9% over 2018, for a total value of 3,876 million euro.
In 2019, exports of sunglasses increased 2.8%, valued at about 2,584 million euro
On the other hand, frame exports grew 6%, totaling approx. 1,201 million euro.

Imports experienced a similar upward growth trend of 6.7% equal to about 1,347 million euro, substantiating the industry’s vitality.

The Italian eyewear industry’s trade balance continues to be largely in surplus (putting the 2019 export-import balance at 2,530 million euro).  

EXPORTS BY GEOGRAPHIC AREA AND COUNTRY

Looking specifically at the two product macro-segments – sunglasses and frames – by geographic area, we can see that:

  • The primary market for eyewear exports in 2019 continued to be Europe (claiming just under 50% of all eyewear sector exports) for an upward growth trend of 2.2% (+3.2% sunglasses, +0.4% frames).

     
  • In America (area to which about 33% of Italian eyewear exports are shipped), 2019 saw a 6.7% increase in sun-optical sector exports, compared to 2018. Driving this growth spurt was the outstanding +12.3% performance of frame exports along with a healthy +4.6% jump for sunglasses.

     
  • In Asia, the continent that claims more than 16% of Italian frame and sunglasses exports, 2019 export growth trended upward by 3.4%, and turned 2018 performance on its head with a drop in exports of sunglasses (-0.7%) and a major increase in frames (17.4%).

     
  • Africa is an area that claims less than 2% of current sector exports; although still untapped, it shows good potential for growth. In 2019, frame exports grew in value by 12.8%, while sunglasses remained basically unchanged (+0.1%).

     
  • In Oceania, a still marginal area with a less than 0.5% share, Italian exports of sunglasses and frames in 2019 decreased 14.5% in value compared to 2018.

     
  • As regards imports, Asia was, once again, the primary supply market in 2019 with a nearly 75% share, concentrated almost exclusively in East Asia.

The export analysis by individual country shows that:

  • In the United States, (which has long been the eyewear industry’s primary export market, with an almost 27% share), overall exports of frames and sunglasses increased 6.7%over 2018. Growth occurred in both sectors: the value of frame exports increased 12.8%, and exports of sunglasses 4.6%.

     
  • In Europe, the performance of Italian exports to the various countries was impacted by the general economic situation, Brexit concerns, the reorganization of healthcare reimbursements in France and the general slowing of domestic consumption. Against this backdrop, our exports encountered even stronger headwinds in France and the UK. In France exports for the sun-optical sector in 2019 decreased 3% in value (-4.4% for frames and -2% for sunglasses). The outcome achieved by Italian eyewear exports to the United Kingdom once again reflected Brexit-related concerns: thus, exports lost 7.9% in value overall, compared to 2018 (-9.8% for sunglasses, -3.1% for frames). Eyewear exports performed a bit better in Spain, where the growth trend fell just 0.3% compared to 2018, with exports of sunglasses making positive gains (+1.6%) that offset the negative frame results (-4.7%). Instead, in Germany, Italian eyewear exports fared very well: with an overall growth rate of 8%, up 10.1% in sunglasses exports and +4.9% in frames.

     
  • Rounding out the list, eyewear exports to the BRIC countries which, taken together, claimed about 8% of the industry’s exports. For a bloc of countries this size, it is still a fairly meager share; nonetheless, it is a bloc with enormous potential (China alone claims 5% of eyewear exports):
  • Brazil +6.9% (+2.1% sunglasses +14.3% frames)
  • Russia +19.4% (+23.3% sunglasses and +13.7% frames)
  • India +7.1% (+6.4% sunglasses and +8.9% frames)
  • China +2.4% (-1.2% sunglasses and +13.9% frames). 

THE ITALIAN GLOBAL EXPORT MARKET SHARE

Based on the global export market for sunglasses and frames, in 2019 worth just under 19 billion euro (+5%), the Italian market share is valued at more than 20%, second only to China. If only high-end exports were taken into account, Italy would still be in first place with a nearly 70% share in value.  

EXPORTS BY VOLUME

The Italian eyewear industry exported about 103 million pair of eyeglasses in 2019, slightly more than in 2018 (+1.9%).

Of the total number of pairs exported, 66 million were sunglasses (64%) and 37 million optical frames (36%). Specifically, sunglasses exports (+0.6%) were fairly stable, while optical frame exports grew by 4.3% compared to 2018.

THE DOMESTIC MARKET

Between exports and the domestic market, it could be said that the Italian eyewear industry ended 2019 on split levels: excellent performance in international markets collides with the weakness of the domestic market.

Consumption, monitored by GfK on the specialized eyewear channel, decreased slightly and remained stagnant compared to the two previous years: -0.2% for an overall value of approximately 2.9 billion euro.

There was no relief from the negative trend in sunglasses (-2.4%) and frames (-2.6%), unlike the performance of ophthalmic lenses (+2.5%) which, in terms of revenue now account for more than 46% for point of sale outlets (thanks to high-added-value segments like progressive lenses that manage to sustain a positive trend).

As in 2018, also in 2019, the upward market trend for frames and sunglasses remained focused on high-end (luxury), and low-end (i.e. private label) products, to the detriment of mid-high range offerings. Also, with regard to sunglasses, the market share of traditional optical channels continued to decrease, shifting in favor of online sales channels.


2020 FORECAST

The first part of 2020 was certainly challenging for the eyewear industry, in several ways.

President Vitaloni’s analysis: “Undoubtedly, the cancellation of the trade shows did enormous damage to our companies, consistently focused on exports, who view the fairs themselves as a means of internationalization. Furthermore, cancelled meetings and contracts, aborted travel plans, the impossibility to fulfill orders and the cancellation of previous purchase agreements were the order of the day in the first part of 2020. Regardless of these direct effects, we cannot overlook the increased costs tied to managing fallout from the pandemic: the inability of agents to call on clients, adaptation to remote working for office staff, implementation of safety procedures and protective measures for employees, adaptation of the workplace, along with implementation of new ways to present products – ranging from digital showcases to the production of new samples to be shipped at increased logistic costs.”

ANFAO forecasts for exports, based on currently available data, estimate negative monthly results (with peaks from April to July 2020) up to year-end. Also considering that export levels in 2019 were moderate and unlikely to be repeated under the current conditions.

The first half of 2020 could close with 40% fewer exports (in terms of value, more than 850 million less than in 2019).

Based on a recovery in the second half of the year, compared to the first half, without factoring in possible new outbreaks of the crisis, the second half of 2020 could suffer a -7% in value (about 130 million less).

Overall, the forecast for Italian eyewear exports in 2020 could suffer a 25% loss, equal to nearly 1 billion euro.

As regards the domestic market, considering the previous and current difficulties that have significantly aggravated the situation, the forecast for year-end is for at least a 10% loss in value.

Likewise, production could decrease by about 15 percentage points.

“We were very cautious in making these forecasts – confirms the ANFAO President – After all, the feeling we get from our member companies doesn’t allow for any more optimism than that. We know the situation is dire for the entire country and that is why we joined the move to ask for truly effective measures to support the economy and consumption. Among these, I am pleased to mention our own request, made under the aegis of the Eyecare Commission, for a voucher to purchase prescription eyewear, to at least lend a minimal boost to consumption and, at the same time, focus attention on the importance of vision, that could take a back seat in times like these. Another key aspect is for the export machine to get back into operation again as quickly as possible, and that the highly publicized export agreement becomes a concrete reality. Thanks to the reopening of the trade shows that are vital to our companies. I am still optimistic about that and we continue to work with all our might to make sure that DaTE first and, above all, MIDO, can mark the true relaunch of our sector.”

SUMMARY DATA GRAPHS AND CHARTS
Computations by ANFAO and Confindustria Moda for ANFAO based on data from ISTAT, Coeweb, Global Trade Atlas, INPS and CCIAA


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