Italian eyewear industry: 2008 situation and expectations 2009

The global economic situation has obviously had its effect also on an eyewear industry that has always been the jewel in the Made in Italy crown and highly regarded by all international markets.
In order to outline the sector’s situation, it must be seen in the context of the global economy.
The United States, the world’s most important economy, is in the middle of a serious credit crisis due to the collapse of the speculative real estate bubble between 2007 and 2008 which, after several months of weakness and job losses, in its turn led to the failure of banks and financial companies.
The situation was epitomized in September 2008 with the collapse of Lehman Brothers investment bank.
Modern globalization has contributed to the spread of the phenomenon throughout Europe and the rest of the world.
Italy was not, and still isn’t, immune to these difficulties. Economic indicators show a downturn in industrial production, a reduction in orders and a drop in consumption.
This general picture shows a decrease in domestic demand because of the reduction in family income and in 2008 the eyewear sector also had a difficult year, especially from the second half onward.
Italian eyewear production in 2008 stood at 2,597 million euro, -6.4% compared to the previous year.
The drop in exports and the downturn in the domestic market affected this result.
It was also reflected in a reduction in the number of companies and employees, mainly in the Belluno district. 2008 closed with 1,005 companies (about -4% against 2007) and with 17,500 employees, 5.4% less than the previous year.
At end-2008, Italy’s balance of trade for the eyewear sector was still largely active (export-imports were about 1,532 million euro), but it was 5.7% lower than in 2007, a confirmation of the export difficulties recorded in 2008.

Exports of frames, sunglasses and lenses, which now represent around 85% of the sector’s production, dropped by 4.7% against 2007.
Although the value was higher than in 2006, it should be pointed out that the last negative figure was recorded at end 2003 and therefore this comes after 5 years of constant growth in exports.
Exports stood at over 2,207 million euro, about 110 million euro less than in 2007.
The export trend was characterized by strongly penalized sunglasses and by a slight reduction in the export of frames.
Exports of sunglasses: in 2008 the export of sunglasses dropped by 6.9% compared to 2007 and stood at over 1,422 million euro.
At almost 735 million euro, the export of frames showed a more moderate, but still worrying, downturn (-0.5%).
The -2.3% falloff in imports against 2007 was also significant.
The monthly and quarterly trends were interesting in that they clearly showed the effects of the global economic situation, especially the crisis in the United States, on the eyewear sector and, above all, on the sunglasses segment. The first negative signals were recorded in May 2008, and worsened in the last quarter, the very worst of the year, with a 13.8% drop in exports (-17.4% for sunglasses and -7% for frames against the 4th quarter 2007).

Export details by geographical area
The details of the geographical areas which import made in Italy sunglasses and frames confirm Europe as the first reference area, with a share of 53.3% and substantially stable exports (+0.3% compared to 2007). The sunglasses segment had a slight downturn in exports (-2.5%), but prescription glasses held on well and increased by 5 percentage points.
Stability in Europe contrasts with the considerable reduction in exports to the whole of America: the export share was 27.8% and exports from the sun-vision segment dropped by 15.5% against 2007, with a marked –18.1% for sunglasses. This result was primarily affected by the strong decrease in exports to North America (United States + Canada), with -20.1% (sun and vision) compared to 2007 and even –24.4% in the sunglasses segment.
Central and South America held up well with exports at +6.4%. This area, which had already emerged in the last few years as one of the most interesting markets, increased its share to 6.6% for Italian exports of sunglasses and frames. Sunglasses performed particularly well (+9.8%).
Exports also increased to Asia with 14.8% of the total of the frames/sunglasses sector, +3.2% overall compared to 2007 and +4.7% for the sunglasses segment.
Export details by country
Total exports to the United States (the first reference market with a share of 21%) of sun-vision eyewear stood at a huge -20.5% compared to 2007, with considerable difference between the two segments: exports of frames recorded a 10.9% downturn while the sunglasses segment dropped by almost double with -24.7%.
Among the traditional reference countries in Europe (France, Spain, Germany and the UK), global exports in 2008 were negative everywhere except France, with an increase in sunglasses (+9.9%) and frames (+9.6%).
In general, in Europe as well as in the United States, it was exports of sunglasses that suffered the most: Spain -8.1% (-1% frames, -10.9% sun), UK -8.1% (+4.4% frames, -15% sun), Germany -7% (-11.4% frames, -3.6% sun).
Interesting signs from Mexico, where exports of Italian eyewear stood at +19.3% compared to 2007. Volumes are still small, but it is certainly a market in which to invest.
Exports to Russia don’t appear to have felt the crisis. In recent years, this market has been one of the most interesting from the point of view of potential, with an overall +27.8% compared to 2007, mainly for frames at +83.4% and a less significant +9.1% for sunglasses.
A good outlet for sun and vision glasses proved to be the Arab Emirates (+12% overall), and it is now one of the sector’s top 10 export countries.
I-style
The world economic situation affected all I-Style without distinction. Overall, in 2008 it recorded a 2% downturn against 2007. In the Italian fashion universe, the only sectors that closed 2008 exports in the black were apparel, cosmetics, fragrances and footwear. All the others were down compared to 2007: yarns and fabrics (-8.1%), jewelry and gold (-6.9%), eyewear (-4.7%), leather goods (-3.3%).
Again, it was the US market that established the rules with a financial and economic crisis being followed by strong contraction in consumption: overall I-style exports to the United States were -17.2%. Only apparel (-8.3%), cosmetics and fragrances (-8.5%) closed 2008 with a moderate drop in exports of under ten percentage points against 2007. The other sectors recorded a two-figure falloff in 2008: jewelry and gold (-30.1%), eyewear (-20.3%), yarns and fabrics (-19.5%), footwear (-17.6%) and leather goods (-16.8%).
Exports in volume
Also in terms of quantities there was an overall 2.4% downturn compared to 2007.
Compared to the substantial stability of vision frame exports, the quantity of sunglasses exported decreased considerably (-5.1%).
The situation recorded in terms of the value of exports to the various importing countries also showed the same downturn in quantities.
The reference countries for frames and sunglasses are still the United States, France and Spain.
Exports to the United States were down in both segments, but the decrease was decidedly more important for sunglasses: -22.2% of sunglasses were exported in 2008 compared to 2007 (less than 12 million against over 15 in 2007 and even one million lower than the 2006 figure); more moderate, but still cause for concern, was the downturn in frames (-9.4% compared to 2007 with about 6.7 million pairs exported).
Ever-virtuous France closed 2008 positively with imports that contributed to making the sector’s debit balance less obvious. France imported over 4 million pairs of sunglasses (+0.5% compared to 2007) and 4 million frames (+5.4% against the previous year).
There were contrasting signs from Spain, where the export of frames was constant, but there was a big falloff in exports of sunglasses (over 4.5 million pairs compared to 5 million in 2007 and 2006, or -11.2% against the previous year).
Export details by market share
In terms of the sector’s world exports (about 8,100 million euro), Italy continues to be in first place with a market share in excess of 26%, but lower than in 2006.
The market share for the export of sunglasses rose to 39%, with frames at about 26%. Italy is followed by China and Hong Kong, but their combined figure does not exceed that of Italy.
Details of the domestic market
A downturn (-7.3%) also for the domestic market, which in 2008 stood at about 1,064 million euro, a demonstration of the contraction in consumption.
It is interesting to take a close look at how the various segments reacted.
Sunglasses and frames were, without doubt, the most negatively affected by the economic situation, whereas ophthalmic lenses had a better response: about 17 million went to outlets (in line with 2007). The performance was different for each type of lens: +3% for progressive lenses, which many manufacturers and distributors are counting on because of their high added value.
In 2008, the market share for vision frames and sunglasses stood at 38% and 62%, respectively.
Overall, 16 million pairs of glasses were distributed (-7% vs 2007).
For materials, the division is more or less the same: 45% plastic and 55% metal for vision frames, the exact opposite for sunglasses.
Expectations for 2009
According to predictions by Italy’s main economic analysis institutes, the end of the negative economic situation is still a long way off and expectations are certainly negative, at least until the end of 2009.
The data published by the Confederation of Italian Industry showed a further drop in production in January and, in general, a similar, or worse, situation was observed in other industrial and emerging countries.
Also in the eyewear sector, the first months of 2009 seem to confirm the difficulties of the moment.
On the other hand, it has to be pointed out that despite the negative end to 2008, the sector seems to be among those than are best able to cope with this critical situation.