Regional focus: What investments & innovations for Italy's luxury packaging sector?

Regional focus: What investments & innovations for Italy's luxury packaging sector?

Fedrigoni’s joint venture with Parma-based Tecnoform has resulted in the creation of Eclose, a range of molded pulp products

© Fedrigoni

Italian luxury packaging suppliers are seeing the post-pandemic era as an opportunity to implement changes with a notable focus on sustainability. In the context of a strong global recovery, this approach is guiding their strategies when it comes to upping capacity, innovation and investment pipelines.

Gucci, Prada, Armani, Bulgari, Berluti, Dolce & Gabbana, Loro Piana, Versace, Ferragamo… Italy is one of the cradles of iconic luxury brands. While most houses have been acquired by the likes of LVMH, Kering, or Michael Kors, luxury groups continue to buy and maintain "made in Italy" expertise. In 2022, LVMH invested €235m in the country, including an injection of €50m in Fendi’s new leather factory in Capannuccia, on the outskirts of Florence. "Until now, 10% of leather goods production was carried out onsite, but our goal is to ensure that this reaches 35 to 40%," says the company’s CEO, Serge Brunschwig. The factory includes production, stock, and, most importantly, a product development office. In 2015, LVMH opted for the same integrated structure for Berluti, in Ferrare.

Sustained investment rooted in the luxury market’s consistent growth is generating significant momentum that benefits glassmakers, papermakers, closures manufacturers, and a whole host of subcontractors specialized in the production of components in materials including metal, plastic, paper, cardboard, wood, leather, and fabric—all of them located in Italy. Thanks to the global luxury industry, the sector continues to grow by exporting a large portion of its production. But after two years of pandemic, it’s time for an update—an aggiormiento.

Dolce & Gabbana's fragrance flacons manufactured by Italian glassmaker Cerve ©Dolce & Gabbana

Supply & demand: a "saturation situation"?

The strong global recovery—coupled with CSR strategies among luxury players—has driven some markets close to saturation. This is true of secondary packaging, a market that has grown by some 10-15% over the last two years. "Most Italian processors aren’t taking new orders until 2024," remarks Ilan Schinazi, Chief Commercial Officer for Fedrigoni’s paper division. Priority is given to local distribution, and Italy has made significant inroads when it comes to bringing production back to Europe from Asia: the country’s expertise in transforming cardboard enables it to supply all of Europe. Schinazi says this strength is rooted in a unique detail: gift boxes for fragrance use the same technology as shoe box manufacturing. Countries with a strong leather goods market, such as Italy, Spain, and Portugal, have been able to capitalize on this expertise and deliver to the luxury sector. "In fact, Americans still use the word ‘shoebox’ for perfume coffrets," notes Schinazi. Valued at €2bn, this transformation market for secondary packaging is currently divided between cardboard boxes, folding cartons, and shopping bags. They are made in Europe or printed in Italy and manually assembled in Albania. "This very competitive economic model ensures a high level of service," Schinazi affirms. Italy is also home to Emmeci, the main producer of machines used to make gift boxes, and which owns 80% of the European industrial park.

This ‘saturation situation’ is also impacting glass and other packaging components used for selective beauty products, which can result in slower development times. Bormioli Luigi’s business is driven by niche prestige perfumery and skincare, and the company hopes to grow 7 to 8% annually on the Italian market. "For the moment at least," says Simone Barrata, Prestige Perfumes Business Unit Director, "capacity prevent us from going any higher."

Other noteworthy developments include the evolving demands of millennial consumers, who are increasingly interested in makeup and perfume, rather than skincare, and favor "newer" sales channels, including e-commerce. In the cosmetics sector, Italy is Europe’s number-three market in terms of demand, after Germany and France. "There is a new trend driven by ‘safe’ beauty that favors organic and green products, sustainability, and versatility, with a demand for hybrid cosmetics that fulfil severalfunctions," notes Matteo Moretti, CEO of primary packaging supplier Lumson.

Fedrigoni has bolstered its portfolio with Tecnoform, manufacturer of Eclose molded pulp products and Tageos, an RFID solutions provider ©Fedrigoni

Glassmakers & paper manufacturers invest on all fronts

Italian manufacturers have welcomed the recovery and are investing to adapt to the European market’s growth dynamics. To keep pace with the shopping bag market, for example, Fedrigoni has invested €6m in a new laminator and a cutting machine at its Arco site, allowing the company "to deliver any format anywhere in Europe within 10 days," says Schinazi.

Bormioli Luigi is on the last stretch of a €200m investment plan that began in 2019 and culminates in 2024. The glassmaker is increasing its decoration and glassmaking capacities while also updating its IT system to deliver more efficient customer service, especially when it comes to planning and deliveries. The family-run company owns two glass factories in Italy and one in Spain, in addition to two decoration units in France, and a third in Spain that will be operational in 2024. "We just installed a new metallization and sputtering line, as well as two lacquer lines that use waterbased varnish. We’ve also reinforced our standard screen-printing and hot stamping machines," Barrata explains.

Bormioli Luigi aims to increase capacity at its Spanish site this year to produce more than 20 million units, and 40 million more pieces by 2024. It also intends to reduce its greenhouse gas emissions by 50% between 2016 and 2030 by switching to electric power. The company has nearly reached its goal, says Barrata, as electric furnaces already supply 65% of the energy needed for production.

Shiseido’s Ule brand opted for Bormioli Luigi’s Ecoline lightweighted glass range ©Ulé / Bormioli Luigi

Specialized in glass finishing since 1953, Cerve has also increased its production capacity for perfumery, cosmetics, and tableware by 30% in the last two years. "Italy is a niche market that produces international quality," remarks Francesco Allegri, CEO of the family-run company. Cerve’s strong local footprint includes six production sites in Italy, in addition to an Austrian glass factory, Technoglass, specialized in high-quality technical pressed glass. This enables the company to offer a global service for decorations ranging from the simplest to the most complex. "Now that this expertise, acquired in 2018, is fully integrated, we are developing glass closures and jars in place of plastic ones for sustainable luxury products," he says. Three years ago, Cerve invested in a 100%-electric Italian furnace for its Austrian factory.

Cerve's Technoglass site is specialized in pressed glass ©Technoglas

Making inroads in sustainable packaging innovation

"We just launched a special new line to make very small glass objects, up to 13g, and we are investing in automation and AI to improve visual quality inspection," notes Allegri. As for decoration, Cerve describes itself as a forerunner in terms of sustainable development for its use of materials like organic ink, hydro-lacquer, and heavy-metal free enamels.

For manufacturers that invest in R&D for new materials and commit to strengthening the circularity of luxury products, sustainability is an integral component of their roadmap designed to increase a product’s life span and intensify use, among other things. Closures specialist Tapì, for example, is spearheading two major projects in CSR and product lifecycle analysis (LCA). "Numerous products, notably spirits and liqueurs, are being rebranded and updated with packaging that is both more premium and eco-designed," notes Marketing Manager Paolo Boratto. "This is reflected in simple, authentic packaging with more attention to detail that has minimal impact and a focus on materials, reuse, and recycling."

Tapi is relaunching is Starcap Craft (left) and Starlight Style (right) stoppers in 2023 ©Tapi

In the quest for environmentally and socially responsible processes, glassmakers advocate their material as a substitute for plastic. Bormioli Luigi’s EcoLine, for example, is a range of lighter glass containers that includes up to 40% PCR glass. "We offer a turnkey product for eco-designed packaging and are currently adapting all of our decoration techniques to more sustainable processes," explains Barrata.

Suppliers are also working with innovative startups, as demonstrated by Fedrigoni’s joint venture with Parma-based Tecnoform which has resulted in the creation of Eclose, a range of molded pulp products. "This solution enables us to eliminate plastic inside luxury coffrets," says Schinazi. The investors’ goal is to multiply the start-up’s production capacity tenfold within two years. Fedrigoni is also creating papers that have qualities including scratch and water resistance in a bid to replace the shopping bag’s plastic coating. Other new items include Paper Snap, a 100%-paper, singledose packaging solution for liquids and semi-liquids, and the FSCcertified Re-Play line that recycles glassine, the silicone-based backing film, to create paper for wine and spirits labels.

Lumson is drawing attention with XPaper, a paper tube featuring an airless pouch, which is the fruit of a partnership with Pusterla 1880, the Italian specialist in cases, boxes, and coffrets based in Varese, Lombardi. Lumson’s Moretti sees a bright future for the product thanks to its sustainability, functionality, and security: "thanks to sophisticated printing technology and a protective cellulose acetate film, the packaging delivers added visual value and a sustainable touch. Once the contents have been used, the plastic and paper components can be separated, making the tube easy to recycle."

Lumson and Pusterla 1880’s XPaper tube ©Lumson

Closure manufacturers are also reinventing their offer with eco-design principles. Tapì has announced upcoming launches outside of Europe for its brands Tapì and Delage, in particular a low impact solution for manufacturing closures for the spirits market. This year will see the relaunch of Starlight, a modern and versatile closure assembled with ultrasonic welding rather than adhesive, and which can be customized with different colors and levels of transparency. Other launches include the Neos range (based on renewable polymers), Abor (which reuses distillation residues), T-cash (using wood from barrels at the end of their life cycle), and Varnishless, a solution that uses heat-treated wood to avoid applying varnish. And last but not least the vintage effect applied to aluminum closures that ensures a raw, craft look.

Guala Closures is focusing on personalization to stand out. "Our closures are 100% custom-made, with infinite potential to combine surprising materials and create unexpected visual and textural effects," explains Gabriele des Torchio, CEO of Guala Closures. The group acquired Italian high-end closures specialist Labrenta in July 2022 to strengthen its presence on premium segment in Italy, Brazil, Mexico, and the US. The deal has resulted in the creation on a new business unit: Labrenta Division Luxe. When it comes to materials that make the difference in design, clients have the choice between stone, clay, or ceramic, which give a rough or high-density look; resin, to achieve different forms in metallization or debossing or zamak, for metallic finishes or in association with wood.

Guala Closure's portfolio includes stoppers made with stone, clay, ceramic, and resin ©Guala Closures

Internationalization goes full steam ahead

Despite current economic and geopolitical instability, geographic expansion should fuel significant growth for Italian manufacturers in the coming years. Two years ago, Pusterla 1880 brought in new shareholders, Andera Partners, to strengthen its industrial system, as well as to double its activity through European growth. Tapì Spa, supported by Stirling Square Capital Partners, is also prioritizing internationalization, particularly growth in the Middle East. Boratto notes that other important challenges in 2023 include optimizing customer service with a new CRM tool, equipping its closures with NFC chips to make them interactive, and exploring the many possibilities of AI.

"Major luxury brands want to work with truly international groups that produce locally on each continent," says Fedrigoni’s Schinazi. "In a few months, we will begin producing Fedrigoni papers in the US with the intention of providing our clients with a global offer." The papermaker is also working with Tageos, a company specialized in RFID solutions and printed electronics, to develop its self-adhesive security label offer for e-commerce. This will provide new opportunities to not only protect brands, but also to offer consumers an exclusive, interactive, and personalized experience, and to ensure product traceability within a sustainable approach (monitoring CO2 emissions during transport, for example). These initiatives will help favor growth among global luxury groups in the coming years, and keep Italy—the land of sophistication, fantasy, and modernity— at the heart of European luxury’s regionalization strategy.

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