EYECARE: Coronavirus BRIEFING: Business Updates Following a Solid 2019, The Global Pandemic Creates a 'Grim' Outlook for 2020, Per a New ANFAO Report By Staff Tuesday, July 7, 2020 12:27 AM MILAN – After what it describes as a “reassuring 2019” business year, based on exports, production and jobs, the advent of the coronavirus pandemic has created a “grim 2020 outlook” for the Italian eyewear industry, per a new report recently issued by ANFAO the Italian eyewear association. Against the backdrop of a challenging 2019 in the global economy, ranging from Brexit-related concerns and trade tensions with China, the Italian eyewear industry recorded a relatively stable year of increases in value and units, according to ANFAO.Nevertheless, the advent of the COVID-19 pandemic has sharply changed the direction, with forecasts now projecting that overall Italian eyewear exports in 2020 could suffer a 25 percent loss, equal to nearly 1 billion Euros for the year. The Italian industry could close with 40 percent fewer exports for the first six months of 2020, ANFAO reported, representing a decline of more than 850 million Euros less than 2019. For the calendar year 2019, the group reported that Italian eyewear production totaled 3,991 million Euro, an increase of 3.3 percent over the prior year, the number of companies stayed fairly constant with 879 businesses in Italy and, at year-end, jobs numbered 18,082 for the year. Representing 90 percent of the sector's overall production, exports of frames, sunglasses and lenses grew by 3.9 percent over 2018, according to ANFAO and other industrial reports, for a total value of 3,876 million Euro. In 2019, exports of sunglasses increased 2.8 percent, valued at about 2,584 million Euro, while frame exports grew 6 percent, totaling approx. 1,201 million Euro. Overall, The Italian eyewear industry exported about 103 million pairs of eyeglasses in 2019, slightly more than in 2018 (+1.9 percent). Of the total number of pairs exported, 66 million were sunglasses (64 percent) and 37 million optical frames (36 percent).The primary market for eyewear exports in 2019 continued to be Europe (claiming just under 50 percent of all eyewear sector exports) for an upward growth trend of 2.2 percent –reflecting increases of 3.2 percent in sunglasses and 0.4 percent in frames. America represents about 33 percent of Italian eyewear exports and 2019 saw a 6.7 percent increase un sun and optical sector exports compared to the prior year. Frame exports grew a significant 12.3 percent accompanied by a healthy 4.6 percent jump for sunglasses. In Asia, the continent that claims more than 16 percent of Italian frame and sunglasses exports, 2019 export growth trended upward by 3.4 percent, with a major increase in frames (17.4 percent). Frame exports from Italy to Africa, which represents less than 2 percent of the sector’s exports, grew in value by 12.8 percentBased on the global export market for sunglasses and frames, in 2019 worth just under 19 billion Euro (+5 percent), the Italian market share is valued at more than 20 percent, second only to China. If only high-end exports were taken into account, Italy would still be in first place with a nearly 70 percent share in value, ANFAO’s report noted.In January, the COVID-19 virus first appeared in China. ANFAO noted that exports to China, Hong Kong, Macao and Taiwan (the first Asian countries subjected to restraints) account for 7.7 percent of all industry exports (a value of just under 300 million Euro/year). China, Hong Kong and Taiwan are also the leading suppliers of raw and semi-finished materials for Italian eyewear. In addition to the impossibility of exporting to Asia, companies had to deal with the lack of raw and semi-finished materials. To address this situation, Italian makers turned to different supply markets, incurring higher costs in the process. In addition, some large companies with production plants in China (primarily serving China and neighboring markets), had to halt production.On February 22, the first patient was identified in Codogno (Northern Italy). Soon after, the international trade show, MIDO, was postponed to 2021, and Italy underwent 60 days of lockdown starting in mid-March.In the first quarter ended March, in terms of exports, Italian eyewear closed Q1 2020 with a 17.7 percent loss, about 200 million Euro less than in Q1 2019. The loss was concentrated primarily in the month of March ( when there was a drop of 43.6 percent). In that period, the Italian eyewear industry suffered significant Q1 losses in exports to America (-20.3 percent), Europe (-16.5 percent) and Asia (-16.2 percent).In terms of the domestic market, March ( brought losses of 30 percent in volume and revenue. April was emblematic with 80 percent losses; May brought the beginning of a turnaround, but nonetheless closed at a decline of 33 percent.According to Giovanni Vitaloni, president of ANFAO and MIDO, “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.” 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 drop of 7 percent in value (about 130 million less) and overall the export market could decline by 25 percent for the year, ANFAO said. Likewise, production could decrease by about 15 percentage points.“We were very cautious in making these forecasts," confirmed Vitaloni, adding, "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.”MIDO is scheduled for Feb. 6-8 at Rho-Pero in Milan.