COSMOFACTORY

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Deanna: In this episode, we're talking about makeup and skincare manufacturing, creativity and design, about formulating products with regional relevance, how the experts anticipate trends years in advance, and about new ingredient development. With me today on the CosmoFactory podcast is Arabella Ferrari, Group Chief Innovation Officer.
at Intercos
.
Deanna: Welcome.
Arabella: Thank you. Excited to be here and happy to help tell you our story and share our excitement.
Deanna: I appreciate it very much. Thank you. So, Intercos is a contract manufacturer; but your business model very much centers on creativity and design. Can you tell me what that means at Intercos?
Arabella: Yeah, sure. I think the most interesting thing is that we invented, created, and developed this business model in the last 50 years. I think my father was extremely visionary. And in a world where this type of business didn't exist, he conceived a company that would think of product on a day-to-day basis and would think of product and be relevant to the most important companies in the world through creativity, through R&D, through innovation, and through anticipating market needs and anticipating client needs.
Arabella: I think what he created in the last 50 years was really understanding the markets, the regions [00:02:00] and drilling creativity and innovation and passion and product like no one else ever before in a company. So we think of a product; we conceive a product; we ideate a product; and then we make it. We search the ingredients, we search the raws, we make the raws, we build, we build machineries, we build equipment, and we actually make it happen.
Arabella: I think there's a lot of trend bureaus, and there's a lot of consulting companies, and there's a lot of people that are capable of identifying trends. But I think what we're really strong in is actually transforming what we see as a product today and visualize it, portray it further as we think into a new version and actually turn it into a real product through the help of [00:03:00] all the divisions in the company. So it starts from market, it starts from a client, a market, a distribution, and then it goes to briefing an R&D who simultaneously will think of ingredients, but next-step ingredients to improve the product that's on the market and actually make it better and to propose the next generation. So it's a vision to go forward. It's a vision of projection. It's a vision of invention, creation, and then, of course, passion and product.
Deanna: right, right. Excellent. I love that. And you mentioned all the various sorts of divisions that are involved. Um, but I'd like to think a little bit more about the company structure. Intercos is a sizable company, I would say. Um, you have headquarters there in Milan, Italy, but can you help us think about where the teams are located?
Deanna: What other facilities do you have?
Arabella: Sure, so the company was built [00:04:00] in Italy because of its craftsmanship, artisanship and creative strength. So all the main R&D, I mean the global R&D, the main divisions, all the corporate divisions, and the European divisions are here. However, we very rapidly expanded into US obviously, which was after Europe our second biggest market, and then Asia on a regional basis. It's 16 commercial offices and 16 plants worldwide. Today you think of us as 3 regions. So 3 main continents. So US, Europe, and Asia. Within these, we have located antennas that act as our commercial offices but also that are situated in the markets to understand the brands, the clients, the distributions, the trends, you name it—so deep rooted into what the actual regional needs are, in contact with over 700 clients worldwide. And then [00:05:00] funneling what the needs are of these markets and clients to a global head, which then redirects to the regional labs. So through the 11 labs, then actually develop products on a regional basis.
Arabella: So to make an example, Korea formulates complexion for the Asian markets. It's not Agrate headquarters R&D, which formulates for Asia, but it is Korea and China that formulate for Asia. So then these products are then made on a regional level. So all of the technologies, the equipment, the machines are all delocalized. Formulations are transferred, technologies are transferred. So today we can produce the same formulas across the world, across the 16 factories with the same machines, the same ingredients, the same raws. It is very, very complex. So technology is born here in Agrate through the global R&D centers. It is then passed on to the 11 R&D centers in [00:06:00] the world. They will understand the local need, develop formulations, which then are produced in their regions. All center, all sort of directed from Italy.
Deanna: Wonderful. That's amazing. Now, listeners to the CosmoFactory podcast know that we like to talk about how ideas become innovations here. Um, in an earlier conversation, you mentioned one of your most iconic products. I believe you described it to me as a long wear, food-proof lip gloss with high shine and comfortable wear.
Deanna: Can you help me think about the idea for this product, um, that the original concept, but as well, maybe some of the challenges that your team had to overcome to make it a reality?
Arabella: Okay. This was one example. I wouldn't call it the most iconic product.
Deanna: Thank you for correcting me.
Arabella: No, you asked me for an example of how we identify market need, and then we develop ingredients, um, to actually that ingredients to create it and to beat the performances of what is on the market. So that was the example.
Arabella: So back, [00:07:00] While ago it wouldn't, it was not conceived that a consumer would use two products to get to a finish. And so a big multinational company launched a double ended lip gloss, lipstick - lip gloss two step, and patented it. So the market could not have it. So back then, we had to begin by, okay, there was a need on the market. How do we overcome the patents? And so developed certain polymers that could actually get to that result and improve it. We did to get a similar product; and then we opened the market up and obviously supplied it to all.
Arabella: But if I may say the most iconic product, if I can make, really, one of the big examples, Intercos is known for powder production and has always been leaders in powders. That's how we started back 50 years ago. At a certain point, you know, a powder is just a powder and there's however much we do in terms of treatment, [00:08:00] treatment of ingredients, treatment of raws, coatings, ingredients, it was still a powder.
Arabella: So at one point, the powder business was also sort of slowing down. And we invented, created, ideated a new structure, which we call it Prisma, which is a new technology we invented about 10 years ago, which actually generated a new category on the market, which was a powder that was positioned in between—using all of the existing technologies—but positioned as a new category in between a cream product, a pressed product, and a baked product.
It was taking all the expertise that we had across all the technologies and generating a completely new structure, which generated a new category on the product on the market.
Arabella: It was the first gel powder. So we incorporated a gel in a powder, which had never been done before because the powder [00:09:00] is normally composed of dry excipients, of powders and binders, which are oily substances which hold the powders together. So we substituted by using a new transformation process, a new manufacturing process, we were able to incorporate gel.
Arabella: So that was one of the biggest innovations that we had, which we have, which we've patented because we were leaders in powders. Then the lipstick example I made you is also is sort of overcoming a hurdle of a patented product where consumers really needed, really wanted that type of performance.
Arabella: And we've taken that further and further and further, in the sense the long wear category today is [such that] you can have a long wear, no transfer, high shine lacquered product in one. So from when we developed ingredients and polymers to actually get the performance in two steps; today it's actually possible through the continuous research in ingredients to actually get the same performance in one [00:10:00] product.
Arabella: So this for us is a never ending process.
Deanna: Yeah. No, I love it. I love both of those examples. Thank you. And thank you for sharing the powder example. That's super impressive. Both of those products. Also seem to, um, you know, address some market demand, but really, I would say, create new consumer expectations, right? Of what's possible with a product.
Deanna: What is your involvement there in terms of working with your partners, maybe to educate consumers or, you know, to help change gesture and application practices? Are you involved in that piece of it?
Arabella: So it's our constant quest to think of new products, new categories, new applications, new packaging, everything that's around the use of makeup. Of course, our priority would always be linked to the formula. Our strength is that of the formula, less of [00:11:00]…and less of delivery.
Arabella: However, we do have categories that use deliveries a lot, such as pencils and mascaras and liners and sort of that category. So within that category, yes, we do try to continuously add new formats, new shapes, whether it's for brow, whether it's for lining, whether it's eye lining or lip lining, but that's really very much packaging driven, which of course is important. And of course it will be part of our creative process, design process, packaging, scouting, packaging development, packaging designing. So absolutely we do all that. However, then we work with outside vendors that will manufacture. Our strength always lies in the actual ingredients, formulation, and performances of the makeup product.
Deanna: Amazing. Thank you. You mentioned earlier how, um, international [00:12:00] the Intercos team is. Can you talk a little further about how you're formulating products that have regional relevance? How are you addressing the variations in markets around the world?
Arabella: Oh my God, today there is so much variation and we just come out of a two-week round table with all of our markets. It is so exciting because we have all of our marketers, which work for months around presentations to tell our R&D centers and our corporate marketing here what their needs are.
Arabella: And, what actually results, what actually the outcome is, is that trends are global, of course. Trends travel very fast and they are global, but never like before. There's a real need to interpret the trends from a very local standpoint. I mean whether it's the habits, the culture, the traditions of every region, everything from the [00:13:00] climate, from what we eat, from what we do, from how we live our livestyles.
Arabella: I mean, it impacts so much what we put on our faces and how we do our makeup. So even if you take foundation, I mean foundation is so different from Asia to Europe to US. We'll all be looking for long wearing foundation or antiaging foundation, but the actual characteristics of that foundation have to be incredibly different.
Arabella: So this is what we learned from the regions, not only foundations on lipsticks, on powders, I mean, you name it. So it's really important to understand what the product, I mean foundation has an objective that of covering imperfections; powders have a mission of mattifying, but within that, then to go deep and understand the market, the consumer you're targeting, the brand, the branding, the brand you cover.
Arabella: I mean, there's so much more, you know, to actually then going in [00:14:00] and developing the product with the region. So that's the part on formulation. On the trends, we host once a year our beauty event here in Agrate where we showcase our trends for the upcoming year and a half.
Arabella: So right now we're working on trends for ‘26, and we'll be showing them here in March ‘25. And that is a wonderful story of how we've developed an internal trend team, which is dislocated across all the regions. And there's very varied people that are part of that. And they're the ones that continuously research to anticipate the trends and they're so capable of creating newness out of what is there today. Because data gives us what is there today, we have to take the data and take the information and evolve it and project it and sort of think forward. [00:15:00] It's very important to have a team of people that really are able to have a vision and project ideas and concepts into the future.
Arabella: And again, future is short term, medium term, and long term. So innovation from a formula standpoint will project me to long term innovation. So long term, what is my foundation in three years? Trend concepts really helped me to position products to what consumers or my brands are looking for short to medium term.
Deanna: Yeah, no, thank you for that distinction. That's super important, it's very helpful. Um, I did promise everyone listening that you and I would also talk a bit about ingredient development. I believe, uh, it was this year actually at CosmoProf Worldwide Bologna that you, announced a partnership with the skincare brand called Amarey that is very much devoted to valorizing every bit of the coffee plant.
Deanna: I'm hoping you can talk about, um, how you're working [00:16:00] with that company and, and what you've created. I know they work, um, hand in hand with the team at illycaffè.
Arabella: Yes. So this was an example of our open innovation that we started a number of years ago. So open innovation for us is part of our R&D innovation system whereby we scout outside for technologies that we do not cover in house.
Deanna: Sure.
Arabella: So in this case, we know that in the last, I would say five to seven years, eco design has been, you know, sort of eco design, sustainability, clean, has been the main focus to drive all of our innovation.
Arabella: So when we found Illy. It was part of our brief to find companies within the open innovation system that would allow us to use ingredients that were a byproduct or a waste [00:17:00] of other industries. So they had started to work on a byproduct of roasting coffee, which actually turned out [to be] an incredible success because, uh, by this ingredient that they gave us, so it's the silver skin ingredient, which holds emollients, which gets discarded, just gets wasted during their toasting process.
Arabella: By giving us this ingredient, the oils and the emollients within this peel actually turned out to be great excipients in makeup. We would never have thought so. The peel of coffee that gets thrown away when given to the food chain, reused in powders turned out to give us the most emollient, creamy, comfortable powders and substitute binders like [00:18:00] never before.
Arabella: And on top of it, allowing us to be clean, sustainable, and natural. So this is just one example because we're doing it with tomato skin. We're doing it with avocado peels. We're doing it with lemon peel…not avocado, but lemon. We're doing it with other ingredients. So this is a real strive that we started a number of years ago; and it's really proving successful, whereby we are able to substitute a very high percentage of our ingredients with natural blends and byproduct ingredients in makeup. But it's actually proving to be better than before. Because to be natural, to be clean, if you end up having a product that's not as good as it was before, you know, we're still makeup users and we're still makeup lovers and makeup junkies. So it needs, I mean, fine, we can claim natural for the [00:19:00] for the non makeup user, but for the makeup user, you want those performances and you want them right. And where we've gone, the level we've gone to actually, it's phenomenal because it's actually improving the previous performances.
Deanna: Yeah, yeah. No, that's amazing. That's amazing. Um, and I think it's so important to that a manufacturer like Intercos is working with new ingredient innovations, um, and working hard to partner with companies, maybe to develop those, but also to bring them in for your customers. I hear so often from brand leaders, um, as well as from ingredient suppliers throughout the industry, how difficult that sort of adoption of new ingredient innovations is.
Deanna: And, you know, even just it sounds like, you know, looking for benefits and opportunities, you're facilitating that.
Arabella: Well, we also have a raw material lab, which we've had for the past 25 years; and again, because we soon enough realized that to [00:20:00] innovate, not necessarily could we get all the ingredients that we needed. And so at some point we had to be creative in house and start developing, more than developing but modifying, treating, coating, or actually developing certain ingredients that we couldn't find in the market.
Arabella: So that's what's really differentiated us from a lot of the competition, but also makes us a point of interest for the brands; because when you manufacture a new ingredient, you need to have a certain number of brands that you can sell it to, and they can't invest in-house, you know, for one brand alone, it makes complete sense.
Arabella: So the idea for us to be so active in sourcing new ingredients and having these type of collaborations is also because we have a very active raw material lab, which not only scouts, but is also doing our own [00:21:00] developments. Then we also have our joint lab. We have joint labs with universities—joint lab with universities is also working in the biotech world. They're also bringing us technologies from other fields. We have a lab up in the Netherlands in Maastricht, also working in a biotech environment. So we're also working with scientists and chemists that are not in cosmetic or in pharmaceutical but are in other fields that also bring in technologies. So opening up to all this: Maastricht, Bicocca University, joint labs, open innovation, all that in a very integrated system, you know, never losing focus.
Arabella: One is makeup, knowing which categories are our main and knowing what regions are our main and what customers we need to address. It's really, really integrated and focused in order to get relevant innovation.
Deanna: Yeah. No, it's so impressive how integrated your company is, but also so intentional with these, you know, other aspects that we might think of as outside of your specialty, but you've, you've really, you know, taken so much on it's, it's really impressive.
Arabella: Thank you.
Deanna: Yeah, um, we did touch more on sustainability there at the end with your ingredient partnerships.
Deanna: Um, because many, many that you mentioned seem to have to do with what I would think of as upcycling, but I'm wondering, as we wrap up our conversation here, if there are any other environmental sustainability initiatives that you'd like to share.
Arabella: I can talk to you about again about sustainable…all the effort that we've done in terms of all the changes in legislations that have happened that are happening in the last years concerning talc, concerning microplastics, silicones. I mean, the whole nature of makeup is changing.[00:23:00]
Arabella: The whole configuration of what we use as ingredients in the past hundreds of years is now being put under examination and having to change. So unless you have R&D strength or a strong R&D that's capable of replacing these ingredients, there's not that many ingredients out there that are available to actually reformulate.
Arabella: So I think where our strength is, is having anticipated this, starting before COVID and today having one-to-one replacements and in some cases also overperforming. And all of our products are clean in the direction that the market's asking. So as I said, no silicones, microplastics, and talc.
Arabella: And there's even more that are coming, you know. There's mica, sorry there's silica. There's also more ingredients that are coming that way that we are ready to [00:24:00] substitute. So that's the toughest thing right now that we are facing.
Deanna: Yeah, no, that's, that's important too. A lot of it has to do with customer safety concerns and ingredient replacement. That makes sense. That makes sense.
Arabella: And then changes of regulations across continents, constant raw material discontinuations, client blacklists. I mean, formulating today has become very complex; and again, unless you have a very strong focus on ingredients, regulatory ingredients, and working together to try to overcome these, it's making complexity even bigger.
Deanna: Yeah. Yeah. No, there certainly are a lot of formulation challenges these days. I appreciate that.
Deanna: And in an earlier conversation, you told me that Cosmoprof Worldwide Bologna has been an important show for Intercos over the years. Please tell us about that.
Arabella: Yes. No. So I've only been here 30 years, but we started coming well before I came here, say it's about 40 years that if not more, 40, 45 years that we gone to Cosmoprof. And when we started, this is an anecdote, my father had to move his actual furniture because, you know, we didn't have means.
Arabella: So whenever, you know, for him to be known and for him to get visibility at the time, he would actually take his furniture, his desk, to Cosmoprof and showcase. So we've come a long way from there. He was in a very visionary mind. So he came a long way. So I think Cosmoprof for us really represents the most important show, cosmetic show in the world.
Arabella: It's the one place where you have to be. It's the one place where it really brings together all of the industry. It has gone to very high levels. It has really become, you know, an exquisite professional [00:26:00] and very high standard show. We traveled to a few other ones, so we can really see that this one is, you know, that this one really stands high in terms of image.
Arabella: Having said that, for us at one point, we backed out for about 10 years, but only because we really wanted to invest here in terms of showcasing and really getting the customer one-on-one and working one-on-one, having more time. But then we went back, we went back and [are] very happy to be back.
Arabella: And it is the only place where you actually meet new customers, new opportunities, but also you see, you actually see the whole industry, which for us is fundamental. Even seeing our competition helps, meeting our competition, being friendly with our competition, that also helps. So it is the one show not to miss.
Arabella: It's the one place to be. [00:27:00] And I think we'll always do it. I think Europe has really, Italy and Europe has really developed as, you know, the number one show in the world.
Deanna: Arabella, we've learned so much from you today. Thank you for joining me on the CosmoFactory podcast. [00:28:00]