Intecos
Intercos is a 1.4bn market cap, family run Italian creator, manufacturer and marketer of cosmetics and skin care products. It is a core long term position for the club. 81% of sales are derived from products, based on formulas developed by the company and then manufactured for their 'partner' customers. With 11 R&D centers and 16 production sites they account for 10% of the outsourced color cosmetics market. 40% of their clients are with the likes of Estee Lauder, 40% with the likes of Kylie Jenner and 20% with retailers' own brands. We like the story because it has multiple growth leavers both externally and internally:
Major brands still have 50% of production in-house, yet the newer brands without the infrastructure, outsource everything as they need a fast time to market. This drives outsourcing demand for the entire sector.
Emerging market penetration is still low. Per head spend in the western world is 160 USD. In India it is 4 USD