The Italian perfumery sector keeps growing. In 2024 the channel posted a 9.5% rise in sales, with total consumption above 2.77 billion euros.

Not bad for a market that, at first glance, might look like it's only about personal pleasure. In reality, behind a fragrance, a face cream or a make-up product there's a lot more: identity, status, the wish to feel well, the search for a small reward, and often a healthy dose of impulse.

Fragrances remain the undisputed protagonists, taking by far the largest share of sales in physical stores. Translation: perfumery is still one of the few places where the customer wants to try, smell, compare, ask for advice, and maybe talk themselves into believing that yes, this scent is who I am.

Online is growing too, especially for fragrances and make-up, while skincare shows signs of slowing. That doesn't mean people have stopped looking after themselves. More likely they've become more selective. Or they've finally worked out that you don't need seven different serums before bed.

The outlook stays positive, with the sector expected to keep growing through 2025 and 2026, pushing total consumption past 3.1 billion euros. Economic uncertainty is still a factor, of course. The customer may love accessible luxury, but the weekly shop keeps reminding them that reality exists.

The generational split is interesting.

For Gen Z, fragrance and make-up are tools of self-expression. I'm not just buying a product: I'm building an identity, saying who I am, changing style, communicating something.

For older buyers, perfumery keeps a stronger link to status, self-care, wellbeing and perceived quality.

Two different logics, same result: beauty remains a very powerful language.

Another notable phenomenon is the so-called "hour glass effect'. The market is polarising. More accessible products are growing at one end, premium and luxury at the other. The middle is left in the most uncomfortable position: too expensive to be a bargain, too undistinctive to be desirable.

In this landscape, perfumery holds a specific role against other channels. Supermarkets and pharmacies work on range and volume. Perfumery lives on specialisation, advice, experience, and the ability to give weight to categories with high emotional content, like fragrances and facial skincare.

The conclusion is simple: perfumery is not just a sales channel.

It's a small laboratory of contemporary consumption.

Where desire, identity, accessible luxury, premiumisation and the need to feel, at least for a few minutes, slightly better than the version that walked in through the door, all meet.

There comes a specific point in the life of some SMEs.

It is not when the company was founded.

It’s not when the first important client turns up.

It’s not when the first foreign market opens.

It is when an investor asks:

“Do you already have an ESG risk assessment?”

Silence.

Downcast eyes.

Someone is coughing.

Then, as usual, comes the immortal line:

“We’re working on it.”

Which translates as: “We have a page on our website that says ‘sustainability’ and perhaps features a photo of a forest.”

The problem is that these days, ESG is no longer just the ‘let’s look good’ department.

It’s not the green sticker.

It’s not the leaflet with the child, the tree and the sunset.

It’s not even the sort of word you’d put in a company profile when you’re two lines short of filling the page.

ESG is far more annoying.

Because he asks questions.

Simple questions, but unpleasant ones.

Tipo:

• Who really calls the shots in the company?
• What happens if the founder goes missing for two weeks?
• Are suppliers assessed or selected using the ‘lowest cost’ approach?
• Do key staff members stay because they are motivated, or because they haven’t updated their LinkedIn profiles yet?
• Can we back up what we say about sustainability, or is it just a leap of faith?
• If a bank, a fund or a major client comes along, do we come across as solid, or do we come across as ‘heroic in an artisanal sort of way’?

That’s the point.

Many Italian SMEs are extremely good at making products.

Much less at to make it clear how they work.

They have qualities, connections, skills and business acumen.

But ultimately, governance is down to the owner.

The supply chain is in an Excel file called “final suppliers – the very last 3”.

These traditions are passed down orally, just like Greek myths.

Sustainability is “we’ve always done these things”.

And perhaps that’s true, too.

But in the world of investors, banks and major clients, ‘trust’ is not a metric.

“We know that” is not an indicator.

“I’ve never had any problems” is not a risk management system.

And this is where ESG comes into its own.

Not because it turns the entrepreneur into a climate activist with a stainless-steel water bottle.

But because it forces the company to take a hard look at itself.

And to ask oneself:

Are we really well-organised?

Are we really eligible for funding?

Are we really scalable?

we really are ready for an industrial or financial partner?

Or are we simply very good at surviving, thanks to three key people, two long-standing suppliers and a worrying amount of WhatsApp?

For an SME, working on ESG does not mean striving for perfection.

It means becoming easier to understand.

Tidier.

More justifiable.

More credible in the eyes of those who have to invest money, credit, reputation or trust.

Because, at the end of the day, ESG isn’t going to save the world in the next quarter.

More modestly, it serves to prevent the world — banks, customers, investors, regulators, the supply chain — from saving itself at our expense.

The moral of the story: sustainability is no longer just the smart outfit you put on when an investor comes round.

It’s more like having your car serviced.

You can also postpone it.

But don’t complain if they stop you.

In private equity, the add-on acquisition is one of the most widely used value-creation strategies.

The theory is simple.

You acquire a platform company.

Then you buy smaller businesses that fit the strategic vision.

you integrate them.

you create the synergy.

You grow.

You improve margins.

You expand into new markets.

A few years later, you sell the group at a higher multiple.

Everything looks neat and tidy.

Especially in the pitch deck.

In reality, add-on acquisitions are fascinating transactions—but they're far less automatic than they're often made out to be.

Because buying a smaller company and bolting it onto a larger one doesn't automatically create value.

Significa, prima di tutto, creare complessità.

More customers to manage.

More suppliers.

More systems.

More people.

More ways of doing things.

More exceptions.

More Excel files called "Final_Version_Updated_Really_Final.xlsx."

And, quite often, more founders convinced that their way of doing business is the only thing standing between civilization and the collapse of Western capitalism.

That said, when executed properly, an add-on strategy can be an exceptionally powerful growth tool.

It allows companies to accelerate expansion without starting from scratch.

It can provide access to new markets, broaden the product or service offering, acquire new capabilities, strengthen distribution, increase market share, and improve operational efficiency.

It's particularly attractive because it often requires less capital than a new platform acquisition while delivering value more quickly provided the acquiring platform already has the right organizational structure, management team, and operating processes in place.

The key word, however, is provided.

Provided there's a clear industrial strategy.

Provided the platform company is genuinely capable of integration.

Provided the synergies are real rather than cosmetic.

Provided the corporate cultures don't repel each other like two magnets facing the wrong way.

Provided management doesn't underestimate the fact that even a small acquisition can create very large headaches.

The most common mistake is thinking that an add-on is a shortcut.

It isn't.

It's a lever.

And like any lever, used well it moves weight. Used poorly, it ends up hurting the person pulling it.

For SMEs, this is a particularly relevant topic.

Many Italian businesses—especially in highly fragmented industries—could become ideal add-on targets: companies with strong products, specialized expertise, valuable customer relationships, defensible niche positioning, or a solid regional presence.

But to become genuinely attractive, generating revenue isn't enough.

A business has to be understandable.

Its numbers need to be clear.

Its processes need to be documented and scalable.

Its management team needs to inspire confidence.

Its customer base needs to be defensible.

Its margins need to make sense.

And, ideally, the entire organization shouldn't depend on the founder answering 97 WhatsApp messages every single day.

Per un fondo o un acquirente industriale, l’add-on non è solo comprare un pezzo in più.

It's about building a system.

And systems only work when the pieces fit together.

Otherwise, it isn't a growth strategy.

It's just a collection of companies sharing the same logo.

Which is a very different thing.

And, more often than not, a much more expensive one.

There's a moment in every M&A deal when everyone looks very pleased with themselves.

The price has been negotiated.

The contracts are signed.

The advisors have produced documents roughly the length of a small encyclopedia.

The closing has happened.

Toast.

Photo.

A press release with words like "synergies," "growth," "shared vision," and "a new phase of development."

Then Monday morning arrives.

And two companies that were happily ignoring each other until Friday are suddenly meant to be "one team."

Spoiler: it doesn't always work out.

Because cultural integration is the thing a lot of people discover after they've already bought the company.

A detail.

Shame that the "detail" can quietly wreck productivity, morale, talent retention, client relationships, and the numbers.

In theory, the buyer has acquired turnover, profit margins, expertise, the brand, the customer base and growth potential.

In practice, they also bought:

entrenched habits;

corporate egos;

unspoken fears;

managers who don't want to lose power;

employees who have no idea what's going on;

incompatible processes;

opposite ways of making decisions;

meetings that used to take 20 minutes and now need 14 people, 3 calls, and minutes for the record.

That's company culture.

Not the values charter hanging in the entrance hall.

That one mostly gets read by candidates waiting for an interview.

Real culture is how decisions get made, how people communicate, how mistakes are handled, who gets listened to, who actually counts, what gets rewarded and what gets tolerated.

And when two cultures collide, the merger risks turning into a forced cohabitation.

An arranged marriage, but with more spreadsheets.

The common problems are well known.

Incompatible values.

Resistance to change.

The loss of key people.

Confused communication.

Quiet wars between functions.

Clients who sense the disorder before the company has even admitted it has any.

All while someone keeps repeating: "It's just a settling-in phase."

Sure.

A fire also looks like a bit of smoke for the first five minutes.

The truth is that most M&A deals don't fail because the industrial logic was wrong.

They fail because nobody actually managed what came next.

The balance sheet was studied. The behaviour of the people was not.

The warehouse was checked. The level of trust was not.

The client book was analysed. The risk that the best managers would walk the moment the lock-up ended was not.

Due diligence was done on everything. Except the culture.

And yet solutions exist.

Before the deal, you need to understand where the two companies fit and where they don't.

During the deal, you need to communicate clearly. Not with slogans, with concrete answers.

Following the transaction, integration must be managed as a genuine industrial project, not as a side effect of the deal’s completion.

It takes leadership, listening, method, clear accountability, and a certain amount of realism.

Because "integrating" doesn't mean stacking one org chart on top of another.

It means deciding what kind of culture you want to build.

Above all, it means ensuring that neither of the two companies feels absorbed, sidelined or simply tolerated.

Ultimately, M&A isn’t just about buying a company.

It is about persuading people who have not chosen to be together to work towards a common goal.

And that, frankly, is often harder than the contract.

Because that’s why you sign the contract.

Culture, on the other hand, is not something you can simply sign off on.

We need to make it work.