There were many smiling faces at the 3-day Opti-München fair, which ended yesterday in modern new fairgrounds with a 25 percent increase in the number of visitors to 31,344 persons - 31 percent of them foreigners. As of Jan. 1, the German government's social security system is no longer giving out subsidies of between €12 and €80 to consumers for the purchase of a new pair of glasses every 3 years, except for children under the age of 18 or for extreme cases. Officials Spectaris and ZVA, the German associations that represent eyewear suppliers and retailers, predicted just before the Munich show that German opticians' sales will decline by between 10 and 20 percent this year as a result, but they changed their minds after the first couple of days of business at the fair, which was much stronger than expected.

Randolf Rodenstock, who chairs Spectaris' consumer optics division, feels that the German health reform will help change people's minds, leading them to consider eyewear more as a fashion accessory and a lifestyle product rather than a medical device that must be replaced every 4 years or so. As the federal government has not been subsidizing the purchase of frames since the first major health reform in 1997, German customers have been simply refitting their old frames with new lenses in one out of 3 cases until last year, with an average replacement rate of 4 years, but this pattern could change now. Some major suppliers at the show indicated that German consumers may be buying all of a sudden more sunglasses, a bit like the more fashion-conscious Italians began to do a few years ago.

Anyhow, in spite of the health reform and the poor economy, German opticians placed big orders at the Opti-München show, partly no doubt because they have now more cash and their inventories are nearly depleted. After the first rumors about the likely abolition of spectacle lens subsidies started to spread last summer, opticians sales enjoyed year-on-year increases of 30 percent in September, 40 percent in October, 60 percent in November and in some cases over 100 percent in December.

The December rush was stimulated in part by news that the federal health care system would only reimburse products sold by opticians before Jan. 1. Intense lobbying by major suppliers and retailers led government authorities to change the regulations and to accept Dec. 31 as the deadline for new lens prescriptions rather than purchases. In fact, the demand in December was so intense that deliveries got delayed by as much as two weeks in spite of extra work shifts and manufacturing even on Christmas Day.

Rodenstock, which experienced increases of between 2.2 and 4 times the normal levels in December, particularly for bi-focal lenses and in Eastern Europe, has given its workers some cash and told them that they can take extra holidays in 2004. For Zeiss, the huge demand from the German market has affected its foreign business, which represents about 40 percent of its sales.

Some big optical retail chains indicate that their business is down by 25 percent from a year ago since Jan. 1, but like with the previous two health reform, the normal growth rate should sooner or later be restored. Anyhow, after a 2.5 percent sales decline in the first 9 months of last year, the 4th quarter brought a jump of nearly 50 percent in their sales, leading them to book an increase of 10 percent for the whole year to €4.35 billion. Sales of contact lenses, which are only marginally affected by the health reform, grew by 3 percent last year in value, with replacement lenses growing to 69 percent of the total market.

For German suppliers, this translated into an estimated 9.1 percent rise to €1.93 billion in their domestic sales of consumer optical products. With their export sales down by 2.7 percent to €1.37 billion, their total turnover went up by 3.9 percent to €3.30 billion, but the number of firms operating in the sector declined from 166 to 161.

The general mood is positive, and like in the case of the previous two health reforms, it's unlikely that many opticians will have to shut down because of the latest one or because of the strong competition from Fielmann. However, German opticians were shocked to hear last Tuesday a statement from the federal health service indicating that consumer will no longer get a standard €7.50 reimbursement for sight tests conducted by the optician. As the government has agreed to continue to reimburse the eye doctors' heavier fees, ZVA decided at a meeting in Munich on Friday to file a legal complaint on this issue.