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By: Fernanda Bonifacio
Posted: November 30, 2011, from the December 2011 issue of GCI Magazine.
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Drugstore chains Drogasil and Droga Raia have reached an agreement to combine their operations into a single company. With the merger, Raia Drogasil has become the largest drugstore chain and the seventh largest retailer in Brazil.
The agreement exceeds the giant formed by the acquisition of Drogão (fourth-leading drugstore chain in the state of São Paulo) by Drogaria São Paulo in June 2010. Together, Drogasil and Droga Raia account for revenues of R$4.1 billion through 700 points of sale. According to Euromonitor International, the new company should hold a 9.5% market share of the Brazilian drugstore channel, which totaled about R$43 billion (on average in 2010, R$76 billion) in 2010. Experts say the merger will allow the company to leverage its purchasing power on its suppliers.
P&G; Unilever Aerosol Deo Production Moves to Argentina
The world’s largest consumer market for deodorants, Brazil is likely to move much of its aerosol production to other Latin American countries by 2013. Due to high manufacturing costs, companies such as P&G and Unilever have been producing aerosols in Argentina and importing large volumes to meet the Brazilian demand.
Over the past 10 years, the import of deodorants increased 500% in value, and approximately 82% of all aerosol deodorants sold in Brazil are currently manufactured overseas. Data from Nielsen shows aerosols account for 57% of the Brazilian deodorant market, which recorded sales of $2.28 million in 2010 (on average, $4 million in 2010).
The production migration is mainly due to raised taxes and high prices of components such as propellants. The Brazilian Association of Aerosols and Sanitizing Products (ABAS) estimates Brazil has lost 9,000 jobs in recent years due to the closure of aerosol factories.