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Beauty Sales Post Greatest Growth in Volume Terms in Five Years

By: Fernanda Bonifacio
Posted: March 2, 2012, from the March 2012 issue of GCI Magazine.

At the end of 2011, Brazil’s beauty market grew 7.3% in volume terms, the largest recorded in the past five years by the Brazilian Association of the Cosmetic, Toiletry & Fragrance Industry (ABIHPEC). In value terms, however, the increase (9.3%) was the lowest in the period.

“With the relatively low growth in value terms, we conclude that the industry had to do many promotions to boost sales,” said João Carlos Basilio, president, ABIHPEC, who also noted government concern about inflation led Banco Central do Brasil (Brazil’s central bank) to raise benchmark rates from January to July, which hampered the growth of the industry.

A survey by the Brazilian Association of Shopping Center Stores (Alshop) shows cosmetics and fragrances were at the top of the list of products sold over the Christmas holiday. Beauty sales rose 18% compared to 2010 while total shopping mall sales increased only 5.5%.

While it is difficult to make predictions due to international economic uncertainties, Basilio believes 2012 will be a positive year for the industry, and sales are expected to keep growing approximately 5% per year through 2015. “By analyzing previous financial downturns, we note that the Brazilian cosmetic industry hasn’t suffered much, whether because consumers believe the products are essential or because they are indulgent in a moment when large expenditures are not allowed,” said Basilio.

Brazil Key Source of L’Oréal Growth; Green Efforts

French beauty giant L’Oréal has 38 plants and 78 distribution centers around the world. In terms of production, its largest industrial plant is located in São Paulo, manufacturing around 370 million units per year, and its current 46,000 square meters of floor space won’t be enough by 2020, when the company plans to reach 100 million Brazilian consumers, double its current reach. At the same time—with a global goal of reducing 50% of carbon emissions, waste and water usage by 2020—L’Oréal has chosen Brazil as ground zero for its energy-saving efforts. Beginning in April 2012, the factory in São Paulo will become the company’s first flex plant worldwide, according to L’Oréal’s director of sustainable development Francis Quinn.

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