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Author’s note: Euromonitor, Mintel and ABHIPEC will present during the trends presentations portion of the 2014 in-cosmetics event in Hamburg, Germany, taking place April 1–3, 2014. Additionally, Brazil will be the first Country Focus for in-cosmetics, taking place at the same event.
Brazil is now the world’s third largest beauty market, according to Euromonitor data for 2012. Valued at $42 billion, it is beaten only by the U.S. (valued at $69 billion) and Japan (valued at $47 billion). And leading the world’s markets in perfume and deodorant sales, Brazil is second in hair care products, men’s and children’s products, bath and shower products, and depilatories and sunscreen; third in color cosmetics and oral hygiene products; and fourth in skin care.
Though growth of the beauty market in Brazil has slowed in line with other major markets lately, there still are some key factors behind the country’s expanding importance. There is an increase in working women who have more disposable income for beauty products and who use such products to look presentable in the workplace. Life expectancy also is increasing in Brazil, as is the trend for cosmetics, which help consumers preserve a youthful appearance. Meanwhile, the country’s beauty industry has been changing and growing in sophistication, leading to increased investment in new products and formulations, as well as in productivity through the use of new technology.
According to ABIHPEC (the Brazilian cosmetic, toiletry and fragrance association), during the past 17 years, beauty industry growth has far outstripped that of general industry in Brazil and the country’s GDP. The Brazilian beauty market grew by 10% 1996–2012, compared to 2.2% for general industry and 3% for its GDP.
Exports are a key contributor to Brazil’s industry growth, averaging 14% annually the past 10 years. Most exports were to other South American countries, led by Argentina, Chile, Venezuela, Mexico and Colombia. In 2012, the largest category of exports was hair care products and oral hygiene products, both valued in excess of $145 million.
Currently, imports of cosmetics, toiletries and fragrances to Brazil are greater than exports, and were worth $1.037 billion in 2012, according to Aliceweb (Análise de Informações de Comércio Exterior-Web, the official website of the Brazilian government for its foreign trade statistics). Deodorants represent 75% of imports from Argentina, while skin care creams account for 24.2% of U.S. imports, 54.2% of fragrance imports come from France, and 26.1% and 38.6%, respectively, of toothpastes originate from Mexico and Germany.
The Brazilian beauty market also is extremely fragmented as far as product companies are concerned, with 2,392 companies and brands competing against each other in the country—mainly in the southeastern corner of the country, which is dominated by São Paolo and Rio de Janeiro. According to ABIHPEC, the largest 20 companies posted net sales taxes of more than R$100 million, representing 73% of total invoicing.
In terms of distribution, there are three main channels: traditional distribution, which includes wholesale and retail stores; direct sales, based on the home sales concept; and franchising, which includes specialized and personalized stores. ABIHPEC notes that the largest growth in job opportunities has come from direct sales, with the numbers of consultants increasing by 514.1% between 1994 and 2012, reaching a total of 3,132. Both Avon and Brazilian-owned Natura are major employers of direct sales consultants, and command large portions of the country’s attention in beauty products.
According to Mintel, there have been 22,489 beauty launches in Brazil in the past five years, and opportunities for new products are increasing as recognition that regional differences in hair types, for example, are very pronounced. Due to the country’s mixed race demographics, there is no such thing as a typical Brazilian hair type—it can be straight, curly, wavy and/or mixed.
Beleza Natural, a beauty salon chain based in the Rio de Janeiro state, targets regions with higher proportions of black or mixed race people. In 2013, the company launched a major branding initiative to celebrate Carnival, inviting consumers to take part in its “Bloco das Cacheadas,” or Curly Hair Carnival group.
More than a third of consumers interviewed by Ipsos Observer Brazil/Mintel said they look for hydrating formulas in hair care products. And according to Mintel’s GNPD data, the industry has been meeting this demand over a three-year (2009–2012) time span, with 50% of Brazilian hair care launches making this claim.
Anti-frizz is the third-most popular hair care claim attracting women in Brazil, mainly in the 16–34 age group. Anti-frizz is a claim often found in shampoos and conditioners but also is a growing claim for leave-in products such as oils and serums. And portable products, such as L’Oréal’s Extraordinary Oil Sublime Treatment, work well as beauty accessories for Brazilian consumers.
It is estimated that Brazil holds between 15–20% of the world’s biodiversity, but less than half of it has been mapped and researched. This means there is still a lot of room for development and innovation.