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O Boticário Surpasses McDonald’s to Become Brazil’s Largest Franchise Chain

By: Fernanda Bonifacio
Posted: July 9, 2012, from the August 2012 issue of GCI Magazine.
O Boticário store

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With a presence in Brazil for more than 50 years, L’Oréal offers the market 23 product lines, 95% of which are produced locally. The French group is also investing in R&D, aiming to manufacture raw materials for cosmetics and perfumes at L’Oréal’s new research center in Rio.

“We will invest R$150 million in infrastructure over the next two years, of which R$70 million will be exclusively directed toward the research center,” says Didier Tisserand, president of L’Oréal Brazil since September 2011. In the wake of a slowdown in traditional markets, Brazil has gained momentum and is now L’Oréal’s largest market for hair care products.

Belcorp to Invest in Brazil

Peruvian direct sales company Belcorp will invest US$200 million in its Brazilian operations through 2015. After spending three years assessing the market, the third largest cosmetic company in Latin America will enter Brazil to compete against direct sales giants such as Natura and Avon.

Owner of brands L’Bel, Ésika and Cyzone, Belcorp projects revenues of R$400 million in the next three years, with 200,000 consultants on board. Currently, Belcorp imports most products, with a small number outsourced and manufactured in the city of Jundiaí, in the state of São Paulo. But to meet the expected demand, Belcorp plans to open its first owned Brazilian plant, where around 80% of the products would be manufactured.

Belcorp currently operates in 16 countries, and the delay in entering the Brazilian market is justified by the company’s expansion model, which prioritized countries culturally similar to Peru. Belcorp’s operations are primarily concentrated in Latin America and the U.S.

Professional Market Study Assesses Product Use

ABIHPEC (Brazilian Association of Cosmetics) and Sebrae (Brazilian Service of Support to Micro and Small Enterprises) have formed a partnership to conduct market research on beauty salons throughout Brazil and to create a list of recommendations for the segment.

The main goal is to assess behaviors related to the use of cosmetics by beauty professionals and their clients. It is estimated that retail products account for 10–30% of salons’ revenue.

A commission has been created to propose specific rules for salons in topics such as education, management, building installations, environment preservation and safety. A law that recognizes the practice of activities such as hairdressing, beauty therapy and makeup artistry is also in line to be approved.

Hypermarcas Installs New Leadership

Former president of Nivea Brasil Nicholas Fischer was hired by Hypermarcas to take over its consumer division, which markets personal care brands such as Monange, Bozzano and Risqué.