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Is Mexico a Mature Market?

Cristina Kroll

Although Mexico is one of the key markets for the cosmetics industry in Latin America, it is predicted to see the weakest growth of the region in the next five years. A drop in demand and low prices in the sector are thought to be the causes.

It is expected that Mexico’s cosmetics industry will grow by 4.6% between 2013 and 2018, going from a market value of $10.8 billion in 2013 to $13.5 billion in 2018.

In contrast, sales of cosmetics in the rest of Latin America are expected to see an average annual growth of 7.2% for the same period, led by Brazil, (9.3%), Bolivia, (8.8%), Guatemala, (7.5%), and Peru and Venezuela (7.4%). By 2018, the market value in Latin America will reach $111.8 billion. It is expected that sun care, hair removal, male grooming, baby care and dental care products will see the highest demand in the region over the next five years.

According to Euromonitor International, consumers in Latin America are also demanding products with multiple benefits, such as anti-aging foundations, nail polish with UV filter, and moisturizing bath products.

Peru’s Luxury Cosmetics Market to Hit $150 Million

The Peruvian luxury cosmetics market grew at a rate of 20-25% 2009-2013, according to estimates provided by The Estée Lauder Company. Esteban Antonijevic, country manager of Estée Lauder in Peru, told the newspaper El Comercio that the market is achieving annual sales of $150 million.

He also explained that, in spite of the significant growth shown in the last years, the luxury cosmetics market in Peru is behind Chile or Argentina, with $200 million and $350 million in annual sales respectively. According to the figures provided by Antonijevic, the demand is led by fragrances, accounting for 60% of sales, followed by makeup, a segment growing at a rate of 15%.

Antonijevic foresees that the luxury cosmetics market in Peru will continue growing by 20%, and that it will be bolstered by the country's economic stability and by the launch of new brands.

He announced that Estée Lauder was planning to launch the Coach line of fragrances in Peru in 2014 and Bobby Brown in 2015. He also said that the company would launch a Michael Kors makeup brand in 2015.

Latin American Regulatory Agreement

Chile, Colombia, Mexico and Peru (members of the Pacific Alliance) are working to build regulatory compliance for cosmetics. A statement referring to this commitment was made at the IX Pacific Alliance Summit held June 19, 2014.

On the basis of this statement, it is expected that governmental authorities will begin to change the regulations currently in force in the four countries. According to the Board of the Council of Associations of Latin American Cosmetics Industry (CASIC), this change and its results will become a regional and global benchmark for future regulatory matters in the sector.

CASIC states that this new regulatory cooperation will simplify the trade of cosmetic products among the members of the Alliance and open opportunities to work on similar initiatives with the 32 countries that participate in the Alliance as Observer States.

The presidents of the participating countries [Enrique Nieto (Mexico), Michelle Bachelet (Chile), Juan Manuel Santos Calderón (Colombia) and Ollanta Humala (Peru)] signed a Presidential Statement, which among other things, urges the countries to “formalize agreements on regulatory cooperation for the cosmetic sector.”

Uruguay: Nail Care & Natural Products

The total sales of cosmetics products in the Uruguayan market reached $469.2 million in 2013, an increase of 9.6% over 2012, according to research from Euromonitor International and published by the Uruguayan newspaper El País. Growth in earnings exceeds that of volume due to an increase in sales of the most expensive products.

Euromonitor said the main trends in Uruguay’s cosmetics industry were the growth of products focused on nail care, the innovation in anti-aging products and the use of natural ingredients.

Euromonitor highlights that the nail care category is doing better than others, as the portfolio of products in this sector continues growing with the incorporation of new formulas and increased advertising efforts.

The report also explains that consumers are changing their ideas about nail care products, and are now using them as fashion accessories that complement their personal style. According to Euromonitor, this trend is also growing in Argentina, where nail polishes are taking the place of lipsticks as impulse buys.

Euromonitor’s report points out that, although the Uruguayan market is still led by international companies such as Unilever, Colgate Palmolive and L'Oréal, local companies are developing products based on regional natural ingredients to differentiate themselves from other companies and attain a better standing in the market. Such is the case of Grinlab, which has created a niche space based on products made from the marcela plant.

Boots Acquires FASA

In May 2015, British retailer Alliance Boots took its first step into Latin America with the $638 million acquisition of Farmacias Ahumada (FASA) from Mexican company Casa Saba. FASA, with around 400 stores, is one of the three largest pharmacy chains in Chile (the three chains controlling 80% of the Chilean market).

“This acquisition gives Alliance a major presence in the attractive Latin American market, one of our priority areas for investment," said Stefano Pessina, executive chairman of Alliance Boots. "It is also a further step toward reaching a truly global footprint.” 

New Beauty Chain in Argentina

Farmacity, the largest pharmacy retailer in Argentina, has launched its own cosmetics chain. The enterprise, Look, is comprised of small stores specializing in makeup and nails that allow consumers to try the hottest trends in makeup, nails and fragrances.

Look started as tiny counters located inside shopping malls, but, since December 2013, the company has been opening free-standing stores. As of July 2014, it had seven doors in Buenos Aires, along with five points of sale in shopping centers.

All locations are focused on mass products, and feature beauty counters called "Get the Look" where women can test makeup, a fragrance bar featuring perfume testers, a skin bar that offers facial products, and a nail studio that features polishes and nail art accessories.

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