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Latin America: Beauty, The In Business

By: Briony Davies
Posted: November 7, 2006, from the November 2006 issue of GCI Magazine.

Due to the decline of the Latin American region’s birth rates, the working-age population has seen its income levels rise, hinting at sizeable opportunities for manufacturers who eagerly anticipate stabilized economies. Although poverty remains, income levels across the region have been climbing. In 2005, the average disposable income per capita in Latin America and the Caribbean stood at $2,321—up from only $1,501 in 1990. Growth in Brazil and the stellar performance of Venezuela and Argentina outweighed slightly lackluster sales in Colombia, Mexico and Chile. With forecast growth of almost 30% by 2010, the cosmetics and toiletries industry is set to be one of the beneficiaries of economic development.

The growth of Latin America’s cosmetics and toiletries sales, more than 80% over the last five years, has been driven by a number of factors. Local and multinational direct sellers—including Avon, Natura, O Boticario, Jaffra and Oriflame—have boosted sales through aggressive geographic expansion and marketing efforts. Increasing product segmentation also has played a role, with manufacturers bringing out products for specific age profiles and ethnic groups.

Being characterized by low levels of disposable income has meant that Latin America’s cosmetics and toiletries markets traditionally have been dominated by products that consumers perceive to be essential. Hair care generates the most sales across all countries, except Venezuela. Foreign manufacturers dominate—with Procter & Gamble, L’Oréal and Unilever taking more than 50% market share. Their ascendancy is even more apparent at brand level, with no local players featured in the top 10 hair care brands.

The leading category in Brazil, for example, is hair care—registering 26.2% of cosmetics and toiletries sales in 2005. Constant product innovation and increased use of product segmentation were chief factors in new hair care launches in 2005. Intensive care offerings factored in, due to increasing demand for hair products containing synthetic chemicals such as relaxants and colorants. Unilever completed Dove’s summer lineup late last year with seven products, including an intensive treatment hair mask. L’Oréal turned to nature with the revamp of Garnier Colorama Ultra Natural, promising to extract the best of nature to treat specific hair needs.

While hair care still accounts for the largest portion of the region’s cosmetics and toiletries sales ($7 billion), the past five years have seen skin care march ahead of oral hygiene products in terms of value sales, with sun care as the fastest-growing category.