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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.

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More so than other firms, direct sellers are expected to benefit the most from improvements in the purchasing power of lower-income consumers. This stems from the strong relationship direct sellers build during tougher economic times and their close proximity to consumers.

Natura is expected to enter the Venezuelan market with a promise of quality cosmetics made with fine natural ingredients. Alongside homegrown Belcorp, Natura is in position to capitalize from the improved purchasing power of lower-income consumers. Premium products are expected to remain aspirational purchases for the largest segment of the population. This leaves direct sellers ample room to target and reach lower-income consumers by launching products that reflect the same trends and offer similar benefits as premium products.

Venezuelan consumers are notorious for demanding the latest developments in cosmetics and toiletries. Consequently, multinationals continued to launch products reflecting the latest global trends, such as antiaging. The sectors that saw the greatest dynamism in terms of new launches—hair care, fragrances, skin care, sun care and oral care—also experienced the highest growth rates in 2005.

Botanical extracts, vitamins, proteins, fruits and seeds permeated throughout cosmetics and toiletries. This trend is expected to gain greater force in the near future. Antiaging solutions—from sun protection to wrinkle-reduction—are common among mass brands. Among leading manufacturers, Beiersdorf SA capitalized on this trend by expanding the reach of its umbrella Nivea brand into sectors other than skin care, notably sun care. Benefits such as improved firmness, smoothness, natural radiance and protection against free-radicals became more common in the parlance of skin care, sun care and hair care products. Even oral care benefited from aging concerns, and launches of whitening toothpaste and teeth whitening products from Colgate-Palmolive were well-received.

Bright Future

Notwithstanding further economic upheaval, Euromonitor anticipates average annual growth of 5.2% for Latin America through 2010—with growth attributable to rising disposable incomes and the development of distribution systems. As the region enjoys increased disposable incomes, the supermarket provides the perfect platform for consumers to spend, due to the breadth of choice and the availability of higher value Western cosmetics and toiletries brands. Brazil will seize the lion’s share of growth, accounting for almost half the region’s sales.