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Brazil's Emerging Middle Class Helps Promote Natural Beauty Ingredient Growth
Posted: September 27, 2012
The Brazilian market for beauty and personal care products has demonstrated double-digit growth rate for 15 years on the trot, and this pace is not likely to slacken in the near future, if the inversion of the social pyramid is anything to go by. The expansion of the Brazilian middle class, otherwise known as the C class, points to higher purchasing power and thereby, a vast market for personal care chemicals.
From 2009 to 2011, about 10 million people joined the middle class demographic and in 2010, it accounted for nearly 46% of the personal care market's total revenue.
The market will also gain from the rise in the number of the aged, which is anticipated to triple by 2020. Brazil's aging population and shrinking young population will direct the beauty and personal care products consumption profile toward specialized items, with both genders likely showing an increased interest in products designed to beautify the skin and defy age. In addition, the market will make inroads into newer segments, especially regarding renewable products. Customers are showing a marked preference for natural sources and green chemicals in their personal care products.
"The search for environment-friendly products and green chemical ingredients has driven the use of organic raw materials; commonly extracted from seeds, fruits, and roots," said Frost & Sullivan industry analyst Lisse de Oliveira. "However, with the food and biodiesel markets competing with the personal care market for raw materials, the depletion of resources may lead to a rapid price rise in end products."
Companies have to ramp up their R&D efforts to identify new raw material sources for their natural products. Participants could also convince raw material suppliers to give priority to the personal care market, as it can offer them substantial financial returns.
Apart from the low availability of raw materials, the volatility of energy prices and other commodities affect the prices of the end product. These issues are compounded by the presence of several small manufacturers, which are formulating lower-quality products at lower prices in the informal market. Owing to their price advantage, the informal market is cornering considerable market share.
"To beat back the competition from the informal market, the governments have to increase end users' awareness about the larger economic fallouts of conducting business with illegal and informal manufacturers," noted de Oliveira. "For their part, personal care chemicals companies should work on offering high-quality products at competitive prices."
Through the efforts of these various stakeholders, the Brazilian personal care chemicals market is poised for significant growth over the next six years.