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Brazil’s domestic beauty products companies fight back
As Latin America continues to see strong economic growth, so too does Brazil’s personal care market, experiencing growth of 8.2% in 2012. According to industry reports published by the Brazilian Association of the Cosmetic Toiletry and Fragrance industry (ABHIPEC), the country is currently ranked as the third biggest beauty market in the world. Moreover, the rise in disposable income has triggered beauty spending and more women are spending money on their appearance than ever before. Therefore more beauty/cosmetics companies are eager to enter the Brazilian market.
In addition to this, Brazil’s growing beauty industry has become increasingly attractive to players that are suffering in Western European markets due to weak consumer spending during the on-going economic downturn. Companies such as Sephora owned by LVMH (the world’s leading luxury products group) and L’Oreal have been increasing their presence in Brazil via a number of strategies targeted at the needs of Brazilian consumers, as they look to cash in on soaring demand in South America’s largest country.
However, interest from foreign players has caused local companies to fight back as they look to hold on to their position as leading players in the market. Natura Cosmeticos (Natura), a Brazilian leading manufacturer and marketer of beauty and personal care products, recently added five new hair care products to its Homem line and has also been increasing its presence in international markets.
Brazilian consumers have become increasing interested in natural ingredients in beauty products and Natura has been successful in building a reputation worldwide for its natural ingredients. Foreign companies wanting to enter the market may find that they have to change their products and offerings in order to successfully compete in this particular category. This can be costly and time-consuming. Furthermore, Brazil has announced plans to boost import taxes. The heavy taxes on premium beauty goods means that even with an increase in disposable income, companies will be out of budget and this will dissuade many potential entrants from targeting Brazil. Sephora’s global president and CEO, Christopher de Lapuenta, notes that Brazilian import taxes for cosmetics (18-35%) as well as currency inflation has resulted in selling products at significantly higher prices than those in Brazil. This can result in consumers moving to alternative brands which offer products as cheaper prices.
Although Brazil’s beauty industry is booming it seems that entering the industry is far from simple.
For more, look into our Brazil Personal Products Industry Report.