Image: Latin America – one of the most promising markets in the world
Globally, Latin America is considered a pulsating cosmetics and personal hygiene market, in growing development, by consumer interest in cosmetics, when local economies allow. Separately Brazil is the highlight of the region, the fourth largest cosmetics market currently, but it was already the second. But other countries in the region have been showing robust growth, such as Mexico, Colombia and Chile. With data from Euromonitor, cosmeticos br shows once again in its content the importance of this region as one of the developing global markets.
BEAUTY AND PERSONAL CARE
The segment of beauty and personal care in Brazil experienced a small increase of 5%, in current terms in 2016, influenced by the price readjustments, which contributed to a strong volume sales decline in the year. Negative macroeconomic factors, such as rising unemployment rates, high inflation, and falling purchasing power among low- and middle-income consumers, coupled with economic and political crises in Brazil, caused a slower performance in 2016. In addition, tax increases such as the IPI federal tax and ICMS on goods movement in some states of the country during this year hurt sales.
According to Euromonitor, the economic crisis becoming consumers more rational with their purchases. Consequently, in 2016 consumers were trading down and looking for cheaper alternatives. Deodorants, hair care, fragrances and skin care were the categories most exemplifying this trend during the year. In the price-sensitive scenario, smaller packages became more important, as lower-income consumers attempted to keep buying from some categories, but only if they could spend less than previously.
During the period when the economic crisis deepened (2015-2016), Unilever Brasil focused its efforts on reducing expenses by increasing the efficiency of its sales management, and with these savings, the company invested in core brands. In general, Unilever Brasil seeks to renew 70% of its product portfolio every year. As a result, the company leads in key categories such as bath and shower, deodorants and hair care.
Product launches are concentrated in colour cosmetics, fragrances and hair care concentrate In colour cosmetics, matte lipstick and cushion foundations were the strongest hits in 2016. Avon Cosméticos Ltda and Botica Comercial Farmacêutica Ltda – O Boticário – were pioneers in the launch of such products, respectively. Leading companies in mass fragrances highlighted one unique ingredient in their marketing, such as Natura Rosa and Elyseé from Natura & Co and Botica Comercial Farmacêutica, respectively. In hair care, novelties focused on curly and afro hair.
Growth continues to be limited While beauty and personal care had a positive 2016, with a growth rate in line with previous years, it is expected that the forecast period will evidence a slowdown of growth, while still maintaining positive numbers. This, no doubt, will be in part caused by a complicated and sluggish economy, but in large part will be affected by the maturation of Chilean beauty and personal care, with consumers highly aware of the product offering and strong competition.
Premium products continue to gain ground Premium products continue to gain ground among consumers, with brands extending their lines and looking to captivate individuals with multi-benefit products that respond to their specific needs and concerns. As the economy continues to slow down, consumers see in premium products a form of self-care and affordable access to status-giving products, increasing their willingness to spend a lot of money for good quality. Premium products have also seen a good boost from the expansion of online selling, which allows consumers to go over the complete catalogue, and makes it possible for retailers to offer exclusive promotions.
Multinationals continue to lead beauty and personal care in terms of sales volume and value, invest in innovation and launch new products. The good performance of these well-known brands has opened spaces for the continuous arrival of international brands.
Domestic brands will continue to expand their catalogs offered in Chile, bringing products with good results in other markets to the Chilean consumer. A large part of this strategy is driven by consumers who become familiar with products offered internationally through social media and respond positively when they become available. Examples can be found in the launches of brands like Urban Decay, NYX and Aveeno Active Naturals, which occupy several price points.
Sluggish economy continues to limit growth, so the focus is on exports. Colombian economy performed worse than expected in 2016, with uncontrolled inflation, tax reform, higher interest rates, among other factors, restricting consumption. However, leading beauty and personal care companies have sought opportunities to expand their production and distribution centers. In addition, new competitors also entered the market, which boosted an export movement.
Euromonitor points to growing concern in the Colombian skin cancer market and companies are presenting products that offer a greater range of skin and sun care benefits that include improved ingredients for greater protection in oral care and more natural components , as additives, flavorings and active ingredients that provide more benefits to consumers.
The challenge for companies has been to respond to changing consumer demand trends and offer products in the amount and type of presentation that is desired. In terms of presentation, analysts at Euromonitor point out, products in different categories are offering a variety of sizes and packaging, depending on the channel and the buying behavior.
Companies focus on new interesting conceptual developments and innovations have recently been introduced in different areas of beauty and personal care. The migration from solids to liquids and custom rechargeable packaging also helped to increase sales. The dynamics of local consumption will continue to grow with the inclusion of several product developments, opening up opportunities for domestic companies in general, for international companies to form partnerships with local players and for distributors to diversify their offer through different channels.
Beauty and personal care is a growing market in Mexico In 2016, beauty and personal care in Mexico displayed dynamism, posting a high single-digit value increase. Growth drivers included innovation, marketing campaigns, higher penetration of smaller categories and consumers trading up to more sophisticated products.
Direct selling grows in 2016 In 2016, direct selling reached high single-digit growth in current value terms. Its growth stemmed from the healthy performance of companies such as Mary Kay Cosméticos de México, Oriflame de México, Natura Cosméticos México. Direct selling companies that performed well during 2016 were extremely active in terms of innovation, marketing campaigns, and sales representatives’ incentives.
But Colgate-Palmolive of Mexico is the company that led beauty and personal care in 2016. The company is present in personal care, fragrances and products for children and for babies. By 2016, leading companies were active in terms of innovation. New product development included line extensions of already well-recognised brands, manufacturers entering new categories, new versions with natural ingredients associated to skin care benefits, new application formats and improved formulations to differentiate from other competitors.
Beauty and personal care to continue developing over the forecast period Beauty and personal care is expected to post a low single-digit CAGR at constant 2016 prices over the forecast period. Sun care, sets/kits and fragrances are predicted to be the fastest growing categories in value terms.