Cosmetic Industry in Brazil
The consumption of cosmetics in Brazil per capita is very close to what you see in places like the United States and the UK. The Brazilian population is very fashion-forward, but inflation and market saturation will begin to impact the industry strongly in the near future.
Still, Brazilians have great interest in beauty and personal care products. The investments in new products and innovation in marketing and sales should guarantee a positive growth over the next few years.
Top Brazilian Cosmetics Brands
Natura reaches around 100 million consumers and is present in 58.5% of Brazilian homes. Today, Natura is the largest company in the personal hygiene, perfumery and cosmetics sector in Brazil.
The brand is the leader in consumer preference, with 44%. In the last five years, the company’s sales network has expanded, with net revenues growing an average of 13% a year.
O Boticario’s multibillion-dollar beauty company network of about 3,600 stores throughout Brazil had a total revenue of BRL 8 billion in retail sales in 2013, representing a growth of 20% in comparison to the previous year.
The O Boticario Group is controlled through a holding company, Calamo Distribuidora de Produtos de Beleza S.A., which reported sales of $933 million in 2012 and a net profit of $212 million, excluding franchisees’ revenue. O Boticario started with an initial investment of only USD 3000 borrowed from the owner’s relatives.
Sales and Prices
The best strategy to reach Brazilian consumers is to use as many sales channels as possible to reach all types of consumers, from all social classes. Sales options can expand from traditional stores toe-commerce, door to door services and even telemarketing.
Prices presented to the Brazilian market are not the same as those offered abroad. The same products, when sold in Brazil, can be much more expensive if they are imported. This difference is due a number of factors such as: Brazil’s high taxes, import duties that can be over 70% and infrastructure problems that makes transportation costs increase.
This is what happened to the world’s largest multi-brand cosmetics retailer. Sephora’s store arrived in Brazil in 2013, causing great excitement among consumers for new and imported products. The French company opened 14 stores distributed throughout the states of Sao Paulo, Rio de Janeiro, Paraná and the capital city, Brasília. But after a year in Brazil, the brand became known as an expensive one with unaffordable trademarks for much of the population, with much higher prices than those charged in other countries.
Sephora opened its first store in Brazil in 2013 and it was considered the most successful store opening event in its history. Even though Brazil represents less than 3% of the world’s population, Brazilian consumers are responsible for 12% of deodorant consumption and also spend more money on perfume than any other nation. Each Brazilian spends around $260 a year on beauty and personal care products.
The market of beauty and personal care continues to see significant growth despite high prices. To continue stimulating consumption, companies are investing in products with higher added value, offering multiple benefits in one product and making sure there is diversity of products on the market.
Lush is another large cosmetic multinacional that invests in Brazil’s market. The brand recently returned to Brazil with its largest store worldwide, located in São Paulo.
Brazil has become an interesting market for cosmetic industries. However, national brands can be hard competition with higher taxes for importation and growing inflation rates that occasioned on a higher price of the Dollar. Still, Brazil’s market has grown enough to attract a good amount of international brands into the competition.