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Get on the ground in Brazil, Euromonitor advises beauty brands

By Lucy Whitehouse + , 24-Mar-2014
Last updated the 24-Mar-2014 at 17:37 GMT

Speaking exclusively to Cosmetics Design in this second part of our special on today’s launch of their 2014 data, Euromonitor analysts tell us beauty players should start operating from within Brazil to tackle the country's import tax hurdle.

The region’s growth remains remarkably robust, sitting at 12%, and there’s space for further expansion too, according to analysts Oru Mohiuddin and Nicole Tyrimou, who here reveal the upcoming opportunities for the industry.

Taxing challenges

Brazil owes its success to its ‘big consumer culture’, noted researcher Nicole Tyrimou, with the country boasting the highest per capital spending in the world in categories such as fragrances; but the opportunity for companies to maximize on this is being held back by import taxes.

Luxury brands, although already higher priced than mass brands, are faced with an import tax at around 40% in Brazil; so you can buy the same fragrance in Brazil for more than double the price you would pay in China or the US,” Tyrimou told Cosmetics Design.

Desire is there but it is harder for the consumer to be able to afford the products, even though disposable income is rising,” she stated.

Get on the ground

The analysts believe the solution is for brands to follow the lead of L’Occitane, whose range of ‘Eau de Brazil’ perfumes were created within Brazil, and so avoid the country’s import tax.

"They can offer the products much cheaper without cutting into their profit margins, and at the same time they’re supporting the local economy, which is a very good marketing strategy for them – they’re doing really well in Brazil,” explained Tyrimou.

Opportunities

Once the import tax hurdle has been addressed, tapping into the country’s under explored premium sector will offer plenty of room for beauty to grow, confirmed fellow researcher, Oru Mohiuddin.

The premium market in Brazil is very small, comparatively small, so there is quite a bit of white space for companies to expand into,” she said. 

A mobilizing mass consumer base will also offer the industry room to expand, as interest in personal care now begins to penetrate further down the income tier, the senior analyst told CosmeticsDesign.com.

Consumer interest in personal care and cosmetics is “spreading across the spectrum and penetrating deeper into the market; getting a more diverse range of consumers into the arena,” she observed.

To access Euromonitor’s data, click here

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