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Booming beauty market in Brazil entices investors

By Michelle Yeomans , 18-Feb-2013
Last updated on 18-Feb-2013 at 17:56 GMT

Booming beauty market in Brazil entices investors

Market analysts say demand is high and continuing to grow for beauty products in Brazil, and with consumption reported as nearing that of America and the UK, more and more cosmetic companies are investing in the country's markets.

According to Hana Ben-Shabat, a partner at A.T. Kearney, a global management consulting firm; “The potential in Brazil is really significant, the population is very fashion-forward and the consumption per capita is very close to what you're seeing in places like America and the UK.”

The market analyst attributes the current situation down to a flush new middle class investing vast amounts of money on designer shampoos, lotions and cosmetics, which is rapidly turning the country into a 'beauty industry powerhouse'.

International investment

All of this Ben-Shabat reckons, is driving cosmetic companies to set up shop including the likes of giant luxury cosmetics group LVMH's Sephora, who recently opened its first store in Brazil back in July of last year.

"While the company can't give numbers, it was the most successful store opening in [our] history," says Paula Larroque, senior vice president for LVMH Latin America.

Since then the company's success has led to the opening of four other stores and it plans to roll out 30 to 35 more within four years. "We really see limitless potential, Brazilian consumers are very sophisticated, with a vast knowledge of beauty products and beauty trends," she says.

Meanwhile, L'Oreal's head of research and innovation Blaise Didillon recently confirmed that the company's investment in Brazil was "essential to staying on top" of other international cosmetic giants.

He further points out that per capita, spending on beauty products is around $260 a year in Brazil, and this is what is leading companies to invest heavily in understanding Brazilian needs.

Fast growing segments

According to Euromonitor, beauty product sales in Brazil hit $43 billion in 2011, a growth of 142 percent in five years that puts it on a pace to overtake Japan as the world's second-largest beauty market within a few years.

The fastest growing segments of the market saw drastic increases in sales between 2006 and 2011; depilatories went up by 299 percent, cosmetics by 281 percent and sun care by 230 percent.

Direct selling is also said to remain as the biggest category in the country, a factor that accounts for major players such as the domestic company Natura and Avon.

However, internet sales are also taking an increasing large slice of the market sales, and are expected to rise in the coming years, in line with the current Latin America share of the beauty retail market that is currently estimated at 12 percent.

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