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Brazil fragrance sector to take largest share of beauty market by 2017

By Michelle Yeomans+

04-Jun-2013
Last updated the 04-Jun-2013 at 17:19 GMT

According to market researcher Canadean, the fragrance segment in Brazil will grow by a (CAGR) of 11.7 percent by 2017 due to the country’s growing affluence which will place it with the largest share among all Brazilian health and beauty industries.

The report noted that due to strong economic growth in emerging markets across Latin America, fragrances are to be one of the fastest growing health and beauty industries in Brazil, as the country’s growing affluence means an increasing number of Brazilians can treat themselves to both mass market and premium fragrances.

"Fragrance is the strongest category with a value share of 49.6 percent and volume share of 49.5 percent in 2012. It is closely followed by men's fragrances with a value share of 42.6 percent and volume share of 42.2 percent."

As the use of fragrances is deeply embedded in the country, Brazil is forecaste to also be the third highest-spending country in per capita terms, behind only the Netherlands and Switzerland.

"This creates a good opportunity for premium fragrances, which are facing a more challenging environment than other premium categories, due to a combination of cash-strapped consumers in developed markets and limited inclination for fragrances in Asia-Pacific."

Strongest category

According to the market researcher, women's fragrance is projected to see the second fastest value CAGR with 11.6 percent with men's following closely behind with a value CAGR of 11.5 percent and a volume CAGR of 8.1 percent.

Thereafter; the unisex fragrances category is predicted to perform third best with a relatively small value share of 7.9 percent and volume share of 8.3 percent in 2012.

The high import tax for fragrances, at more than 40 percent, as well as the increase in disposable incomes for traveling, are pushing consumers into buying premium fragrances while abroad rather than in Brazil.

"While there are undoubtedly difficult challenges for premium fragrance brands to overcome in order to get a strong foothold in Brazil’s fragrance-loving market, Sephora’s presence is sure to shake up the field."

Other key drivers

In addition to the presence of Sephora in the country, the market researcher says another key driver will be the internet, which has been expanding to new regions in Brazil that have few physical points-of-sale, providing an opportunity to increase sales in the coming years through lower operating costs.

"This provides a platform for premium fragrances, where lower until prices can be offered to make such products more accessible to consumers. Unit price will also be one of the most important drivers of premium fragrance for the Brazilian marketplace."

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