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Brazil turns to international cosmetics market for growth

By Simon Pitman , 04-Jan-2006

International sales of Brazilian cosmetic products increased by 20 per cent in 2005 and plans are under way to increase international distribution centers to meet further growth in the coming years.

The domestic market is also showing significant growth, having reached $6.3 billion in 2005, an increase of 14.5 per cent on the 2004 figure, according to the Brazilian Association of Toiletries, Perfumes & Cosmetics Industries (Abihpec) .

Breaking this figure down, Abihpec said that the value of sales for the hygiene sector grew by 13.4 per cent, while the cosmetics sector grew by 15.8 per cent - highlighted by the strong growth of perfumes, with sales 17.6 per cent higher than in 2004.

 

Volume of sales was up by 9.2 per cent for hygiene products and 11.5 per cent for cosmetics products, reflecting an inflation rate of between 7 - 7.5 per cent for the year and the growing spending power of the Brazilian consumer.

 

Abihpec also reports that the increased demand in cosmetic and toiletry products means that employment within the sector has grown, with major companies increasing their workforce by an average of 6.62 per cent between October 2004 and October 2005.

 

But looking at the international market, it appears that Brazil is well poised to increase its share of the international cosmetics and toiletries market, having invested significantly in international distribution projects during the course of the last two years.

 

That investment has brought about distribution centers for Brazilian products in Miami, Florida, and Dubai, United Arab Emirates, that cosmetics and toiletry producers have also been able to tap into.

 

The success of these two centers, which mainly benefit small- to medium-sized enterprises, means that now the Brazilian government is giving its backing to seven more international centers.

 

The project aims to establish centers in Frankfurt, Germany and Lisbon, Portugal in the first half of 2006, while negotiations are under way for further establishments in China, South Africa, Poland, Russia and Finland.

 

The centers will be temporary posts lasting 18 months at a time, a period considered adequate for companies to establish business links and establish distribution channels.

 

But, as Juan Quirós, president of APEX-Brazil (Brazil Export Promotion Agency) points out, the aim is not to target big importers, but the end consumer.

 

"Our target is the retail trade," he said. "This mechanism allows us to introduce thousands of Brazilian companies in foreign markets."

 

The distribution center in Miami currently involves 87 Brazilian companies and has a further 100 on a waiting list to use it - a significant number of which includes cosmetic and toiletry companies. The facilities include a 1,000 square metre area with warehouses, offices and meeting rooms.

 

"Florida's government has a policy of attracting enterprises and pays 50 per cent of the rent. Let's see what we can get from the other countries," added Quirós.Such moves have helped the Brazilian cosmetic and toiletry industry to expand its presence internationally, although countries within South America still remain the principle destination for exports.

 

Currently the markets experiencing the highest levels of growth are those in the Middle East, with United Arab Emirates leading the way, followed by Lebanon, Jordan and Libya.

 

Abihpec estimates that domestic sales of Brazilian cosmetic and toiletry products should grow by 10 per cent to reach $6.9 billion in the course of 2006, and is anticipating that increases in exports should match those of 2005.

 

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