With beauty retailer Sephora entering the Brazil market, and the rise of the internet giving reach to more consumers than ever before, Brazil could become a premium fragrance market for the future, according to Euromonitor.
Brazil is the world’s biggest fragrance market, and is expected to have the strongest absolute growth from 2011-2016, says the market researcher, but it is highly mass-dominated with over 90 percent of sales from this category.
“The high import tax for fragrances, at over 40 percent, as well as the increase in disposable incomes for travelling, are pushing consumers into buying premium fragrances while abroad rather than in Brazil,” says Euromonitor.
“In fact, the average price for premium fragrances in Brazil is more than double that of the US, at over $100 per 50ml.”
The real opportunities for the market lie with retail distribution which Euromonitor predicts will play a key role in determining where the balance will lies between premium and mass fragrance by 2016.
One driver will be Sephora which altered the retailing environment in Brazil after acquiring Sack’s, the leading internet retailing in sales of beauty and personal care products – mainly premium cosmetics and premium fragrances – and it plans to open its own retail stores.
“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,” says Euromonitor.
Another key driver identified will be the internet, which has been expanding into new regions to reach more consumers in regions with 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 unit prices can be offered to make such products more accessible to consumers,” states the market researcher.
“Unit price will also be one of the most important drivers. With spending per capita in Brazil higher than in many of the premium dominated countries, reducing taxes or producing locally will be essential in encouraging Brazilian consumers to buy premium fragrances at home.”