Brazil and China spell big opportunity for ingredients players – Euromonitor

By Pooja Kondhia

- Last updated on GMT

Among the emerging markets it is Brazil and China that are poised for the most dramatic growth, according to market analyst Euromonitor - a situation that spells significant opportunities for cosmetics ingredients companies.

These two markets are consistently proving to be important sources of revenue growth on account of the market growth, and in line with this a considerable amount of merger and acquisition activity has been taking place in these countries as ingredients companies race to get in on the act.

The cosmetics and personal care industry in Brazil showed a 15 percent growth in value in 2010. Driving this growth is the fact that per capita spend on cosmetics and personal care in Brazil in 2010 was US$192, just short of the US average annual spend of US$193, according to Euromonitor.

Meanwhile the Chinese market grew by 12 percent in 2010 and is forecast to achieve growth of over US$10bn by 2015, by far the highest increase of any country globally.

Color cosmetics in the South

In light of this, it is no surprise companies are focusing on expanding their operations in these markets. Most recently, Sensient acquired a color cosmetics ingredients supplier in Brazil, Les Colorants Wackherr (LCW).

LCW is based in Sao Paulo and supplies ingredients for applications like nail polish make-up and skin care. With this acquisition, Sensient says it now has access to the Brazilian market and will be able to take advantage of LCW’s established network and client base.

Brazilian advantage for Belgian

Likewise, Univar has also recently invested in Brazil with the acquisition of a distribution company. Arinos Quimica is a distributor of specialty and commodity chemicals in Brazil.

According to Univar, the company has a nationwide distribution network that positions it will for further expansion opportunities in this fast-growing emerging market.

"Arinos has a highly complementary business model to Univar, and provides a strong platform for future growth in the large and rapidly growing Brazilian chemical distribution market​”, CEO of Univar, John Zillmer.

Chinese innovation expansion

Taking advantage of the lucrative Chinese market, specialty chemicals firm Evonik has expanded its research and development centre in Xinzhuang.

The R&D centre will have an area of 35,000 sq ft post expansion. The company aims to develop product applications and provide technology service for customers throughout Greater China and Asia.

According to a member of the executive board of Evonik, Dr Dahai Yu, the rapidly increasing demand for R&D facilities in Shangai reflects the strong focus on ‘innovation in China for China’, a key factor for Evonik’s successful growth in Asia, especially in the Greater China region.

Targeting ingredients growth

Italian active ingredients manufacturer Indena has also targeted the China market to expand its cosmetics division.

We decided to invest in developing more innovative ingredients for the cosmetics industry last year (2010), because we saw the potential for tremendous growth in this sector, especially in China​,” Martino Meneghin, development manager, Personal Care said.

Chinese consumers are becoming more conscious of the impact of their purchases on the environment, and see the advantages that our natural products have to offer. Without a doubt, China is fast becoming one of the more important countries for us to grow our business​.”

Related topics: Market Trends

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