Euromonitor forecasts points to strong outlook for LATAM beauty market

The latest figures from market research provider Euromonitor International show that the biggest opportunities are likely to be found in the men’s grooming and fragrance categories, while the counties with the strongest overall growth are likely to be found in the region's two largest markets, Mexico and Brazil.

Cosmetics Design looked at Euromonitor forecasts for the region’s five biggest economies – Argentina, Brazil, Chile, Colombia and Mexico – where we found that the outlook is largely positive, although the Colombian market does represent some specific challenges that translate into a lower growth rate.

Latin American beauty market overview​

In 2016 the Latin America beauty and personal care market was estimated to be worth a total of $58.9 billion, compared to a value of $39.2 billion in 2011, representing a CAGR of 8.4% over this five year period.

That growth rate looks set to slow in the coming years, partly reflecting the impact of the economic downturn that hit both Brazil and the rest of the region hard in 2015.

For the period 2017 to  2021, Euromonitor predicts that the beauty and personal care market in the region will grow at a lower CAGR of 3.6% to reach a value of $69.9 billion by 2021.

Breaking the forecast down, the highest growth rate in the region during the forecast period will be in the fragrance category, which is predicted to expand at a CAGR of 5.1% to reach $14.3 billion by 2021, while the men’s grooming category is set to expand 5.0% CAGR to reach $12.8 billion.

Brazil is on a path for recovery​

Brazil being by far the biggest market in Latin America, economic growth there sets the pattern for the rest of the region.

In 2015 the country’s economy contracted as it reeled from government overspend and political crisis, which in turn led to lower consumer spend on cosmetic and personal care products.

This led to a sharp sales volume decline that was compounded by a lower spend largely reflected in the fact that many beauty and personal care consumers in the country were trading down to cheaper brands in an effort to stretch family budgets further.

As the economy continues to recover, the beauty and personal care market is also rebounding, with the market estimated to be worth $29.3 billion in 2016. Over the next five years this figure is forecast to see 4.5% CAGR to give a market value of $36.4 billion by 2021.

This growth is likely to be underpinned by a strong performance in both the fragrance and men’s grooming markets, which are expected to grow by 6.6% and 6.4%, respectively.

As a result of the strong outlook leading beauty and personal care players are expected to invest production in an effort to meet the anticipated increased demand, Euromonitor analysts predict.

Other key LATAM markets​

Elsewhere in the LATAM region, low to moderate growth is expected to prevail in the period up to 2021, with Mexico forecast to see its beauty and personal care market expand at a CAGR of 3.0%, giving the market a value of $9.7 billion, while Chile Should grow at a CAGR of 3.1% to reach a value of $3.3 billion.

The lowest growth in the key markets is expected to be seen in Colombia, where inflation, a sluggish economy and tax reform that has weighed in on retail prices have all served to weaken consumer spend.

As a result of these tough conditions, the market for beauty and personal care is expected to grow by a CAGR of just 1.0% up to 2021, to reach a value of $3.3 billion.

As a result of the tough economic conditions many Colombian beauty businesses are expected to become more focused on export markets, as they race to make up for the challenging conditions in the domestic market.

The LATAM low down​

Although there are significant opportunities in the Latin American market, there are some tough economic, political and regulatory hurdles to overcome in many parts of the region, which means the region can be tough for international businesses to enter.

Opportunities vary greatly from country to country, but in general new opportunities prevail in the men’s grooming and fragrance categories.

The largest category throughout the region remains hair care, but this is now a highly competitive category that is largely saturated, which means that there is only room for highly innovative or ground-breaking products.