Avon’s LATAM results underline business challenges – Euromonitor
For Avon healthy growth in the LATAM market as a whole has seen sales rise steadily since 2012, up from $45.9 billion to $65.4 billion in 2017.
Brazil accounts for almost half of those sales, and during the country’s economic crisis, Avon’s sales stalled, only to pick up again in 2016 and 2017, albeit it a modest rise.
LATAM region proves a hard nut to crack
However, further problems in the Brazil market have hit Avon hard again in 2018, significantly impacting the performance of what is currently the sixth largest beauty and personal care player in the LATAM market, but business has also been challenging for the company throughout the region.
“Avon’s second-quarter results continue to reflect the difficulties the company has been facing in Latin America, especially in Brazil. Despite the positive growth rates seen between 2016 and 2017, Avon´s value sales growth was much lower than those seen in the region as a whole,” said Elton Morimitsu, senior research analyst at Euromonitor International
“While Latin America´s beauty and personal care value sales increased by 12% in 2017, Avon posted a 4% growth, in USD value terms.”
The Euromonitor team points out that the trend seen in the LATAM region as a whole since 2017 has also been reflected in Brazil and the other key market, Mexico, where sales growth were both well below the industry averages.
In Brazil the company posted a 4% growth rate during that year, compared to an overall market growth rate of 13% for cosmetics and personal care, while in Mexico sales were only up 1%, compared to a market increase of 6%.
2018 has continued to prove challenging for Avon
In Brazil the company was hard hit by a series of trucker strikes during the second quarter of 2018, which has significantly impacted the Avon business, leaving many of its customers to search out alternatives.
“The truck strike in Brazil lasted 11 days, impacting several businesses in the country at some extend,” Morimitu said.
“In Avon´s case, while the strike might have indeed caused a negative impact, sales deterioration are likely to have been more influenced by the continuous competitive and challenging scenario that Avon faces in Latin America. In Brazil, key categories continued to be pressured either by a trade down movement in some categories or intense competition.”