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Cosmetic and Toiletry Sales Rise in Latin America

November 22, 2005

Due to increasing investment from major direct sales
companies, cosmetics and toiletries sales in Latin America have increased within the past year, with the region’s total market value rising 5.4% to $18.7 billion. However, regional growth in 2003 was not enough to prevent local economic
difficulties leading to a decline in sales over the 1997-2003 period on whole, according to Euromonitor.
The 5.4% increase of value sales, however, is a large improvement over the steep fall of 10.9% in 2002. The increase was attributed to the strong performance of the Brazilian market, supported by a combination of price adjustments, improvements in product quality and greater segmentation by major manufacturers. Sales were further boosted by the aggressive marketing efforts of direct sales companies such as Avon, Natura and O. Boticario, which distribute affordable, high-quality products to consumers who are not widely catered to by other channels.
The Venezuelan market also contributed to the growth, mainly due to inflationary pressures that led to an increase in unit prices. However, this increase was partially offset by a stagnant performance in Mexico, owing to the poor economic situation in the later part of the review period.
Social and demographic changes such as ongoing urbanization, increasing numbers of women entering the workforce and diminishing household sizes have led to greater disposable incomes and the erosion of traditional purchasing behavior. But because disposable income is still at a low level, the region’s cosmetics and toiletries markets are dominated by products that consumers perceive to be essential, such as hair care, which is the leading sector in five major Latin American markets. Bath and shower products and oral hygiene products also contributed a relatively high proportion of sales across the region.
Skin care products and color cosmetics both accounted for a particularly high proportion of sales in Venezuela, where women strive to maintain impeccable appearances, even in difficult economic times. By contrast, lower average unit prices and the predominance of mass brands tended to restrict the value share held by both categories in Brazil. More info: (312) 922-1115; Website: www.euromonitor.com.
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