Features

BRICs Are Building Blocks for Many Companies

January 7, 2009

Personal care marketers trying to build their business should make Brazil Russia, India and China a foundation for all of their expansion plans.

BRICs are Building Blocks for Many Companies



Personal care marketers trying to build their business should make Brazil Russia, India and China a foundation for all of their expansion plans.



By Imogen Matthews
Consultant to In-Cosmetics



Fast growth by Brazil, Russia, India and China—also known as the BRIC countries—is causing cosmetic and toiletries manufacturers and retailers to sit up and take note.

Brazilian Fruit's signature line is Caipirinha, based on the famous Brazilian cocktail.
According to Kline & Co., the BRICs are advancing at a fast pace, averaging 10% annual growth in cosmetics and toiletries, compared to just 5% or less for major markets elsewhere around the world, including the U.S., Japan, France, Germany, Italy and Spain. Although the U.S. was still ranked No. 1 in 2007, China and Brazil have been moving up the standings and now hold third and fourth place, respectively. What makes this trend all the more exciting is the per capita spending potential. China spends less than $12 per capita on cosmetics and toiletries compared to a world average of $40.51. Indian consumers spend even less at just $5.40. Although Brazil and Russia spend more at $98.05 and $88.83 respectively, they still spend considerably less in comparison to Japan ($232.67) and France ($245.31).

Brazil



Euromonitor researchers are even more bullish about Brazil’s status on the world stage, placing it in third position behind the U.S. and Japan.

“Beyond Brazil’s large population of 192 million (as of Jan. 1, 2007) and its citizens’ increasingly noticeable propensity to spend heavily on cosmetics and toiletries, factors such as recent sustained economic growth and rising purchasing power, particularly among consumers in the lower socio-economic groups, have underpinned this strong performance,” explained cosmetics and toiletries analyst Oru Mohiuddin.

The fastest growing sectors in Brazil’s beauty markets are men’s products, oral care, hair care, fragrances and deodorants, according to Euromonitor. Skin care and hair care are particularly strong, reflecting Brazilian women’s obsession with the body beautiful.

ABIHPEC (the Brazilian Association of the cosmetic, toiletry and fragrance industry) is bullish about Brazil’s prospects, even at a time of a global economic downturn. Joao Carlos Basilio, president of ABIHPEC, stated: “I don’t believe we’ll be seriously affected by the recent news. On the contrary, our opportunities are likely to increase. If we are able to control our expenditure, then we have a good change to emerge even stronger.”

There are a number of factors in Brazil’s favor. More women are coming into the Brazilian workforce, life expectancy is greatly improving (prompting a demand for anti-aging products) and the level of new product launches is increasing to meet growing market needs. Many innovative concepts and ingredients are derived from the Amazon rainforest and its abundant supplies of natural fruits, oils and botanical extracts.

Brazil’s export sales represent $650 million, which ABIHPEC has forecasted to grow by more than 8% in 2009. Brazilian Fruit developed its eponymous brand with the international market in mind. It uses typical fruit found in Brazil, including cupuaçu, pitanga, guarana and açai. Its signature line is Caipirinha, based on the famous Brazilian cocktail, which uses ingredients that help the skin. Lime and sugar have high concentrations of glycolic acid, which is claimed to be an excellent skin emollient and cell regenerator.

China



The booming economy in China has led to higher disposable income for average consumers who have become more sophisticated in terms of purchasing behavior.

“Chinese consumers no longer consider cosmetics and toiletries as luxury products,” maintained Ms. Mohiud-din. “An increasing number of Chinese consumers, who care about their personal appearance, view cosmetics and toiletries products as daily necessities.”

The biggest change has been in the growth of the working middle classes. “With improved economic status, premium products are increasingly af-fordable to middle class consumers who are also willing to pay a premium to improve their appearance,” affirmed Ms. Mohiuddin.

International players, such as Procter & Gamble (Guangzhou) Ltd., L’Oréal China, Unilever China, Amway (China) Co. Ltd. and Shiseido Liyuan Cosmetics Co. Ltd., have made significant inroads into the Chinese market. For example, L’Oréal China, heavily promoted male grooming products in 2007, resulting in robust growth of the category.

India



India’s population exceeds 1.1 billion, making it the second most populous country in the world, after China. Most people live in rural areas and small towns, although urbanization and a growth in the number of office workers has led to a strong focus on grooming.

“Grooming is increasingly associated with professional and social success,” said Ms. Mohiuddin. “Taking care of one’s appearance is regarded as a virtue rather than vanity.”

The color cosmetics category has been the biggest beneficiary, as women focus more on their appearance. Deodorants, fragrances, depilatories and styling agents have all benefited from this trend.

According to Kline, the infiltration of western lifestyles and a retail boom across India has attracted an influx of luxury brands. However, India is weighted most heavily toward basic toiletries. For example, personal cleansing products account for 1 in 3 cosmetic and toiletry purchases in India, compared to the global average of just 1 in 10. Low cost beauty soaps, in particular, are a popular item and more affordable than western-style facial skin care products.

Russia



Russia has been developing fast with many consumers now prepared to pay a premium for quality products. However, rising inflation is starting to slow down growth, resulting in price hikes, according to Kline. Increasing prosperity is the result of salaries rising by as much as 15% during the past two years.

“There is evidence of an accelerating shift from mass market cosmetics to higher quality products and premium brands as consumer incomes rise and Russians are more exposed to western lifestyle trends,” said Ms. Mohiuddin.

Kline suggests that Russian cosmetics and toiletries usage is similar to the rest of the world, but is skewed slightly more toward basic toiletries and oral care.Meanwhile, Euromoni-tor is noting more products offering combination effects such as tinted moisturizers and skin care and hair care with added sun protection.

Beyond BRICs



Commenting in The Times of London last year, media company WPP chief executive Sir Martin Sorrell predicted that of the four BRIC economies, India will do best in 2009. He also referred to the “next 11” countries, including Vietnam, Bangladesh, Nigeria and Mexico, as having reasonable growth prospects.

With the world economy increasing just 1%, many will be looking beyond the West for future growth.

Kline and Euromonitor will be participants in marketing trends presentations at In-Cosmetics, which takes place in Munich, April 21-23. More info: www.in-cosmetics.com

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