Belcorp Cosmeticos Enters Brazil
In a market dominated by direct sales companies such as Avon and Natura, Belcorp Cosmeticos is still relatively unknown in Brazil, despite the fact that the multinational cosmetics company has operations in 16 countries around the world including Peru, Argentina, Mexico, Venezuela, France and Germany. According to Euromonitor, Belcorp was the third largest direct-selling cosmetic company in Latin America, even before entering Brazil. It landed here with an intense campaign to open opportunities for enterprising people who want to be part of its team of independent consultants.
Belcorp uses the multilevel business model with three exclusive brands, L’Bel, Ésika and Cyzone, targeted at different audiences. Early next year, its beauty portfolio will include 800 products—giving it the largest number of products in a catalog of direct sale companies selling to the Brazilian consumer. The company has 850,000 consultants to get all those product catalogs into consumers’ hands.
Debt Load SlowsHypermarcas
For the past 15 years, Hypermarcas relied on acquisitions to expand its business. Company founder Joao Alves Queiroz Filho built Hypermarcas by acquiring more than 30 companies, that includes spending $4.7 billion for personal care, beauty, pharmaceuticals and household products. Last year alone, Hypermarcas closed 10 acquisitions, among them the largest in its history, laboratory Mantecorp, for $1.4 billion.
But acquisitions have been negligible in 2011 as the company’s debt load has risen and its share price has fallen. Since the start of the year, the stock has lost 60% of its value, at the same time, debt rose to $1.58 billion in the second quarter. To boost its balance sheet, the company is closing factories in rented properties and transferring production lines to Goias (central region of the country). The cosmetics segment will be transferred to Senador Canedo, also in Goias.
Natura’s Q3 Sales Rise 7.8%
Natura’ third quarter sales rose 7.8% to $851 million, while net income increased 5.2% to $124 million. Domestic sales increased 5.5% to $768 million, while international sales surged 42%. During the period, Natura launched 69 new products, including VôVó, which features the innovative proposal of celebrating the bond between grandparents and grandchildren (see Happi, August). Meanwhile, Natura Ekos is being relaunched in a move to be concluded by year-end. The move includes new formulas and packaging that strengthen the connection these products enjoy with Brazil’s biodiversity, according to the company. Through the nine months, Natura has introduced 109 products. For the year, consolidated sales rose 9.5% to $2.4 billion and net income increased 2.9% to $332 million.
Thus far in 2011, the number of active representatives has risen 16.3% to more than 1.3 million. The number of Brazilian reps rose 14.9% to more than 1.1 million, and international representatives increased 23.2% to reach 230,000.
P&G Expands Distribution
A growing Brazilian middle class is eager to purchase health and beauty aids, and Procter & Gamble is eager to sell products to them in all regions and through all retail outlets.
“The Class C is consuming more technology and innovation,” said Jose Antonio Valdez, commercial director. “Today, the market is ready for our product lines. Who would have thought seven years ago that we could succeed with whitening toothpaste, or a line like Head & Shoulders? Products with higher added value are booming.”
To take advantage of this new reality, P&G is expanding distribution of Olay beyond pharmacies and into supermarkets. The company hopes to duplicate the success of Pantene, which is the No. 2 hair care brand in Brazil after sales have jumped 10 times since 2006. P&G expects Pantene sales to quadruple by 2015.
Hair Color Sales Post Gains
And yet, while the middle class is driving skin care sales, it is consumers in lower income brackets who are pacing hair colorant sales. Last year, sales of hair colorants rose 3% in Brazil. However, consumers in the lowest income brackets bought 13% more product. The share of low-income families who put the item in the cart at least once in a year was also the one who most climbed—from 49% to 54%.
“The category growth has been driven by the D and E classes,” said Arthur Oliveira, an analyst at Nielsen. “The expansion did not occur via reduction of prices.”
Value sales rose 28%, which was higher than in volume in these income brackets. For the same period, sales of the market as a whole grew 9.4%, to $764 million. It is a sign that the low-income consumer has given preference to items with higher added value.
L’Occitane Grows 35%
L’Occitane is also betting on Brazil, as sales are growing about 35% a year, according to Anna Chaia, president of the Brazilian subsidiary.
“Brazil is a priority for the company. We are opening about 20 stores per year. In 2009 we started the e-commerce platform and today products are available throughout the country. We are also present in pharmacies,” she said.
Avon Brazil Leads Growth
Avon Brazil has been operating in the country for 53 years. But last year marked the first time that the unit had the highest turnover among the group’s subsidiaries around the world. From 2005 to 2010 the Brazilian subsidiary registered cumulative growth of 178%.
“Brazil has shown a trend of economic growth steady and sustained. We are carefully monitoring this movement and the market opportunities, with consumer greater purchasing power and demand for products with higher quality,” said Luis Felipe Miranda, president of Avon Brazil.
J&J Restructures
Johnson & Johnson is the Brazilian market leader in key categories such as sunscreen, feminine care, mouthwashes, children’s lines and wound dressings. To meet growing demand, J&J has restructured its operations to be more closely aligned to regional markets such as North and Northeast, where annual gains exceed 10% and J&J is a leader in marketing initiatives such as global sponsorship of FIFA World Cup in 2014.
Sueli Ortega
Correspondent
Sueli Ortega has written forIsto É and O Estado de São Paulo. Since 1987, she has served as a correspondent for Cosmetics International. In addition, she created the beauty channel for El Sitio, an Argentinean website and the Women Channel.She has her own website, Cosmeticos BR and can be reached at sortega@cosmeticosbr.com.br