Even among the Big 3, Brazil dominates the hair care market. According to Euromonitor, Brazil, Mexico and Argentina are the three largest hair care markets in Latin America, with 2012 sales of $5.9 billion, $2.3 billion and $1.1 billion, respectively. On the world stage, figures from the Brazilian Association of the Cosmetic, Toiletry and Perfumery Industry (Abihpec) shown Brazil held a 12.5% share of the market share, making it the No. 2 market in the world, trailing only the US.
Why is the market so large? Brazilian women have a great dedication to hair, and category sales in the past decade have surged 350%. This past year, Brazilian women spent more than $7.7 billion on products—representing nearly half of their total spend for personal care and beauty products, according to a 2012 study by IBOPE Intelligence. They also spend a lot of money outside the home, as 37% of Brazilian women said that going to the salon is a necessity, according to Unilever. There are 342,000 salons scattered throughout the country, with a heavy concentration in the southeast, where it is possible to see as many as 10 salons in a single city block.
Almost every adult Brazilian woman chemically treats her hair, so it’s not surprising that Brazil is the country with the largest market for so-called “post wash” treatment items used after bathing. Considering the consumption of post-shampoo (treatment products) by home, per year, Brazil is three times larger than the US and four times higher than the world average, according to IBOPE.
P&G Brazil, through its Wella unit, is the No. 1 hair color company, according to Nielsen. With brands like Koleston, Soft Collor and Pro Vital, P&G controls nearly 21% of the market. In November the company launched the first post chemical line for anti dandruff products. It comprises shampoo and conditioner with a balanced formulation which nourishes the scalp, moisturizes the strands without damage as well as combats dandruff.
With such devotion to hair, it should come as no surprise to learn that there are more than 3000 brands of shampoo and conditioners on the market. Also no surprise is the low level of brand loyalty. Brazilians have a natural propensity to try different brands. Indeed, it is common belief among Brazilian women that hair performs better if shampoo and conditioner brands are changed regularly.
Follow the Leaders
Unilever, P&G and L’Oréal dominate the category in Latin America. L’Oréal Mexico has the largest hair color production plant in the world in terms of production capacity, since this is one of the most strategic countries for the group and is a key crossroad between North America and Latin America.
In the shampoos market, which is the most significant in the category, Euromonitor says Unilever Brazil has 40.7% of market share, L’Oréal 15.9% and P&G 9.3%. In addition, these companies have become reliant on Brazil to shore up their global growth. Over the past five years, 29% of L’Oréal´s absolute growth in hair care comes from Brazil. While, for Unilever and P&G, the percentages are 22% and 19%, respectively.
Due to the high degree of miscegenation among Brazilian people (eight hair types are cataloged by L’Oréal, from more straight to more curly), the French company intends to make the country a large test tube to develop new products that will be sold not only in Brazil but also in other markets. For this, L’Oréal will open a new research center in Rio de Janeiro, its sixth in the world, in 2015. The center reinforces the importance that Brazil has been gaining in overall corporate strategy. The country—which until July 2013 was considered part of Latin America in the company’s planning—was “dismembered” and went on to have independent status.
Two brand launches have defined new segmentation battlegrounds in Brazil´s hair category. First was Unilever´s TRESemmé, which rolled out in the second half of 2011; secondly, Procter & Gamble´s Wella Pro Series, which came on stream at the beginning of June 2012. Performing well in the short-term, they were associated with professional salon brands for home use.
TRESemmé has proven a big hit in Brazil. It is the leader in the hypermarkets and is widely perceived as an affordable premium brand among Brazil´s lower-middle-income consumers.
The arrival of the Pantene Expert Collection (AgeDefy and Advanced Keratin Repair) in Brazil is a milestone for Pantene, a premium category to retail, offering to the hair the same caring attributes as skin care. In a survey designed to understand the perception of aging hair among Brazilian women, 41% said they consider their hair thin; eight out of 10 respondents consider the appearance of hair in relation to quantity and thickness as very important, while only four out of 10 these women consider it very important not to have cellulite. The survey further found that 28% disguise the lack of volume with a hairstyle or different cut while 31% use vitamins and medicines to prevent thinning hair.
Battling Brand Switching
As brand loyalty is weak in Brazil´s shampoo category, leading players are introducing large-sized packaging in which consumers are unlikely to need a new brand for the next months. This taps into value-for-money, which is becoming more important to purchasing criteria as Brazil´s economic growth slows this year.
Domestic companies like Natura, the leader in the Brazilian cosmetic market and also present in some countries in Latin America such as Argentina, Bolívia, Chile, Colombia, Peru, México, started to expand its market share at the expense of multinationals.
The company´s biggest move in 2013 was the relaunch of the Natura Plant brand with new formulas, packages and more technology. For insight, the company studied more than 5000 women´s hair from all over Brazil to find treatment solutions that combine powerful natural actives with high technology.
The range covers 32 products, divided into eight lines, which meet different hair care needs: Moisturizing Restorative, Brightness and Smoothness, Oily Control, Deep Cleaning, Post-Chemical Revitalization, Outstanding Curls, Straight and Loose, Live Color.
The packages also come with green plastic (PE) in its production, which has 27% reduction in CO2 emissions compared to the current line. In addition, the shampoo and conditioner feature Braille on the packaging labels. The line is also bringing a new refill which reduces the use of plastic and the emission of gases responsible for global warming by 77%.
Offering more intensive and tailored treatments, inspired by skin care, could be a key opportunity for marketers as innovation is crucial in the hair care battleground.
Daniela Ferreira is a marketing and communication professional in both consumer and B2B cosmetic markets. With a degree in social communication and postgraduate work in business administration, her expertise includes managing and launching products, communication planning, market studies and analysis, and identifying new business opportunities. She also has beauty blog (www.circulodabeleza.com.br), and is a makeup artist and image consultant.