The Brazilian toiletries, fragrance and cosmetics industry (HPPC) has broken a virtuous circle of two-digit growth: the Brazilian Association of the Toiletries, Fragrance and Cosmetics Industry (Abihpec) estimates indicate that the Brazilian market grew around 3 to 3.5% in 2013. This is extremely low for a sector which has seen average deflated growth of 10% per year over the last 17 years.
Several factors have been blamed for this loss of performance, among them continuing inflation, reduced credit supplies and increased rates.
Another significant fact which has certainly had a bearing on the cosmetic market was the National Health Surveillance Agency (Anvisa) delaying approval of grade 2 products. Anvisa has an average waiting period of 45 days for release of the processes, but here this took 200 days. The cosmetics industry, strongly bound up with the launching of new products, and in general more complex products of a high value-added nature, suffered serious losses. In the Jan/Feb 2014 edition of Cosmetics & Toiletries Brasil, João Carlos Basílio, Abihpec president, announced that the delay caused the industry to lose around R$ 1 billion in turnover, 6,500 jobs and around R$ 340 million in taxes.
Consolidated numbers for product categories in 2013 were not yet available but Basílio highlighted the sun protection sector. Performance here should be a positive surprise for the market, thanks to the heat wave, unbroken since the end of December. In toiletries, Basílio mentioned the marked growth in the deodorant category: up 12.4% in sales volume and 21.66% in turnover by August 2013. He also highlighted the increased performance of fragrance in the franchise market: “there has been a very significant increase (in the fragrance segment) in comparison with the traditional market and direct sales”.
Today the cosmetics sector represents 1.8% of Brazil’s GDP. Brazil is in third position worldwide, behind only the USA and Japan.
Brazil boasts 2,412 companies working in the HPPC market, according to Abihpec. Forty-six of these are in the north, 169 in the central west, 242 in the north east, 1,487 in the south east and 468 in the south. Another significant fact is that of these, 20 are large-scale companies, the majority of them multinationals, with net sales of above R$ 100 million, representing 73% of the sector’s total turnover.
Against a backdrop of a less than perfect economy, the hosting of the football World Cup and the upcoming presidential election, it is difficult to make predictions for 2014.
While economists hold divergent opinions over 2014, there is consensus that it will be a year of slow and moderate growth, with GDP below 2.0%. A World Bank study for 2014, released at the start of the year, indicated 2.4% growth in Brazil, 2.8% in the USA, 7.7% in China, 6.2% in India and 1.1% in the Euro zone.
In Cosmetics & Toiletries Brasil, João Carlos Basílio further stated that predicted growth for 2014 would be within what the sector was used to, with real growth of between 7% and 10%.
Hamilton dos Santos is the Publisher of the magazine Cosmetics & Toiletries Brasil