Outsourcing: a promising segment in Brazil

Outsourcing: a promising segment in Brazil

Outsourcing the manufacture of cosmetics products has become a sought-after segment in Brazil, especially in the southeast, where over 70% of Brazil’s cosmetics companies have their headquarters.

 There are several reasons for this demand. The first (and in my opinion the most important) is the growth of the Brazilian cosmetics market, which continues to be the world’s third largest. This growth has left some industries’ production capacity below their needs, with the solution being to outsource a part of production, to meet demand.

Another reason (not less important) is Brazilian vanity. Despite being in Brazil a long time, I’m still an outsider who sees things from a different point of view. Accordingly, I feel fine about saying these two words together. Brazilian vanity is greater in artists, media types, and people working in esthetics and beauty (dermatologists, estheticians , hairdressers, etc.) At some point, they feel the need to have their own cosmetics range. This strokes the ego and increases the credibility of the professional or the establishment, but it’s difficult and unfeasible to open a factory when this isn’t the actual focus. And thus the solution – outsourcing production.

These examples show the importance of outsourcing and the different models or sizes an outsourcing company can take on. It could be large enough to meet the demand of heavyweight cosmetics brands or small to meet the lesser demand of someone launching a brand upon the market, or who’s manufacturing a line to be sold on his/her own premises.

Taking on a company to outsource one’s product to, however, isn’t as simple as it seems at first glance. Firstly, the suitability of the outsourcing company has to be verified, especially when outsourcing a specific project or an extra production run to meet increased sales demand, for example at the Christmas season. If the outsource doesn’t comply, or only partially complies, the image of the company which used outsourcing is ruined for consumers as non-compliance means a lack of products in the market.

The legal and the regulatory aspects must also be taken into consideration. Signing an agreement carefully drawn up and revised by both parties is a must before beginning any service.

After defining the company, the important thing is to know which model of outsourcing will be used, as it’s a very flexible process. It allows for the carrying out of just one part of the process (for example packaging a product or assembling a kit of several products) or it can be a little more complete (the manufacture and packaging of a product) right up to a complete outsourcing in which the total process (buying of raw materials and packaging materials, manufacture and packaging) is outsourced. In the case of a brand without a factory, the company being outsourced to could even develop the product’s or products’ formula/s and be responsible for all evidence needed for regularization, such as the challenge test, stability and safety and efficacy tests.

In sum, outsourcing is an important tool that used well can contribute to a company’s growth and/or the success of a product or brand in the competitive world cosmetics market.

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