BW Confidential - Issue #17 - March/April 2014 - (Page 58)

Market watch: Latin America Regional overview credit: istock Beyond Brazil BW Confidential analyzes the state of the beauty market in Mexico, Colombia and Argentina by Oonagh Phillips W hen most industry players think about Latin America, they immediately think Brazil. However, other countries in the region are generating interest and seeing development and investment. Our market watch covers three of these: Mexico, Colombia and Argentina. Of these, Colombia is perhaps generating the most excitement, due to changes in the country which have resulted in greater stability and a more secure environment, boosting economic development. Colombia's unemployment rate is falling and its annual per capita income is rising (it is now $10,000 compared with $2,000 some 10 years ago), which is fuelling investment from Mexico, Argentina, Colombia beauty market Country Mexico Sales 2013 $bn* % change 2013/2012 10.75 +8.26 Argentina 6.18 +16.4 Colombia 4.30 +8.04 Source: Euromonitor International *estimated, retail sales price (beauty and personal-care sales) 58 brands and retailers. This largely perfumerydominated market is also attracting more foreign retailers, particularly Chilean department stores, such as Ripley and Falabella. Mexico, too, is an increasingly attractive market. It is thought that recent government reforms (in terms of energy, education and tax) will result in further investment. Sephora entered the market in 2011, in an attempt to offer young consumers (65 % of the population is under the age of 32) an alternative to department stores, which account for 90% of prestige market sales. Department stores have reacted by adding more exclusive brands and services to their offer. Argentina's challenge As for Argentina, while the beauty category is showing strong growth (sales are estimated to have risen by 16.4% in 2013, according to Euromonitor), the market is extremely tough. Government measures restrict imports, while the country is on the brink of a currency crisis and suffering from galloping inflation. The regulatory situation is also increasingly complex, and brands are finding it difficult to bring their products to market, while retailers are unable to get their hands on stock. This makes planning launches a headache, and the situation is unlikely to get better any time soon. Industry watchers say this is a shame, as Argentinian consumers are sophisticated buyers of beauty. Protectionist policies are all too common in Latin America and the region is also an expensive place to do business. Seeing returns on what can seem like a hefty investment are often a long way off. There is also the parallel market, which, depending on the country, can represent up to 50% of fragrance sector sales. Despite this, there is still much potential, and these countries' young populations, quality retail and rising purchasing power are all positive. There is also room for growth beyond fragrance. Analysts say Mexico, Colombia and Argentina are ripe for expansion in make-up and skincare. Argentina may have its share of problems, but both Mexico and Colombia are on financial analysts' emerging-market watch list (as part of the MINT and CIVETS block of countries). Keeping an eye on these markets will no doubt also reap rewards for brands. n March-April 2014 - N°17 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #17 - March/April 2014

Cover
Comment
Contents
Update
Brand & retail news recap
Companies on the move
Take note Market facts, figures & trends
Best of BW Highlights from our e-publication
Launches The latest in fragrance, skincare & make-up
Interview Guerlain ceo Laurent Boillot
Insight: Make-up
Category overview
Budget brands
The latest trends
Retail
Innovative strategies
Retail
Vending machines
Store concepts
Digital Social media content
Market watch: Latin America
Regional overview
Mexico: country analysis
Mexico: prestige retailing
Colombia: country analysis
Colombia: prestige retailing
Argentina: country analysis
Argentina: prestige retailing
Radar A profile of six up-and-coming beauty brands
Emerging markets Company profile: Mahogany
Travel retail: Brazilian travelers
Analysis
Industry viewpoint
Packaging: Decoration techniques
Trends analysis
Innovations
Last word Diagonal Reports analyst Jacqueline Clarke

BW Confidential - Issue #17 - March/April 2014