BW Confidential - Issue #17 - March/April 2014 - (Page 60)

Market watch: Latin America Mexico: country analysis credit: istock Business gets a boost New government measures and a young population are set to fuel growth in Mexico's beauty market by Alex Wynne T he year 2013 was tough for Mexico's prestige beauty market, as uncertainty about the new government's economic reforms gained traction, negatively-although some say temporarily-impacting consumer sentiment. After several years of strong double-digit growth, department stores reduced their inventories in late 2012 and sales in the prestige segment subsequently fell in the 10 months to October 2013, according to industry observers. Still, signs of improvement were seen in November, with sales picking up by as much as 14% on year. Market-research company Segmenta reported that prestige retail sales in 2013 reached 6.41bn pesos ($478.16m), up 7.59% in value and 3.8% in units, compared with 2012. Segmenta covers 76% of prestige retail in Mexico. However, Euromonitor puts the growth of prestige at 9.53% for 2013. Source: Segmenta "We expect [2014] to be a very good year for Mexico," Velez says. "The middle class is growing, they're getting credit, and we are a very young market. Some 65% of the population is under the age of 32; these people are gaining purchasing power and they are great consumers of cosmetics." "Mexico is going through a very interesting time in terms of the number of reforms that the government is trying to put in place-energy reforms, education reforms, tax reforms, which I think are going to be fantastic for the country in the mid- and long-term," comments Daniel Rachmanis, Estée Lauder Companies svp for Latin America. "It has created a little bit of concern in terms of consumer confidence over the last quarter [of 2013], but I think that's temporary." Still, Mexico remains a difficult and expensive market for brands. "It's the US without the revenues," one executive sums up. The market is led by department stores, which account for some 90% of prestige distribution, with brands paying for all marketing costs and often, BAs' salaries. Add to this the fact that the top-five brands in fragrance-which still represents the 60 March-April 2014 - N°17 - BW Confidential A positive outlook For 2014, the outlook is positive. According to Federico Velez, ceo of distributor Pavel, the recent budget voted in by Mexico's government, which will inject money into the economy, has buoyed consumer sentiment, while as of September 2013, generous credit offers from the country's major retailers have boosted spending. Mexico top five prestige brands 2013 Rank Skincare Make-up Women's fragrance Men's fragrance 1 Lancôme MAC Chanel Carolina Herrera 2 Estée Lauder Clinique Carolina Herrera Hugo Boss 3 Clinique Lancôme Lancôme Ralph Lauren 4 Clarins Estée Lauder Givenchy Giorgio Armani 5 Biotherm Chanel Ralph Lauren Chanel

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