MASS BEAUTY AND PERSONAL CARE IN BRAZIL - ANALYSIS

Country Report | Jul 2023

KEY DATA FINDINGS Market Sizes

Retail value sales grow by 12% in current terms in 2022 to BRL112 billion Sales of Mass Beauty and Personal Care
Mass fragrances is the best performing category in 2022, with retail value sales Retail Value RSP - BRL million - Current - 2008-2027
increasing by 21% in current terms to BRL31.2 billion
Natura Cosméticos SA is the leading player in 2022, with a retail value share of 16%
111.692 Forecast
200.000
Retail sales are set to increase at a current value CAGR of 7% (2022 constant value
CAGR of 3%) over the forecast period to BRL158 billion
150.000
2022 DEVELOPMENTS

Facial skin care and adult sun care boost mass beauty and personal
100.000
care, but fragrances maintains its leading role
While premium beauty and personal care products continued to show a robust
performance in 2022, there was also healthy growth in sales of mass products in 2022,
50.000
driven by Brazilian consumers’ increasing attentiveness towards health and skin care.
Categories such as mass adult sun care and skin care outperformed the premium
segment, with per capita spending on these categories experiencing an approximate
12% increase from 2021 to 2022 in local currency. This signifies the growing importance 0
placed on health and skin protection, as consumers are prioritising their skin care 2008 2022 2027
routine and embracing products that cater to their specific needs. Meanwhile,
fragrances maintained its prominent position, showing rapid recovery in consumption
and outpacing the general speed of recovery of average incomes in the country. Sales Performance of Mass Beauty and Personal Care
Despite the economic challenges, fragrances demonstrated resilience, as consumers % Y-O-Y Retail Value RSP Growth 2008-2027
prioritised the indulgence and personal expression offered by scents.
Despite the rising cost of living, local consumers remained interested in affordable
indulgences, providing opportunities for products such as local brands. DaBelle, for
11.8% Forecast
20%
instance, has strongly explored hair care through in-store channels, appealing to
consumers with recognised ingredients and competitive prices, even surpassing some
mainstream mass consumer brands. The player also revamped its marketing, 15%
highlighting its social and sustainable commitments. This approach emphasises the
significance of ethical and responsible brands across all price segments in Brazil,
regardless of whether they fall under the premium or mass segment. 10%

Trading down in hygiene to sustain consumption in beauty, and trading

across in gifts 5%

The Brazilian population was conscious of spending during the pandemic years,
avoiding spending on discretionary items such as beauty products. However, by 2022 0%
this seemed to have changed, and Brazilians started to become more aspirational due
to increasing disposable incomes. The average real monthly household per capita
income reached BRL1,586, a 7% increase compared with 2021, when it was BRL1,484 – -5%
2008 2022 2027
the lowest in the historical series initiated in 2012 by the Instituto Brasileiro de
Geografia e Estatística (IBGE). This resulted in people being more willing to spend on
new technologies, experiences, and products. The slight recovery of macroeconomic
indicators contributed to this scenario. However, the increase in incomes was
accompanied by rises in the prices of hygiene products, with double-digit adjustments
in categories such as bar soap and toothpaste. To address the challenge of aspirational
consumption while facing higher prices for essential hygiene products, many Brazilians
chose to save on personal care products to afford beauty products. This resulted in a
divergence in the performance of companies positioned between hygiene and beauty.
O Boticário, Ruby Rose, and Natura are examples of mass beauty brands that performed
strongly – and better than those found from mainstream brands positioned in personal
care in Brazil – such as those from Coty, Colgate-Palmolive, and Unilever.
Marked by the return to socialisation, 2022 also brought back gift-giving occasions.
Mother’s Day, Christmas and Valentine’s Day are examples of dates that historically
drive sales of beauty products. Brazilians saved in 2022, but did not remove gifts from
their consumption basket. The trading across phenomenon helped balance spending.
Trading across refers to the tendency for consumers to shift their preference from more
expensive products to more affordable alternatives without a change in brand, but
transitioning between categories. Driven by economic uncertainties, this switching
behaviour seeks better value for money without compromising on needs or wants.
Replacing fragrance with scented body lotion or gift soap are examples of moves made
to maintain gifting purchases throughout the year.

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Grocery retailers faces challenges from inflationary pressure, driving the Sales of Mass Beauty and Personal Care by Category
rise of new distribution channels Retail Value RSP - BRL million - Current - 2022 Growth Performance
With the increasing prices of essential consumer goods, in 2022 trips to grocery retailers Mass Baby and Child-specific Pro...
were targeted towards the consumption of basic products. Spending on discretionary 6.095,2
goods became more rationalised, with distribution shifting away from supermarkets Mass Bath and Shower
and hypermarkets towards e-commerce platforms and beauty specialists. This 11.661,0
transition was driven by the greater diversity of SKUs (stock keeping units) available, Mass Colour Cosmetics
and the ability to compare prices and options, which are more extensive in these 9.235,3
channels. Mass Deodorants
11.769,0
Some specific categories, such as colour cosmetics, have also developed new consumer
spaces focused on the mass segment. The make-up sales franchise Espaço Make Mass Fragrances
31.214,2
proposes to sell products from brands such as Max Love, Ruby Rose, Luk, Playboy, and
Fenzza for BRL10 in shopping centres, and already has around 20 points installed. The Mass Hair Care
24.044,5
company’s next step is inspired by the connection between direct selling and e-
commerce, through a home-based e-commerce franchise. This new strategy has been Mass Skin Care
14.956,8
developed for those who want an extra income, have an affinity with the internet and
make-up, but do not have the financial resources to afford a physical shop. The low Mass Adult Sun Care
2.715,6
initial investment allows a good performance through competitive prices, and allows a
-5% 10% 25%
balance between indulgence and the tight monthly budgets of Brazilian consumers.
MASS BEAUTY AND PERSONAL CARE 111.691,7 CURRENT % CAGR % CAGR
According to Euromonitor International’s Lifestyles survey conducted in 2022, the main YEAR % 2017-2022 2022-2027
motivations for in-store shopping highlighted by Brazilians are: the possibility to try the GROWTH
product before buying (45%), and immediate purchase (46%). With the desire for
immediate consumption, and purchasing power under pressure, apparel and footwear
specialists such as Renner, C&A, and Riachuelo are also emerging as an attractive
channel for consumers. These shops have significant regional capillarity, have Competitive Landscape
increased their assortment of beauty and personal care products, and also offer the
possibility of paying in instalments using store cards. Concentrating beauty spending on Company Shares of Mass Beauty and Personal Care
a dedicated card makes it easier to separate essential from discretionary spending,
% Share (NBO) - Retail Value RSP - 2022
offering financial ease.
Natura Cosméticos SA 16.0%
PROSPECTS AND OPPORTUNITIES Botica Comercial Farmacê... 15.1%
Unilever Brasil Ltda 12.8%
Slight upturn in macroeconomic indicators, increase in welfare benefits,
and sustainability suggest a positive forecast Avon Cosméticos Ltda 3.9%
Procosa Produtos de Bele... 3.8%
Due to a series of structural bottlenecks, the average growth of Brazilian GDP was
severely limited in the past decade (0.6%), despite the country’s highly favourable BDF Nivea Ltda 3.6%
demographic structure. Productivity growth is low due to a number of factors, including Coty Brasil Indústria e ... 3.5%
a complex tax system, unequal accumulation of human capital, and low savings rates. In
2022, real GDP grew by 2.9%, largely driven by household consumption, which Johnson & Johnson do Bra... 3.2%
increased by 4.3% during the year. The labour market recovery continued, with Colgate-Palmolive Indúst... 2.7%
unemployment dropping to 7.9% in December 2022 – the lowest level since 2015.
Procter & Gamble do Bras... 1.9%
Inflation continues to pose a persistent challenge for Brazil: its peak of 12.1% in April
2022 led to a strong cycle of monetary tightening, which raised the basic interest rate to Phitoteraphia Biofitogen... 1.6%
13.75% in December 2022. The expansion of federal social transfers continues to play a Niely do Brasil Industri... 1.5%
key role in providing income to lower-income segments. These transfers helped reduce
the poverty rate to 24.3% in 2022, down from 28.4% in 2021 (the poverty rate is based Mary Kay do Brasil Ltda 1.5%
on a value of USD6.85/day, PPP). Striking the right balance between protecting the Devintex Cosmeticos Ltda 1.1%
poorest and ensuring the sustainability of public finances, including at subnational
levels, is a fundamental political challenge to be overcome in the coming years, and Flora Produtos de Higien... 0.9%
may dictate the consumption capacity for mass beauty and personal care in the forecast Larru's Indústria e Comé... 0.9%
period.
Wella Brasil Ltda 0.7%
Supporting the transition to a greener and more resilient growth model also remains a Jequiti Cosméticos 0.7%
major challenge. Brazil is home to over 60% of the Amazon rainforest, the largest
Other Private Label 0.1%
tropical forest in the world, and has a high share of renewable energy in its energy
matrix. However, its high exposure to climate risks and deforestation requires a robust Others 24.4%
reform agenda to address these challenges. Consumers are increasingly aware of and
rigorous about companies’ commitment to this cause. According to the 2022 Lifestyles
survey conducted by Euromonitor, more than a quarter of Brazilian respondents
strongly agree with the statement, “I feel I can make a difference to the world through
my choices and actions”. At the same time, more than 68% of global beauty and
personal care players claimed to invest in climate-related actions using sustainable
packaging, according to Euromonitor International's Voice of the Industry: Sustainability
survey. As a result, most innovation is expected to continue to focus on less use of
plastic, new formats that limit the use of water, and refillable options.

Influencers will increasingly shape brands and products, considering

importance of social media
In an environment where the current beauty products are experiencing increasing
competition from new brands, the importance of customer loyalty and retention will
become even more critical, especially considering the significant influence of social
media. With the rise of influencers and the power of online platforms, consumers are
constantly exposed to a wide array of beauty options. Social media plays a pivotal role
in shaping consumer preference and driving brand awareness. Building a loyal
customer base requires not only the provision of good products and experiences, but
also leveraging social media to engage with customers on a personal level. Brands that
effectively harness the power of social media can connect with their audience, create

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meaningful interactions, and foster a sense of community. To internalise these Brand Shares of Mass Beauty and Personal Care
advantages, big beauty companies have created brands and specific lines targeted % Share (LBN) - Retail Value RSP - 2022
towards influencers and famous personalities on the internet. Grupo Boticário has
launched Nina Secrets within the Eudora brand, while Océane has incorporated lines Seda 2.7%
more connected to gen Z through the influence of Larissa Manoela, or millennials Dove 2.5%
through a partnership with Mariana Saad. However, influencers are no longer perceived
only as a vehicle for recommending other brands, and have started to captain the Natura Tododia 2.2%
reinforcement of their own name through products, especially in lines positioned as Natura Ekos 2.2%
masstige, which flirt with aspirational appeal and premium quality at a price closer to
the mass segment, hitting the optimal point in the search for cost-effectiveness. Malbec 2.0%
Nivea 1.9%
Masstige and D2C emerge as favourable trends for forecast growth Eudora 1.7%
The masstige concept in beauty and personal care is expected to continue its upwards Palmolive 1.6%
trajectory in the forecast period, in response to the projected increase in purchasing Rexona Women 1.5%
power amongst consumers. As economic conditions improve and disposable incomes
rise, consumers are likely to seek out products that offer a blend of affordability and Lux 1.4%
high-quality experiences. The masstige segment is well-positioned to meet this Rexona Men 1.3%
demand, providing consumers with accessible luxury options that align with their
evolving preferences. This forecast suggests that the masstige segment will witness Monange 1.3%
sustained growth, as more consumers aspire to elevate their beauty and personal care Pantene 1.3%
routines while maintaining a reasonable budget. Players catering to the masstige
Mary Kay 1.2%
segment are anticipated to capitalise on this trend by expanding their product offerings
and enhancing their marketing strategies to attract and retain a growing base of O Boticário 1.1%
discerning consumers seeking a balance between affordability and prestige. Big players Elsève 1.1%
in the industry have already explored this trend. Beiersdorf has increased its skin care
products through lines such as Nivea Cellular Luminous Facial Serum, and L’Oréal Floratta 1.1%
through its CeraVe line. Pharmacies have shown themselves as a good translation Johnson's Baby 1.0%
channel for different positionings, especially in skin care, which has acquired well-
Other Private Label 0.1%
defined and delimited spaces within physical shops for the premium, masstige, and
mass segments. Others 70.8%

The pandemic led to significant challenges for traditional mass beauty and personal 5-Year Trend
care retailers to reach out to their target audience. This made them realise the Increasing share Decreasing share No change
importance of having a strong online presence, which D2C brands enjoyed during the
pandemic, as they were driven by technology, depending on online sales through their
own websites, or platforms such as Amazon, Mercado Livre, and Shopee.

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