Beauty & Personal Care in Portugal

The performance of beauty and personal care takes a negative turn

The economic climate in 2011 led sales of beauty and personal care products to decline, as

consumers tightened their budgets. In particular during the second half of the year, the crisis in

Portugal dominated newspaper, press and media articles; these were generally pessimistic about

the economic situation. As a result, mature categories such as fragrances, skin care and sets/kits

suffered the most. Price-sensitivity is now the reality for the majority of Portuguese consumers,

who use techniques such as more frequent visits to outlets to find promotions. Along with many

other markets, beauty and personal care struggled in 2011. Nonetheless, some product categories

succeeded in growing sales despite the recession.

Product offers and strong price competition

Pessimism about the economy made Portuguese consumers especially attracted to discounts and

price offers on cosmetics, which were particularly developed during 2011, as manufacturers

struggled to maintain volume sales. The average household income decreased strongly, which,

combined with the rising cost of living, meant that Portuguese consumers were becoming

increasingly price-sensitive. The products offered at reduced prices, most commonly found in the

mass segment, were the ones which benefited from these trends. Offers such as buy-one-get-one-

free were seen. Pingo Doce (a large supermarket chain from Jerónimo Martins) launched an

interesting concept of baskets which are tailored with different combinations of products, such as

a shampoo, toothpaste, shower gel and deodorant from different brands.

Private label has a better image and sees a slight increase in penetration

The Portuguese economic downturn brought changes in the competitive environment in the

country. The significant decline in consumer spending created fierce competition amongst many

manufacturers, due to decreases in revenue. In terms of private label beauty and personal care

products, El Corte Inglés launched Veckia, and Continente (a large supermarket chain from

Sonae Distribuição) launched My Label in 2011. The competitive prices and range of offers in

private label, as well as the greater availability in even more supermarkets, hypermarkets and

discounters were the main factors which contributed to the rising popularity of private label in

Portugal during 2011. The launch of My Label for Sonae was an important milestone for the

mass segment. However, the four leading players in the Portuguese market in 2011 were L’Oréal

Portugal, Procter & Gamble Portugal, Unilever Jerónimo Martins and Beiersdorf Portuguesa.

Premium products suffer huge pressure

The premium segment suffered in 2011; these products are normally purchased by higher-

income consumers. In Portugal the upper middle-classes were affected by the economic crisis,

and in particular by new taxation regimes. Fragrances and skin care have an important weight of

sales of premium products, but Portuguese consumers started to use less expensive luxury brands.

The quality image of premium brands and the higher prices associated with these products

changed in 2011. Consumers can see that there are similar products with similar quality with the

same purpose at cheaper prices. Offering more appealing and similar products is now very

common amongst masstige brands, which try to convert premium clients.

Further decline expected over the forecast period

The beauty and personal care market is expected to decline further, as the Portuguese economy is

not expected to recover from its current recession any time soon, and disposable incomes are

expected to decline further over the course of the forecast period. Portuguese beauty and

personal care manufacturers are therefore very pessimistic about the future, and there will be

more brand competition, with growth rates not expected to show signs of recovery before the end

of the forecast period, especially through specialist beauty and personal care channels.