key trends in beauty and personal care in north and latin america
TRANSCRIPT
KEY TRENDS IN BEAUTY AND PERSONAL CARE
NORTH AND LATIN AMERICA
OCTOBER 2015
INTRODUCTION
DIVERSIFICATION IN DISTRIBUTION
KEY MARKETING STRATEGIES
POTENTIAL IN NATURAL PRODUCTS
OPPORTUNITIES IN NEW CONSUMER GROUPS
SUMMARY
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Scope
INTRODUCTION
Beauty and Personal Care
Baby and Child-Specific Products
Bath and Shower
Colour Cosmetics
Deodorants
Depilatories
Fragrances
Hair Care
Men's Grooming
Oral Care
Skin Care
Sun Care
Sets/Kits
Premium Beauty and Personal Care
Mass Beauty and Personal Care
INTRODUCTION
DIVERSIFICATION IN DISTRIBUTION
KEY MARKETING STRATEGIES
POTENTIAL IN NATURAL PRODUCTS
OPPORTUNITIES IN NEW CONSUMER GROUPS
SUMMARY
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Beauty and Personal Care is one of the most dynamic fmcg industries in the Americas. Sales in North and
Latin America combined increased by 7% at fixed exchange rates in 2014.
Beauty and personal care, a dynamic industry
DIVERSIFICATION IN DISTRIBUTION
0
20
40
60
80
100
120
140
160
180
2009 2010 2011 2012 2013 2014
US
$ b
illi
on
Sales of beauty and personal care in the Americas 2009-2014
Latin America North America
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Traditional retailers within beauty and personal care, such as direct sellers, modern grocery retailers and
mixed retailers, have been increasing their sales at lower rates compared to health and beauty specialist
retailers and internet retailing. This diversification in distribution is an opportunity for manufacturers and
retailers to cater to growing demand for value-added products and convenience.
Distribution diversifies within beauty and personal care
DIVERSIFICATION IN DISTRIBUTION
0
5
10
15
20
25
30
35
Modern Grocery Retailers Health and BeautySpecialist Retailers
Mixed Retailers Direct Selling Internet Retailing
% v
alu
e
Beauty and personal care distribution in Americas 2004-2014
2004 2014
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Euromonitor International’s survey on shopping for beauty and personal care showed the preference of
consumers to purchase in stores, which contributes to support the growing sales in channels such as health
and beauty specialist retailers compared to direct selling.
Impulse purchasing plays an important role in consumers preference to purchase in a store.
Preference for purchasing at stores
DIVERSIFICATION IN DISTRIBUTION
Brazil
46.4%
Colombia
49.3%
US
55.2%
Mexico
50.0%
% of Respondents who
purchase in person at a store – 2014
Source: Euromonitor International Survey 2014
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Movement towards multichannel in Latin America
DIVERSIFICATION IN DISTRIBUTION
Gu
atem
ala •Beauty specialist stores and
drugstores have expanded their assortment of beauty and personal care products, and they have been gaining importance, especially in sales of masstige products. In order to capture this movement, Boots acquired the second placed Chilean pharmacy, aiming to introduce its private label. Salco, the leading drugstore in Chile recently acquired DBS, an independent beauty specialist retailer.
Ecu
ado
r •Modern grocery retailers face a very competitive environment, which has led them to develop very aggressive strategies, including price wars in a number of categories. This has been impacting direct sellers, particularly those targeting lower income levels. Modern grocery retailers have been offering products at similar prices to direct sellers with the advantage of the products being available immediately.
Co
sta
Ric
a •Stiff competion among retailers such as drugstores, beauty specialist retailers, direct selling and hypermarkets is driven by special occasion sales and convenient payment deals, such as Black Friday, payment apps and partnerships between providers of financial tools and stores, such as ZIMP, an app for smartphones, which works as a virtual pocketbook used to pay in certain stores through the use of a code.
In some countries within Latin America, there have been movements towards expanding sales to new
channels and initial investment in multichannel retailing.
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Movement towards multichannel in Latin America
DIVERSIFICATION IN DISTRIBUTION
Ch
ile
•Due to the stiff competition in medicines, drugstores have taken the opportunity to expand their assortment of products to beauty and personal care, which offers better margins. Meykos Parapharmacies, for instance, offers consultants provided with equipment to examine customers’ skin and recommend the most suitable products.
Mex
ico
•Internet retailing is one of the channels that retailers have been investing in to cater growing interest among consumers in the convenience offered. Fybeca, one of the biggest chained drugstores, recently initiated operations through the internet.
Peru
•Direct selling continues to lose share to store-based retailing due to constant investment in discounting and marketing activities. In addition, consumers are proving less willing to wait to receive direct selling orders.
Co
lom
bia
•Both manufacturers and retailers are expanding channels to become omnipresent in the current retail environment. Beyond the expanding internet retailing marketplace, retailers like Almacenes Éxito are making inroads in sales based on catalogues, while large companies like Nutresa are rapidly expanding in direct selling. During the review period, major direct sellers like Amway and Belcorp launched bricks-and-mortar stores to expand their presence.
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Canada, the US and Brazil are the top three markets in terms of per capita consumption within the
Americas. More developed markets are at a different stage of multichannel retailing, with a focus on the
premium segment through direct selling and investment in private label.
Distribution in mature markets
DIVERSIFICATION IN DISTRIBUTION
In a very competitive retail landscape that has seen strong growth for beauty specialist retailers and internet retailing, direct sellers have struggled. However, direct selling is currently being re-imagined by newer companies that are breaking the mould of traditional direct sellers and compete at the premium end of the market. Rodan & Fields – a premium direct seller of skin care and sets/kits – has enjoyed phenomenal growth since its launch in 2008, and serves as a good example of this trend. However, as channel lines have blurred, and even mass operators have begun to offer products that emulate boutique quality items, consumers have either committed to full-scale premium products or have settled for the value tier. Thus, as direct sellers look to remain competitive, they have increasingly begun to offer more premium products in an effort to entice the more affluent.
The large number of new entrants in the market is increasing competition in the industry, while traditional players are investing in marketing campaigns and innovation in order to retain their market share and increase their penetration among consumers. As a result, the use of multichannel strategies has increased greatly in the past few years, as players are entering all the channels available in the country in order to catch consumers’ attention and increase sales. For example, O Boticário, a traditional beauty specialist retailer, entered the direct selling channel a few years ago, and is also present online. The strategy is paying off, as O Boticário continues to grow strongly year-on-year.
Retailers are seeking to capitalise on demand for beauty and personal care, and more private label products are entering the market. Loblaws Cos –Canada’s leading grocery retailer – has recently acquired Shoppers Drug Mart – the leading Canadian drugstore retailer and one of the largest beauty care retailers. Loblaws is expanding its beauty care range under the Joe Fresh brand to include skin care formulated with botanic ingredients. Joe Fresh was launched initially as a private label apparel brand of Loblaws, but has gained the status of a fashion brand. The retailer continues to build its expertise in beauty and personal care, leveraging the Joe Fresh name, while putting emphasis on marketing Joe Fresh beauty lines and seeking to fit better into the prevailing trends in the Canadian beauty care market.
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Some countries have been facing limited investment in retailing, due to economic slowdown. Bolivia
continues to benefit from the good relationships established by direct sellers.
Challenges for Venezuela, Uruguay and Bolivia
DIVERSIFICATION IN DISTRIBUTION
Venezuela
Due to regulatory obstacles to operating a business in Venezuela, the development of newer retailing options has faltered, with many retailers dropping plans to expand their platforms. For instance, retailers such as the supermarket Excelsior Gama and the home improvement and garden centre Epa previously offered online sales and homeshopping as a multi-channel strategy, but both have been forced to halt these efforts.
Uruguay
Distribution continues to be dominated by supermarkets and health and beauty specialist retailers.
Bolivia
Direct selling continues to remain the most important channel [Q: and it is outperforming store-based retailing. Passport – its share declined over the review period.] This is due to the good relationships built by consultants, which are still perceived as an important factor by Bolivians.
INTRODUCTION
DIVERSIFICATION IN DISTRIBUTION
KEY MARKETING STRATEGIES
POTENTIAL IN NATURAL PRODUCTS
OPPORTUNITIES IN NEW CONSUMER GROUPS
SUMMARY
© Euromonitor International
13
Competition is stiff in beauty and personal care, with the top 10 leading companies holding a 56% value
share in North and Latin America in 2014. The tough competition requires manufactures to innovate and
invest constantly in communication.
Beauty and personal care – tough competition
KEY MARKETING STRATEGIES
North and Latin America – Beauty and personal care market shares by value - 2014
Procter & Gamble Co, The
L'Oréal Groupe
Unilever Group
Colgate-Palmolive Co
Johnson & Johnson Inc
Estée Lauder Cos Inc
Avon Products Inc
Natura Cosméticos SA
44%
56%
Source: Euromonitor
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Investment in mass advertising campaigns continues to be important to leading multinational players to
increase brand awareness in competitive categories within beauty and personal care. Some companies have
been focusing on specific marketing actions at points-of-sale, product positioning and associating products
with professionals.
Different marketing strategies to remain competitive
Professional brands
• US: MAC and Bobby Brown are associated with professional artists in make-up. Guthy-Renker has used a professional hair stylist named Chaz Dean to serve as its iconic figure.
• Brazil: Unilever has presented TREsemmé as a professional product, and this high quality image has contributed to the good performance of the brand.
Ethnic products
• Canada: In spring 2014, L’Oréal announced a new marketing and product development strategy that will seek to draw the attention of consumers in China and other Asian markets.
Marketing in point-of-sale
• Uruguay: Leading players in hair care have been advertising products with point-of-sale materials, while drugstores have been promoting products through the distribution of flyers.
• Chile: Specialist stores for Estée Lauder brands have a specialist to teach and assess consumers, and offer free colour and facial make-up sessions.
KEY MARKETING STRATEGIES
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More investment in social media
KEY MARKETING STRATEGIES
Growing sales of computers and smartphones, and a rise in the number of people using the Internet in the
Americas have opened opportunities to companies to explore other channels to promote their brands,
such as social media (eg Facebook, Twitter and Instagram) and blogs.
Source: Euromonitor
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2009 2010 2011 2012 2013 2014
% p
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Internet access and ownership of technology in the Americas 2009-2014
Sales of Computers Latin America Sales of Smartphones Latin America
Sales of Computers North America Sales of Smartphones North America
% Population Using The Internet Latin America % Population Using The Internet North America
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Based on a survey conducted by Euromonitor International, the most common brand interactions via social
media are:
How consumers interact through social media
KEY MARKETING STRATEGIES
In Latin America, companies have been investing in social media to
have closer contact with consumers to promote new
products, promote discounting and understand consumers’ needs.
Ecuador faces restrictions due to communication regulations, while
Venezuela has experienced product shortages. Companies like
L’Oréal and Beiersdorf have responded by using social media to
advertise products. Source: Euromonitor International Survey 2014, 8,051
respondents
INTRODUCTION
DIVERSIFICATION IN DISTRIBUTION
KEY MARKETING STRATEGIES
POTENTIAL IN NATURAL PRODUCTS
OPPORTUNITIES IN NEW CONSUMER GROUPS
SUMMARY
© Euromonitor International
18
Differentiation through product innovation has been one of the strategies adopted by manufacturers to
remain competitive in beauty and personal care. Although products positioned as natural or containing
natural ingredients are still a niche in the Americas, they are increasing their presence.
In 2014, a survey showed that consumers are willing to pay more for natural products within beauty and
personal care.
Differentiation through natural products
POTENTIAL IN NATURAL PRODUCTS
Source: Euromonitor International Survey 2014, 2,129 respondents
Willingness to pay for beauty products
Sought-after green features - 2014
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An image of high quality, combined with the introduction of more effective and eco-friendly products across
all countries in the Americas, has driven sales of natural products.
Manufacturers with a focus on both mass and premium products have been investing in natural products. In
Canada and Argentina, for instance, there are local manufacturers specifically investing in this niche.
In the US, studies have been published linking triclosan to liver cancer, and suggesting that mothers could
easily passed parabens and phenols through their breast milk. The entire state of Illinois banned micro-
beads in 2014, as they are know to damage marine ecosystems. Negative publicity surrounding traditional
ingredients tends to draw the attention of consumers to natural and organic products.
Natural products perceived as offering high quality
POTENTIAL IN NATURAL PRODUCTS
Live Clean Baby
Calming Bedtime
contains a blend of
lavender, camomile,
jasmine and vanilla
extracts, and essential
oils
Boti-K in Argentina is
present mainly in bath
and shower with 100%
natural products
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Presence of natural positioning in mass products
POTENTIAL IN NATURAL PRODUCTS
Natura is acknowledged as using natural ingredients and
being socially responsible.
Avon is using the natural approach with Avon Naturals in
Ecuador
Speed Stick Naturals & Protect in Bolivia and Guatemala
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Local companies investing in natural products
POTENTIAL IN NATURAL PRODUCTS
Aromas para El Alma, local company from Costa Rica,
invests in natural and organic products
Yanbal Eco-organics with extracts from açaí, noni and
acerola
Roots Cosmética Natural, from Ecuador, includes synthetic
chemical-free soap in its portfolio
INTRODUCTION
DIVERSIFICATION IN DISTRIBUTION
KEY MARKETING STRATEGIES
POTENTIAL IN NATURAL PRODUCTS
OPPORTUNITIES IN NEW CONSUMER GROUPS
SUMMARY
© Euromonitor International
23
New consumer groups drive growth in beauty and personal care
OPPORTUNITIES IN NEW CONSUMER GROUPS
Men
High Income
Young Adults
Men, young adults and high income women are increasingly becoming targets for beauty and personal care
manufacturers, as they have proven to be willing to spend on everything from basic products to higher
priced, multi-functional and targeted items to improve their appearance.
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Young female consumers an important consideration
OPPORTUNITIES IN NEW CONSUMER GROUPS
0
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40
50
Ye
ars
Mean age of female population - 2015 While the age of consumers continues
to rise across the Americas, especially
in North America, the current average
age of women in many countries is
between 25 and 35. In some cases, it is
a full 10 years younger than the
average in Uruguay, US and Canada.
These young women are an important
target for new product innovation.
Even in countries where consumers are
ageing, there is a benefit to focusing on
young people, as establishing a
relationship early on will help to create
brand loyalty. Additionally, while
younger consumers may not have the
level of income of their older
counterparts, they typically have more
discretionary income and are willing to
invest in their appearance.
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Uruguayans have historically
been very traditional in their choice
of colour cosmetics; however, in
recent years, new trends have
brought new colours, such as
shining blue, green, orange and
pink to make-up and hand products
that have not only been adopted by
teenagers but by older women in
their everyday look. The wearing of
such vibrant colours among 50
year-old women would have been
unthinkable in the past, but is now
much more common. Brands such
as OPI in nail polishes and
Maybelline in make-up have been
developing colour trends and have
been very successful in Uruguay
While baby boomers remain a key
demographic in the US, much of
the industry’s recent growth can be
attributed to millennial shoppers.
Growth within skin care has shifted
away from anti-agers to acne
treatments, facial cleansers and lip
care. As millennials continue to
emerge as a prominent
demographic, their brand
preferences are creating shifts
within the competitive landscape.
Formerly strong brands, like Olay
and Avon, are ceding share to new
upstarts that appeal directly to
millennial consumers.
Teenagers in Ecuador are an
important group for beauty
manufacturers. Parents have
become more accepting of the early
adoption of make-up, allowing their
daughters to experiment with
products, especially colour
cosmetics. The population using
colourants is evolving, from 35 year-
olds and over towards teenagers
looking to change and update their
look regularly, resulting in
penetration jumping from 10% to
40% of the female population,
according to trade sources. For
women in Ecuador, hair is also a
very important part of grooming and
is considered as their “presentation
card”. Having the right colour (and
the colour on-trend) is a key part of
this.
Targeting youth despite older average population
OPPORTUNITIES IN NEW CONSUMER GROUPS
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-2
-1
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1
2
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7
8
2014-2
019 %
CA
GR
Co
ns
tan
t 2
01
4 P
ric
es
Forecast beauty and personal care growth vs men’s grooming 2014-2019
Men's Grooming
Total BPC
Men’s grooming expected to see strong growth
OPPORTUNITIES IN NEW CONSUMER GROUPS
Projected growth for men’s
grooming is strong in Latin
America. While this can be
attributed in part to the
smaller base of men’s
grooming, the opportunity is
still notable, especially in
Brazil, Mexico and Peru, where
growth over 2014-2019 is
predicted to outpace that of
total beauty and personal care.
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Men, particularly those in the upper or
middle income brackets, are
increasingly interested in investing in
personal care products. However, price
controls and import restrictions are
expected to continue restricting the
development and growth of men’s
grooming over the forecast period.
Venezuela’s leading beauty and
personal care companies are expected
to continue focusing on larger, less
regulated categories, making it likely
that men’s grooming will record low
levels of company activity during the
forecast period.
Venezuela
While men’s toiletries will see a positive value CAGR of 1% at
constant 2014 prices between 2014 and 2019, a sharp
decline in men’s shaving will drive growth down for men’s
grooming overall. The relaxation of men’s business dress
codes and fashion trends in facial hair, coupled with the cost
and inconvenience of shaving, will hamper sales.
There remains hope in men’s skin care. As male consumers
become more educated about their skin, a growing number
of consumers are expected to look for their own skin care
products rather than using the family products. Meanwhile,
manufacturers are expected to be active in product
development to help boost sales, continuing to link skin care
products with the shaving process.
Canada
Men’s’ grooming fairs poorly, for very different reasons
OPPORTUNITIES IN NEW CONSUMER GROUPS
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Guatemala Mexico
Men’s grooming is perceived as having
considerable potential in Guatemala. Men are
feeling more confident in buying specific products
for their personal needs, and companies are taking
the opportunity to launch new products designed
specifically for them.
The variety of products is growing in the market,
such as shampoos, for example Head & Shoulders
for Men (Procter & Gamble Interamericas Ltda),
bath and shower products like Protex Men (Colgate
Palmolive), and facial creams and moisturisers like
L’Oréal Men (L’Oréal).
In Mexico, most men’s grooming segments are
posting positive growth with increasing interest
from men in their personal care regimes. Men’s
skin care is expected to register the strongest retail
value CAGR of 8% at constant 2014 prices over the
forecast period, supported by a growing number of
men concerned about reducing signs of ageing,
which will favour men’s facial care.
A number of hypermarkets and parapharmacies
already have a men’s section, where all personal
care products for them are together, no matter if
they are hair care, skin care or deodorants.
Also, some direct sellers have recently started to
incentivise the entrance of men to their sales force
to help them to reach male consumers more easily.
Opportunities ahead for men’s products
OPPORTUNITIES IN NEW CONSUMER GROUPS
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Annual disposable incomes to see continued growth
OPPORTUNITIES IN NEW CONSUMER GROUPS
-3
-2
-1
0
1
2
3
4
5
6
% C
AG
R,
co
nsta
nt
pri
ce
s
Projected annual disposable income growth 2014-2019
Growth is expected for beauty and personal care products in most of the Americas . Those categories
considered non-necessities are expected to benefit from rising disposable income growth over the
forecast period.
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Rising incomes in Bolivia have expanded the
consumer base for beauty and personal care.
Manufacturers are specifically targeting these new
consumers through advertising, looking to build brand
loyalty.
Bolivia
As disposable incomes rise, the base of consumers
wanting to enjoy premium-like brands or those offering
affordable luxury increases. On many occasions, low-
income consumers purchase a premium product to
meet their aspirational desires.
Mass brands, like the direct sellers Yanbal and
Oriflame, are offering portfolios with higher perceived
value for consumers wanting to upgrade to more
premium products. The penetration of fashion brands in
colour cosmetics is still not as developed as it is in
fragrances. This could be a good expansion opportunity
for fashion brands in the retailing environment.
Colombia
The growing high income consumer group in Chile is
driving demand for premium beauty products. Top end
skin care from Perricone, La Prairie, Swiss Code,
Guerlain, and many others is much more visible and
available.
The middle and upper income segments of women are
discovering the benefits of more varied options in terms of
colour, as well as multi-benefit products like DD creams in
skin care. At the same time, they are moving towards
more premium product ranges.
Women have become more ambitious and optimistic
about their personal and career development.
Beauty specialist stores, including DBS, Bobbi Brown,
MAC and L’Occitane, have opened to target these
consumers. Drugstores and pharmacies have added
dedicated spaces for beauty and personal care (eg
Espacio Salco Brand, Ahumada and Cruz Verde).
Chile
From skin care to fragrances, premium growth opportunities abound
OPPORTUNITIES IN NEW CONSUMER GROUPS
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Brazil Peru
The trend for nail products in Brazil has led to
the creation of a new retail channel,
esmalterias. These are specialised beauty
parlours that offer manicures and pedicures,
and also sell a wide variety of premium nail
care products.
These salons attract those Brazilians interested
in premium nail care. While the market is still
considered niche, it is growing rapidly, as more
and more consumers are drawn to the trend.
In 2014, consumers continued to be attracted
by multi-benefit products, which help them to
save time. The hectic lifestyles of consumers
have led them to look for alternatives offering to
solve many problems with just one product.
Consumers are willing to pay extra for multi-
benefit products because they offer to replace
many products providing the same or similar
results.
New products and trends appeal to consumers willing to spend
OPPORTUNITIES IN NEW CONSUMER GROUPS
INTRODUCTION
DIVERSIFICATION IN DISTRIBUTION
KEY MARKETING STRATEGIES
POTENTIAL IN NATURAL PRODUCTS
OPPORTUNITIES IN NEW CONSUMER GROUPS
SUMMARY
© Euromonitor International
33
• Made to order
• Exclusivity
• Multi-purpose
• Multi-benefit
• Time saving
• Affordable luxury
• Value added products
• Natural Ingredients
• Natural Products
• Organics
Focus on health and
natural Premiumisation
Individualisation Convenience
SUMMARY
Innovations on new consumer’s profile and preferences
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SUMMARY
Multi-
channel
• The retailing environment is changing worldwide. Consumers want to be in control.
• Multi-channel is here to stay, mainly internet retailing, which is changing the way consumers shop.
Natural Products
• Consumers are more concerned about the benefits of natural products, for themselves and for the natural environment.
• Consumers are willing to pay more for natural products.
New Consumers
• New target consumer groups, such as men and teenagers, are expected to offer the highest growth in beauty and personal care, as there is plenty of room to develop these segments.
Top 3 future prospects for Americas
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