By  on July 24, 2014

MEXICO CITY — Brazil’s beauty industry, the world’s third-largest, is expected to grow by 11.8 percent to 42.6 billion reals, or $19.2 billion at current exchange, this year, despite slowing consumption on the back of Brazil’s economic downturn.

Latin America’s largest economy is set to grow a mere 1 percent in 2014, down from a 2.3 percent hike last year and much higher growth rates in the past few years.

The slowdown, however, is not worrying the beauty industry, which continues to grow at double-digit rates, driven by buoyant consumption of low-price items in the flagship hair-care, fragrance and deodorant markets, which make up 50 percent of turnover.

“The industry remains unfazed by the fluctuations of the Brazilian economy since cosmetics, toiletries and fragrances are low-average-ticket products that don’t impact consumers’ budgets,” João Carlos Basilio, president of main industry lobby Abihpec, told WWD. He added the sector remains a top employer with 5.6 million workers and is “highly competitive.”

This year, the industry will step up investment by 5.2 percent to $14 billion reals, or $6.3 billion, with the majority going toward brand development, expansion and research and development activities. Beauty leads other industries in brand investment, with new product launches a key revenue booster, Basilio said.

“It is essential to invest in brand positioning,” he noted. “The market renews itself very quickly.”

According to Basilio, the beauty circuit has been growing at 3 to 4 percent above the economy in recent years. In 2016, Abihpec forecasts it will account for 2 percent of gross domestic product, up from 1.8 percent now.

“The industry remains optimistic, investing to increase production capacity, research and innovation,” Basilio asserted. Brazil’s beauty industry is now the world’s third-largest after the U.S. and China — but first in some segments including deodorant, sunscreen and fragrance, Basilio said.

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