With debilitating economic crises a thing of the past, Argentinean women are free to indulge in their great passion: beauty.
This story first appeared in the May 9, 2008 issue of WWD. Subscribe Today.
Beauty is everywhere in Argentina, with a constant stream of ads urging women to buy lotions, potions, creams and shampoos to keep them looking younger, thinner and more attractive.
No wonder, considering that Argentineans are absolutely obsessed with appearance and dieting. In a country that imports more silicone implants per capita than any other in the world, women are not only very attractive, extremely thin and very tanned, but also all seem to have ridiculously nice hair.
Two-thirds of schoolgirls say they want to be models when they grow up, which explains why Mattel chose Buenos Aires to open its first-ever Barbie “fashion-attainment” store, where girls can have their hair and makeup done at the Barbie beauty salon.
The obsession with beauty is reflected in sales. Cosmetics and toiletries rang up $2.3 billion in 2007, according to Euromonitor International, a figure expected to hit $2.7 billion by 2012.
Also surprising is that Argentina is fast becoming a major exporter of cosmetics. According to figures from Cámara Argentina de la Indústria de Cosmética y Perfúmeria, or CAPA, exports reached $345 million during 2007. Argentina’s main buyer is Chile while its main exporter is Brazil. “Argentina is producing cosmetics at a great quality level because our local rules are as strict as the European ones,” says Julio Torres, operations manager for CAPA.
Such growth wasn’t always a sure thing. Argentina experienced a dire economic crisis in 2001. The road to recovery began in 2003; over the last four years, this country with a population of 40 million has seen average GDP increases of around 9 percent a year, reaching in 2006 a per capita annual income of $15,200. The economy is expected to continue to grow through 2011.
“We’ve surpassed the levels we had before the crisis,” says Fernando Suban, director of AC Nielsen Argentina. Today, consumer confidence is at an all-time high. According to Nielsen, average monthly expenditures over 2006-2007 increased by nearly 25 percent.
One sector in which women are eager to spend money is hair care. In 2007, sales reached $570 million, according to Euromonitor. Fragrance was second with $333 million, followed by men’s grooming products at $325 million, skin care at $324 million, premium cosmetics at $217 million and makeup at $150 million.
Another aspect of Argentinian culture is the desire to always be clean. There’s a kind of obsession with the matter that makes women go out with their hair wet as a symbol of permanent “freshness.” Argentineans wash their hair on a daily basis; hair care was the only sector of the toiletries market in which the government stepped in and negotiated an agreement for containing prices during the economic crises.
According to Latin Panel Argentina, 46 percent of Argentinean women work outside the home, a proportion that declines as one moves down the social pyramid. Working women spend an average of 7 percent more and shop 7 percent less frequently. Most women who work are between 25 and 49 years old; their primary purchases are cosmetics, jewelery, books and clothes. “Argentinean women are very keen of their appearance, no matter their social status,” says Carla Andrada, head of press at Avon Argentina. According to Avon, the company receives about six million orders annually, at an average of $50 each. About 80 percent belong to lower- and middle-class working women. Though a leader in direct sales, Avon had to open a dozen flagships in different cities here in order to increase customer familiarity with its products.
Overall, women are becoming much more savvy about beauty products. They’ve become highly demanding, requiring quality and valuing brands on the basis of their appeal, since price is no longer a valid indicator in itself. Brand loyalty can no longer be taken for granted.
According to a recent survey by Nielsen, regarding hair care and bath and toiletries, the primary retail channels are hypermarkets and local supermarket chains and pharmacies. But when it comes to buying color cosmetics, consumers largely preferred the convenience of neighborhood stores, because of the impression that independent stores offer a more personal shopping experience.
Also, consumers do not want to travel to stores relatively far away. A notable exception is Farmacity, a drugstore chain that showed strong retail growth over the last five years. Farmacity’s growth is attributable to its 24-hour, seven-day service, competitive prices, heavy advertising and frequent promotions, interest-free financing and a large number of stores in high-traffic areas.
Another huge portion of the beauty market takes place in direct selling. Avon is the leader, though Tsu Cosméticos is a strong contender. Meanwhile, the high-end luxury market continues to be dominated by imports such as Clinique, Dior and Lancôme. Other major players include Procter & Gamble, L’Oréal, Maybelline, Unilever, Johnson & Johnson, Coty, Natura and Colgate-Palmolive; the most significant local player is The Value Brand Co. In addition to the well-known multinationals, “small and medium-size companies have gradually increased their shares,” according to Euromonitor. Such brands on the rise include Tsú Cosméticos, Cannon Puntana SA, Lab. Andromaco SA, Matiz SA and Naturel SA.
Argentina’s Cosmetics and Toiletries Sales: 2007
Total Market: $2.3 billion
1. Hair Care: $570 million
2. Fragrance: $333 million
3. Men’s Grooming: $325 million
4. Skin Care: $324 million
5. Premium Cosmetics: $217 million
6. Makeup: $150 million
The Knife’s Edge
“Argentinean girls are amazing. They are the most beautiful women in the world and I cannot wait to come back.” So said pop star Robbie Williams during an interview with local journalist Diego Maradona. Ask anyone in Buenos Aires why this is the case and the answer is always the same: “It’s in the genes.” However, according to a book called The Masks of Argentina, written by Luis Majul, plastic surgery may be the reason why. One in 30 Argentineans has had plastic surgery. Add up all of the procedures—facelifts, liposuction, hair transplants, breast implants, etc., says José Juri, Argentina’s leading plastic surgeon, and the only country that possibly carries out more operations as a proportion of its population is Brazil. The U.S., France, Italy and Spain all lag behind, despite being far richer, according to the International Society of Aesthetic Plastic Surgery. In fact, within six months of the crash, a period when spending in supermarkets went down by 40 percent, plastic surgeons—as well as fitness clubs and beauty salons—were all reporting that business was booming again.