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Brazil as Beauty Paradise

Brazil is a burgeoning beauty mecca, according to François-Xavier Fenart, president and chief executive officer of L’Oréal Brazil.

Brazil is a burgeoning beauty mecca, according to François-Xavier Fenart, president and chief executive officer of L’Oréal Brazil.

During his address at the Summit, Fenart discussed the country and how his company has adapted its business model there.

Fenart reminded attendees that Brazil hasn’t long been a free market. In the Seventies, it was sealed off under military dictatorship, and, subsequently, its economy was slammed by financial instability.

Fast-forward to today, and Brazil has a healthy economy. Its gross-domestic-product growth is estimated at close to 6 percent this year. Further, Brazil’s young and ethnically diverse population is growing quickly (as is its middle class); in two decades, the country’s expected to have 20 million more people than its current 220 million denizens.

Brazil has the third-largest health and beauty market worldwide, with approximately $20 billion in sellout (excluding soap and oral care), said Fenart. It’s number two in fragrance, color and hair care, and it ranks first in deodorant.

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In eight years, L’Oréal has gained almost 40 million new consumers in Brazil. It is the fourth-largest beauty player there, 50 years after its arrival. In 2009, the company registered 15 percent growth and had 8 percent market share, and in first-quarter 2010 the company posted 32 percent gains in the country.

“The future is today in Brazil,” said Fenart, who outlined some best practices. He said it’s key for executives to continually deal with the country’s fiscal complexity. Import tax can run up to 150 percent, for instance, and taxes can vary by state, by product and by category.

“Brazilian women are looking for a real, natural beauty,” he continued, adding beauty in Brazil is correlated with personal hygiene. Women in Brazil will take up to three showers daily in summertime, for example.

“We have an obsession with having white teeth and clean nails; you don’t go out of the house if you’re not impeccable,” said Fenart. “The main preoccupation is hair. It is a weapon of seduction for the Brazilian woman.”

Brazilian women wash their hair nearly daily and use up to four to five products. The second main beauty priority is body care, followed by skin care. He explained many Brazilians use body products on their faces and continued that there’s a “booming” sun care market in the country.

The dermacosmetics segment is growing fast in Brazil. Meanwhile, the professional category is flourishing but still only contributes 3 percent of the whole.

Brazil’s numerous retail channels include food sellers, drugstores, pharmacies and door-to-door. The selective scene remains highly segmented.

Part of L’Oréal’s success in Brazil stems from its creation of a laboratory (a first for one of the company’s subsidiaries, in 2006) focusing on hair. It was a must, said Fenart, since there are a phenomenal eight hair types in Brazil. Certain innovations — in both product and services — specifically for Brazil have been developed in that lab.

L’Oréal also established an active cosmetics division in Brazil in 2002, since its citizens are dermatologist enthusiasts.

L’Oréal ranks first in Brazil’s professional market, where it concentrates on color and treatment. And to further win over the middle class, the firm has been introducing “accessible innovation” through its Garnier and Matrix brands plus some new categories.