Mexico City – Exports are expected to roughly double this year, industry executives said, as Brazil’s beauty brands scramble to find new customers abroad in the face of a tough economic environment and increased competition.
Bruno Cavour, head of international expansion at Grupo Boticario, one of Brazil’s largest beauty companies, said: “Brands can be more competitive and make more money in other areas.” I’m starting to think about it,” he said.
Driving international expansion is the weaker real, which now trades at around 5 reais to the dollar compared to a 3-to-1 ratio a decade ago, making Brazilian products more attractive to foreign buyers. It has become a thing.
“We benefit from the exchange rate, which gives us a little more leeway,” Cavour said, adding that Brazilian labels have also become more sophisticated in recent years, improving product quality and control.
In fact, young and educated entrepreneurs are running more agile export franchises, helping to expand international shipments, especially to markets in Europe and the Middle East, where demand is particularly high.
“If you think about Brazilian entrepreneurs 30 years ago, many of them didn’t speak English and had never traveled outside Brazil, but the new generation is much braver and more globalized,” Cavour said. said.
The left-wing government of Luiz Inácio Lula da Silva, who won re-election in 2022, is also helping brands expand globally by sponsoring their participation in international beauty trade fairs.
Beauty Care Brazil has been called the state’s international expansion project, with 62 companies participating in the Beautyworld Middle East 2023 fair held last October, and the brand expanding to the United Arab Emirates (UAE) and the Middle East and Helped target new customers in North African (MENA) countries. .
The UAE is Brazil’s fourth largest market, with key categories such as hair care, skin care and tanning.
“At the last trade fair, 2,383 business meetings were held, with international sales totaling $5.7 million,” said trade lobby group Avipec, which runs Beauty Care Brasil in partnership with export agency Apex Brasil. said Gueisa Silveiro, who heads the initiative. Silveiro said it expects to generate an additional $50 million in sales over the next 12 months.
Cavour said Brazilian hair care products are becoming a sensation in the Middle East.
“In the Middle East, everyone talks about hair. [Brazilian] It is well known that the formulation, ingredients and quality level of the products are very advanced. ”
She added that her body care is also progressing smoothly.
The group’s flagship brand, Eau Boticario, sells body products (particularly under the Nativa Spa label) that use quinoa oil as the main ingredient, which is five times more hydrating than traditional oat-based formulas. Cavour claimed that it had a replenishing effect.
O Boticario is rolling out these products in the United States, and they are already available in Dubai, Colombia and Portugal, the company’s biggest markets.
The London-based executive said the company also wants to sell its fragrances in the UAE and Saudi Arabia.
Overall, O Boticario hopes to open 20 stores this year, compared to 10 in 2023, primarily in Latin America, including Colombia, Bolivia and Paraguay.
“In the last four years, we have grown by 40% every year,” Cavour said, noting that Grupo Boticario’s international business remains very small.
Another brand expanding overseas is Lola Cosmetics, a mass stage hair care brand.
The company plans to expand into Canada this year, initially marketing to Brazilians before expanding its presence in the U.S. to target the country’s large Hispanic community.
The company also plans to open new doors in Mexico and expand into Guatemala, Honduras, El Salvador, Costa Rica and Panama, as well as Colombia and Bolivia.
In Asia, the company is looking for distributors to expand in South Korea and Thailand.
“We are growing 100 percent internationally,” said Laura’s global boss Václav Soukup Filho. “Currently, exports account for 20% of our income, but we want to increase that to 30% this year and 50% within five years to about 500 million reais.” [$103 million]”
Sokpu said Lola has a strong presence in Europe, particularly in Portugal and Spain. We produce a variety of hair care products using famous Brazilian ingredients such as keratin.
Lola, which also sells body care products in concept stores in Brazil, will grow by 40% this year (both in the domestic and international markets) to about 420 million reais, Soukup said.
Assessing Brazil’s $50 billion local market, Soukup said it could grow by about 8% this year from 6% in 2023, even as the economic slowdown slows consumption. Stated.
According to some economists, Brazil’s GDP growth rate is expected to grow by 3% in 2023 and slow to 1.6% in 2024.
However, Soukup said there are a number of measures to stimulate consumption and increase sales, especially among the country’s vast low-income consumer segment.
In fact, Brasilia recently introduced a debt relief program called Desenrolla to help Brazilians renegotiate their debts.
“Despite the economic challenges, the government has launched important incentives to increase consumption by those at the bottom of the income pyramid,” Sokup said. These include access to cheaper credit and ways to pay in up to 10 installments, he added.
But for now, these incentives are contributing to sales growth, at least on a volume basis, offsetting losses from more pressured masstige and premium brands.
Still, Latin America’s biggest beauty powerhouse faces big challenges. Specifically, double taxation and massive competition from independent brands challenging the biggest players, Natura, Boticario and Avon.
As brands seek to attract new customers, price wars and deep discounts have emerged, with new entrants such as Epocacosmeticos.com and Beleza Na Web offering shampoos and skin care products that previously cost $5 to $10 for $1 to $10. There is an online expansion where it sells for $2. .
As emerging players gain market share, major labels are watching and could eventually swallow them up.
O Boticario achieved this by acquiring Truss & Vault last year, and before that by acquiring indie label Dr. Jones, Cavour said, adding that the group still has scope for acquisitions. Ta.
“The industry’s main challenge has nothing to do with government.” [i.e., regulations] However, competition is increasing due to the proliferation of smaller brands,” he said. “It increases third-party manufacturing capabilities and allows them to distribute their products online. They no longer need to have their own stores or manufacturing facilities. They can grow their brand on their own.”