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Brazil’s Northeast records the highest growth in cosmetic sales

The Northeast region has been the Brazil’s fastest growing in the perfumery, cosmetics and personal care industry in recent years. According to figures released by ABIHPEC (Brazilian Association of Cosmetics), there are currently 256 companies operating in the region, 12 on top of 2013.

President of the Boticário Group, Artur Grynbaum

President of the Boticário Group, Artur Grynbaum

According to the association, the figures represent an increase of 4.9%, a quite impressive result if compared to the other regions of the country, which grow about 2.3% per year. The Southeast is the region that concentrates the majority of the companies (1,511) and also the one that attracted the most number of industries in 2014. Last year, the Southeast states saw the opening of 17 new plants, recording a growth of 1.1%.

Over the last 10 years, the Northeast kept its leading position, with an increase of 175.3% in the number of established companies compared to the Southeast (57.1%), South (71.2%), North (80.8%) and Midwest (169.2%).

Such interest in the region can be explained by several reasons related to changes in the Brazilian economy in that last decade. The latest reports by ABIHPEC point out the income increase and the access of working classes (D and E) to cosmetic products. Accounting for 40% of beauty items sales in Brazil, new members of the working class (C) also began to choose products with higher added value, and three out of ten people who entered this segment are originally from the Northeast.

The market potential in the region was also indicated in a survey released by IBOPE in 2013. Data shows that the Northeast is the second largest consumer region in Brazil, with a 19% market share, only behind the Southeast, which accounts for 50% of total consumption. Opportunities are also emerging for the professional sector, with Salvador ranking third among the cities with the largest number of beauty salons in Brazil.

One of the companies that has established in the Northeast lately is the Boticario Group. The brand has invested R$ 380 million in the building of its new facility, which opened its doors in September in Camaçari, state of Bahia, located 40 km from Salvador. It is the largest investment ever made by the company. The plant can produce up to 150 million items per year, thus increasing the group’s production capacity by 50%.

In April this year, O Boticario also opened a new distribution center in the municipality of Sao Gonçalo dos Campos, also in Bahia. It was a R$ 155 million investment and the new center is responsible for the delivery of cosmetics and perfumery items to nine states in the Northeast, North and Midwest regions.

The president of the Boticario Group, Artur Grynbaum, points out the market growth in the region as one of the reasons for high investments in Bahia. "With the new plant, we will give more fluidity to the production and distribution of our products to the North and Northeast states, which are our fastest growing markets, and also part of the Midwest," said Grynbaum.

One of the leading companies in the personal care segment, Kimberly-Clark Brazil also picked Camaçari to deploy its 5th factory in the country in 2013. The company already had its business division and a distribution center in Recife since 2008. Kimberly-Clark’s goal is to expand the participation in the local market through increased sales in the region. R$ 100 million was invested in the implementation of the unit, which manufactures products such as napkins, baby diapers and toilet paper.

The company claims that the Northeast is the largest consumer market in categories such as children’s care and women’s care. For the site selection, Kimberly-Clark conducted an extensive study about the market, logistics networks, suppliers’ location, environmental and tax issues, as well as availability of manpower. In 2013, the company’s sales grew 26% in the Northeast. Between the years of 2010 and 2012, the increase was 62%.

Aline Quezada

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