In 2016, Brazil’s exports of beauty products dropped once again, a hardly surprising outcome given last year’s political and economic turmoil. Cosmetics’ foreign trade fell by 13.7%, following a 10.3% drop in the previous year.
“The economic and political scenario that took shape in the last couple of years has affected not only the CT&F industry, but also Brazil’s overall trade balance,” says Ricardo Nobrega, foreign trade manager at the Brazilian Association of the Cosmetic, Toiletry and Perfumery Industry (ABIHPEC).
He believes the unstable local currency has contributed directly to Brazil’s poor performance in foreign markets, but it is not the only responsible factor. A research ran by the National Industry Confederation (CNI) pointed out a series of hurdles to exporters, such as fees charged by ports and airports, high tax burdens, lack of Government support and the difficulty in offering competitive prices to overseas buyers. However, logistic issues are still perceived as the greatest obstacle to Brazilian companies wanting to expand globally.
In the current top ten list of countries importing Brazilian cosmetics, nine are from Latin America, with the US – ranked in ninth place – being the only exception. “Although there are still impediments for trading within Latin American, the geographical proximity makes up for logistics hurdles. The fact that our consumer habits and personal care routine is similar is also a plus,” says Nobrega.
In 2016, LATAM countries accounted for 82.6% of total exports of beauty products, with sales of over US$ 510 million, according to data from Brazil’s Ministry of Development, Industry and Foreign Trade. The figure falls below the 11.2% recorded in 2015, when the top ten importers accounted for US$ 575 million.
Argentina, Paraguay, Colombia and Mexico managed to soften the overall drop in foreign sales. Together, they received 52.2% of total exports in 2016, recording a 10% increase in comparison to the previous year.
The best performance came from trade within the Mercosur bloc. Right at the top of the list is Argentina, with a 14.9% increase in imports compared to last year. Paraguay sits in fifth place, showing a 22% growth in the same period. Colombia and Mexico also showed good results and recorded growth of 13.1% and 10.1% respectively, ranking third and fourth on the list of top importers.
The largest drop among Brazil’s main trade partners was Venezuela. The country’s harsh economic crisis resulted in a 19% GDP drop and inflation rates reaching 800% last year, according to preliminary data from its central bank. Brazilian cosmetics trade with Venezuela went from US$ 109 million in 2015 to US$ 11 million in 2016, an abysmal drop of nearly 90%.
Hair care products have consistently been top sellers overseas. Brazil’s ethnic diversity drove the industry to develop a wide range of products for different audiences. Innovation is also a driving force in the local industry, with about 30% of total sales coming from new product launches, according to ABIHPEC.
Since 2000, ABIHPEC has been working with the Brazilian Trade and Investment Promotion Agency (Apex-Brasil) in the Beautycare Brazil project to support and promote Brazilian exports of CT&F products. The program organizes business roundtables and matchmaking events, as well as joint participation in trade shows, to bring together potential buyers and Brazilian companies looking to expand overseas.