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Companies & industry

Licensed cosmetics help boost sales and improve product visibility in the marketplace

Royalties can be as high as 10% of the product cost, but licensed products may increase sales in up to 20%, according to the Brazilian Licensing Association

Selling licensed cosmetics is a strategy used by many small and medium-sized companies to gain market share and attract new customers. The exclusive right of use of a trademark for an agreed period of time is subject to the payment of royalties, which are calculated as a percentage of sales.

Nail polish range Flávia Alessandra by Mohda Cosméticos

Nail polish range Flávia Alessandra by Mohda Cosméticos

According to data from the Brazilian Licensing Association (Abral), product licensing is on the rise in Brazil. Having recorded sales of R$13.2 billion in 2014 – 6% higher than in the previous year –, Brazil is the sixth-largest market for licensed brands worldwide behind the U.S., Japan, England, Mexico and Canada. In the cosmetics industry, which ranks fourth in Brazil’s top categories of licensed products, this practice has been fairly popular for quite some time.

With a focus on the children’s market, Phisalia started working with licensed cosmetics in the 1980s by selecting one of Hello Kitty’s friends, who was very popular at the time, to launch its first licensed range. “It was a huge success,” says Phisalia’s marketing manager, Ligia Sposito. The company built on the momentum to create its own brand, Tra Lá Lá Kids, which today accounts for most of Phisalia’s profits.

Nail polish manufacturer Mohha Cosméticos took the opposite path. The company has been in business since 2008, but waited until earlier this year to launch its first licensed line under arrangements with Brazilian actress Flávia Alessandra. “We realized that the time had come to link our brand to a celebrity,” says Marcela Goulart, marketing and development manager at Mohda Cosméticos. While celebrating the first sales numbers – “the customer response has been great” –, she says that the biggest advantage has been increased brand awareness. “The Mohda brand still sells more,” she says.

The price of licensed products is usually higher. Data from Abral indicates that royalties on cosmetics can reach 5% to 8% of the retail price. According to Phisalia, rates can be even greater, ranging from 7% to 10%. “Licensed products incur more expenses, such as royalties paid to right holders and more elaborate, attractive packaging,” says Esposito.

Then why so many companies are turning to licensed cosmetics? Abral says that licensed products can increase sales in up to 20% and improve product visibility in the marketplace. The organization lists other good reasons, including adding value to products, creating a point of difference from competitors and quickly building hype to a product.

Phisalia's Patati Patatá shampoo and conditioner

Phisalia’s Patati Patatá shampoo and conditioner

"The market for licensed products is very dynamic," says Esposito. In 2014, Phisalia decided to invest in the popularity of the clown duo Patati Patatá to develop a new range of personal care products for children. The company also took advantage of the fourth Transformers movie, which screened in Brazilian cinemas in July, to revamp the brand’s licensed shampoos and conditioners. “They end up being as profitable as a company-owned brand. The retail price is higher and so are our margins,” says Esposito.

Nail polish brand Alta Moda é…, owned by the Alfaparf Group, had a unique introduction into the licensed products market. The company was approached by Brazilian actress Gloria Pires, who launched her e-commerce Bemglô in 2014. The website had accessories, footwear, homeware and even pet products, but was lacking a nail polish brand.

We were brought together by a common goal. Our brand has been popular in the market for many years and Gloria was already a customer. When she decided to launch her own brand, she picked us as partners,” says Carmen Marijuan, training and development director at Alta Moda é…. The Gloria Pires collection hit the shelves earlier this year and has already added new shades to its portfolio. “The response has been fantastic,” she says.

Renata Martins

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© 2015 - Brazil Beauty News - www.brazilbeautynews.com

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