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Markets & trends

Sales of cosmetics, fragrances and personal care products in Brazil fall by 8% in 2015

The country has also lost market share by dropping from third to fourth in the global ranking; categories such as sunscreens, deodorants and perfumes are no longer world leading.

João Carlos Basilio, president of ABIHPEC

João Carlos Basilio, president of ABIHPEC

The Brazilian industry of cosmetics, fragrances and personal care products finished 2015 with an 8% fall in sales and net revenues of R$ 42.6 billion. The result followed a 5% drop in the first half of 2015, marking the first decline in the past 23 years.

According to the Brazilian Association of the Cosmetic, Perfumery and Toiletry Industry (ABIHPEC), the increased tax burden - along with currency effects and the current political and economic turmoil - has led the country to lose positions in the global marketplace. Brazil was overtaken by Japan as the world’s third largest market as well as losing ground in categories such as sunscreens, deodorants and perfumes.

Negative impact of tax increases

ABIHPEC’s president, João Carlos Basilio, says the industry’s negative trend is directly linked to tax hikes imposed by the government to close the budget gap. “This has actually created the opposite effect by driving down sales and, as a result, reducing tax revenues,” he says. Basilio believes that the water crisis has also had a major impact on some categories, namely bath products, which dropped from second to fourth in the world ranking. “This scenario has triggered a change in consumer and personal care habits for Brazilians, resulting in reduced time and frequency of baths and showers.

In addition to the drop in sales, the industry has also recorded a decline in job vacancies. Following a stable first half in 2015, the year finished with a 3.3% decrease in job opportunities compared to 2014.

Products that are regarded as essential to consumer health and wellbeing were saddled with increased taxes in most Brazilian states, and this has had a direct impact on prices. "In the state of Paraná, for example, the tax burden on sunscreens increased by 108%. Minas Gerais saw a 125% rise on toothpaste taxes and another 50% on basic items such as soap and toilet paper. Such tax hikes are expected to shake the CT&F industry again this year,” says Basilio.

Another potential effect of the increased tax burden against a background of rising unemployment and falling purchasing power is the growth of the informal sector, fuelled by illicit trade and smuggled goods. “We strongly encourage consumers not to purchase counterfeit products. The Brazilian CT&F industry is regulated by the National Health Surveillance Agency (Anvisa) and, therefore, committed to maintaining people’s health and wellbeing. We are urging consumers not to use these products under any circumstance as they can be harmful to their health,” says Basilio.

Investing in innovation

ABIHPEC states that investing in innovation is an alternative for the Brazilian industry to regain breath, competitiveness and market share. "It is time to act and pursue innovation broadly by focusing on management, logistics, services, communication and sales. It is necessary to review strategies and teamwork is key to maintaining the vitality and strength of companies going through this difficult economic time.” With the most critical period of the water crisis coming to an end, ABIHPEC expects consumer habits, especially those related to personal hygiene, to go back to normal and bath products should resume their traditionally good performance.

Fernanda Bonifacio

© 2016 - Brazil Beauty News - www.brazilbeautynews.com

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