Brazil: make-up on the rise

The third edition of MakeUp in SaoPaulo will take place on December 7 and 8 next at the Centro Rebouças in Sao Paulo. An edition that will take place in a slightly gloomy economic climate, as everyone knows. But paradoxically, the cosmetic sector in general and the make-up / skincare sector in particular are doing rather well. The statistics published in March 2015 by the ABIHPEC prove it and recent projections since this date confirm it. Overview with Joao Carlos Basilio, the President of the ABIHPEC.

Joao Carlos Basilio

Joao Carlos Basilio

MakeUp in…™: What was the closing of the Brazilian industry of Personal Hygiene, Perfumery and Cosmetics (HPPC) in 2015?

Joao Carlos Basilio: The Brazilian industry of Personal Hygiene, Perfumery and Cosmetics was the target of tax penalties in 2015, which resulted in an 8% real drop in comparison to the previous year, with “Ex-Factory” sales, after sales tax, of R$42.6 billion. That scenario also ended up influencing Brazil’s fall in the world ranking of consumption, moving from third to fourth, behind the USA, China and Japan, respectively.

MakeUp in…™: What marked such performance in the Brazilian industry of HPPC in 2015?

Joao Carlos Basilio: Such performance – already expected – is directly associated to consecutive and indiscriminate measurements of tax increase, under the pretense of increasing resources to the public treasury. Its final result knocked down the sales of the industry and, consequently, reduced the revenue curves, in a contrary effect to the one desired by governors. The currency depreciation also contributes to the negative result of the industry, which closed the year losing its leadership position in important categories that are essential to the consumers’ health and well-being, as sunscreens and deodorants.

MakeUp in…™: What is the outlook for 2016?

Joao Carlos Basilio: With a new government ruling Brazil, the Industry of HPPC is expecting a better demand for the second half of 2016, as Brazilians regain optimism, since the Country can start an economic recovery.

However, as priority action to improve the economic activity in Brazil, the society expects the new government to control public money and eliminate privilege excesses. The tax burden of the industry already is excessively high and we do not expect it to increase more, as it would be unsustainable.

With the US dollar forecast at about R$3.20, pointed out by LCA Consultores, price readjustment needs decrease. We believe that the consumer will be able to purchase higher value-added brands again, those they stopped purchasing due to their purchase power fall. It is difficult to foresee when that is taking place, but we believe in a repossession.

In 2016, Brazilian industries may move towards innovation even more. The Brazilian industry of HPPC know to do it differently, so much so it invests nearly 40% of its sales in launches biannually. However, this year we must move towards innovation even more and present better cost-efficient alternatives either for companies or for consumers. Companies with good insight, proper understanding and good ideas, especially at this delicate period for Brazil, will stand out in the market.

MakeUp in…™: How is the performance of the Make-up category in Brazil?

Joao Carlos Basilio: Besides the industry retraction, the make-up segment remains strong in Brazil. The increase in the feminine audience entry in the marketplace also reflects on their choices and habits of such multitask people, who are assiduous consumers of make-up.

Mintel’s 2015 research points out, for instance, that 45% of women prefer long-lasting make-up. The second leading preference is easy-to-apply cosmetics, at 38%. That proves the need to take care of the way you look and deal with time optimization.

Additionally, the industry of HPPC is increasingly more engaged in providing innovative products that meet the specific demands of each audience and that reflects on quality of life, improvement of self-esteem and support to the requirements of the lives of modern women.

MakeUp in…™: How is the regulatory scenario of the industry of HPPC in Brazil?

Joao Carlos Basilio: There are many challenges to be faced in the regulatory system of the industry of HPPC in Brazil. ABIHPEC, together with sanitary authorities, claims for measures that consequently will bring more benefits to the consumer, to the sanitary control carried out by Anvisa and to the industry, focusing on post-market surveillance, counting on the entry of private laboratories and the agency’s human resources so that they can have access and inspect the reality of products placed in the market, either those regulated or those coming from unfit companies.

MakeUp in…™: Does ABIHPEC have any work of internationalization of the Brazilian industry of HPPC?

Joao Carlos Basilio: ABIHPEC, in partnership with Apex-Brasil, carries out the Sectorial Project Beautycare Brazil, intended to support and foster Brazilian exports of the industry of HPPC, from the qualification and preparation of companies to external markets to their internationalization.

Beautycare Brazil’s job is directed to sensitizing companies that are still not part of the project; encouraging and assisting companies still not performing in international markets; and supporting exporting companies.

The project works in partnership with ABIHPEC several areas of performance, which allows us to always be aware of the market behavior, including analysis and assessment of commercial interferences, tax and non-tax barriers, international agreements, logistics and customs, international deals and aliquot and marketing, economic and political variables, driving the realization of such actions in a way to better serve the group of companies that are part of Beautycare Brazil.

MakeUp in…™: What are the advantages for the Brazilian market of HPPC with the implementation of industrial plants from foreign companies?

Joao Carlos Basilio: The implementation of new plants heats the economy of the Country and strengthens the performance of the industry of HPPC, once it reaches the entire production chain and generates new job opportunities.