The Cosmetic Market in Mexico

Summary of Contents

- Introduction

o Market Definition

o Cosmetic Definition

o Cosmetic Industry

- Cosmetics Market in Mexico

o Distribution

o Mass market oriented production

- Foreign Companies

- Major Local Companies

o Zan Zusi

o Bissú Cosmetics

o House of Fuller

o Renova

o Madame Chantal

- Major Foreign Companies present in Mexico

o Avon

o L'Oréal

o Maybelline

o Colgate Palmolive

o Procter & Gamble

- Trends & Shows

- Mexican Society of Cosmetic Chemists

- Conclusion

- Acronyms of mentioned institutions

- References

Introduction

Market definition

In marketing, the term market refers to the group of consumers or organizations that is interested in the product, has resources to purchase the product, and is permitted by law and other regulations to acquire the product.

Cosmetic Definition

We can define cosmetics as articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body...for cleansing, beautifying, promoting attractiveness, or altering the appearance.

A subset of cosmetics is called "make-up," which refers primarily to colored products intended to alter the user's appearance. Many manufacturers distinguish between decorative cosmetics and care cosmetics.

Cosmetic Industry

The worldwide cosmetics and perfume industry currently generates an estimated annual turnover of US$170 billion (according to Eurostaf - May 2007). Europe is the leading market, representing approximately €63 billion, while sales in France reached €6.5 billion in 2006, according to FIPAR (Fédération des Industries de la Parfumerie - the French federation for the perfume industry).

Cosmetic products are important consumer products with an essential role in everyone's life: apart from "traditional" cosmetic products, such as make-up and perfumes, it also includes products for personal hygiene, for example tooth-care products, shampoos and soaps.

Mexicans reserve a large budget for their cosmetics. Indeed, 92% of the habitants of Mexico city consider it essential to use perfumes and cosmetics. Moreover, their respect for hygiene, their desire to look and feel good, is the major element of their purchase behavior.

In terms of salary, women earn about 70% of the income men earn for the same level of education. 21.4% of Mexican women have income below the minimum wage. The minimum wage varies by occupation and location. The National Commission on Minimum Wage (NMSC)

set a minimum wage in 2010 to 57.46 MXN per day (less than 3.5 €). Note

only 7.5% of women have incomes above 5 minimum wages.

MMexicans in general are sensitive to the image they may give and they want to communicate. They are attracted by the brands, new products, and new trends. They follow currents and adapt. The Mexican woman is sophisticated, flirtatious and likes to attract the gaze of others.

Cosmetics market in Mexico

Mexico has a very rich local market with companies that go from small family businesses to big direct sales companies. It's a very dynamic market despite the crisis and the weak purchasing power of consumers.

Consumers spend a large share of their income in the acquisition of cosmetics principally and dermo-cosmetics more and more as self-image becomes anchored. Natural products, although still beginning in this market, are well received but still not requested by society. However, to push them further, they will need a communication effort on the part of stakeholders operating in this niche.

Overall, youngsters and men are increasingly seeking new products, resulting in a segmentation of the sector and diverse offers.

The spa market will continue to grow in the tourist towns receiving national and international visitors. In general, the expected strengthening of the existing legislation regarding spas will generate a little more consistency with the concept required in naming a spa.

The national market for cosmetics and dermo-cosmetics is very competitive. It rose from 4.31 billion USD in 2005 to $ 7 billion USD in 2009, an increase of 61.57% in 5 years.

The sector represents 0.8% of Mexico's GDP in 2009. The market is highly concentrated: in fact, the area is composed by more than 200 companies from which the top 15 make 75% of sales. Note that 80% of them are multinationals.

The cosmetics industry in Mexico generates over 27,000 jobs and encompasses about 200 companies. Through direct sales system it rises to 1'800,000 employed people.

Distribution

According to the Mexican National Chamber of Perfume, Cosmetics and Toiletries (CANIPEC), advertising is key for the large cosmetic and personal care product companies in Mexico using many some channels that are not only for television viewing. They also put advertising on radio, in magazines and merchandising at retail stores and outdoors industry to increase their visibility and sales over their competitors. The graph below paints a picture of how the cosmetics industry is divided by product category. Although the graph is a couple of years old by now, it does show a fairly accurate description of the cosmetics market in Mexico and how the product sectors are divided comparing data from 2005 to 2010.

The distribution by traditional sales represents about 67% against 33% achieved through direct sales, which generates a turnover of 2.9 billion Euros.

Within the segment of direct