The market researcher notes that as a result of the devaluation of the peso and inflationary pressures, consumers traded down and resorted to prioritizing beauty and personal care necessities and making more purchases in the context of special offers and price reductions.
Despite experiencing growth of just 7.1per cent in 2009, the $8.6bn/ €6bn beauty and personal care market remains one of the strongest sectors of the Mexican consumer goods market as a whole, according to Euromonitor, due to the fact consumers view beauty and personal care products as affordable luxuries.
Hair care ($1.98bn), skin care ($1.61bn) and fragrances ($1.43bn) are the most dynamic product sectors, experiencing growth of 8.8 per cent, 6.5 per cent and 10.1 per cent respectively between 2009-10.
Direct selling channel expanding rapidly
The direct-selling channel in beauty and personal care, where products are generally offered at a more affordable price point than in stores, is expanding at a rapid pace, accounting for approximately 30 per cent of total sales, and the number of sales representatives has swelled to over one million as high unemployment levels have translated in more women looking to grow their incomes.
With manufacturers and retailers developing new strategies in order to sustain sales and compensate for the consequences of a sluggish economy, department stores are importing exclusive brands and expanding geographically. Grocery retailers are targeting the lower-income segment and expanding into smaller cities and rural communities, thus allowing companies to penetrate new markets and boost sales.
Affordable yet sophisticated formulations, such as multipurpose products, are expected to drive growth in future, according to Euromonitor, which highlighted that an effective way for manufacturers to differentiate themselves from the competition is through the development of products that mimic the technology of medical formulations and cosmeceuticals.
Counterfeiting threatens industry
Unfavorable economic conditions and a lack of education among consumers are boosting demand for counterfeit products, according to Euromonitor, which estimates that sales of counterfeit fragrances and color cosmetics amounted to Mx$2bn each in 2009, demonstrating the very real threat to the legitimate beauty and personal care market despite government efforts to crack down on piracy.
In 2009, piracy, counterfeiting and parallel trading increased by around 18 per cent overall, with figures suggesting that illegal products have been purchased on at least on occasion by 76 per cent of Mexican consumers.