Bad smell

Latin America's hard-hit perfumery sector hopes for a recovery.

The perfume sector in Latin America is growing again and is expected to significantly improve in the 2021-2026 period after a slump in 2020 due to the Covid-19 pandemic.

A regional executive for a global brand commented, “It is not a secret that COVID-19 hit us hard. Perfumery is not considered essential and so it is easily discontinued by the consumer. As a result, our perfumery and cosmetics sales dropped 50% in 2020, compared to 2019. For 2021, we are targeting a return to 2019 but it is difficult.”

“Our perfumery and cosmetics sales dropped 50% in 2020, compared to 2019. For 2021, we are targeting a return to 2019 but it is difficult.”

Regional executive, global personal care brand

Cosmetic products and fragrance consumption in Latin America saw significant decreases in 2020 compared to 2019 results, with Argentina experiencing the most significant drop in the region, at 35%. Peru registered a 17% decrease, Bolivia 7%, Colombia 6% and Mexico 1%. Only Brazil and Chile experienced increases, with respective 4% and 3% growth rates.

Within the perfume sector, house fragrances have seen a significant increase in demand in Latin America. For instance, Natura Brasil recently launched a new product, Perfum.ar, in which a tablet sprays dry air with 20 different fragrances. The potential of this sector is increased by digitalisation options, in which “machine-learning” devices keep a record of consumer preferences and personalise fragrances. The boom in house fragrances is a global trend confirmed by Firmenich in the US, which showed that during the pandemic, 56% of people said they appreciate nice fragance at home as it brings serenity.

The former CEO of a Latin American fragrance business commented, “We saw the highest demand for citrus fragrances which give a sense of clean and fresh. Consumer tastes have changed and we are all reinventing ourselves and exploring new inputs, such as inputs from the Peruvian jungle, mountains and coasts.”

“Consumer tastes have changed and we are all reinventing ourselves and exploring new inputs, such as inputs from the Peruvian jungle, mountains and coasts.”

Former CEO, Latin American fragrance business

Lockdowns and commercial restrictions have favoured an increase of entrepreneurial ventures that offer direct perfume and cosmetic products sales in Latin America, and bringing new opportunities for manufacturers to reach new markets.

It’s not an easy market to break into though, as the former CEO of a fragrance business confirmed, “There are very few local fragrance businesses and those that started here rapidly internationalised and moved away or were acquired. The cost of marketing is very high, especially if you want a global distributor to take your product. The key is to have great digital marketing, telling a good story and staying honest and transparent to boost the credibility of your product.”

The regional council for cosmetic products in Latin America (CASIC – Consejo de la Industria de Cosméticos, Aseo Personal y Cuidado del Hogar de Latinoamérica) considers that local producers could benefit from a higher harmonisation of regulations in the region, already in place in the US and the EU. This would include common product definitions, a separate regulatory framework for cosmetics and fragrances, unified labelling and national product lists and components, and establishment of a common best practices list among other measures.

 

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