Smells good

Latin America's fragrance market sees strong post-pandemic recovery and an increase in regional production. 

Latin America’s beauty and personal care market is growing after being severely hit by the COVID-19 pandemic. Worldwide, the fragrances segment represents 10% of the total beauty and personal care market, amounting to USD 46.5 billion in 2020. The Americas, including the US, is the second largest market, accounting for 32% of total global consumption, behind Europe, which tops the ranking with a 34%.

A global executive committee member of a multinational beauty brand explained the roller coaster the market had been on over the last three years, “Fragrances were badly hit during the pandemic – obviously people didn’t wear fragrances while they were under lockdown. Our perfume sales were down 50%, it wasn’t easy. Thankfully, as the pandemic recedes, demand has recovered well and we are now ahead of where we were in 2019.”

“Thankfully, as the pandemic recedes, demand has recovered well and we are now ahead of where we were in 2019.”

Global executive committee member, multinational beauty brand

During the pandemic, Latin America experienced a decline in the use of fragrances due to the change in lifestyle conditions, including home office, physical distancing, and mask wearing. Despite this, the skincare division continued to grow across the region as middle- and high-income earners adopted home skincare activities which were previously limited to beauty spas and salons. Chile saw the sharpest rise as local consumers enjoyed greater financial liquidity derived from pension-fund withdrawals, according to a recent Euromonitor study.

Another study, carried out by Coty, a global beauty company, provided further detail on Latin America’s fragrance market, reporting that Mexico is the largest consumer of fragrances in Latin America, even 30% larger than Brazil. Interestingly, while premium fragrances are registering the fastest growth worldwide, Latin America is an exception with the mass market growing faster.

“At a regional level, it is the international rather than domestic companies that continue to dominate Latin America’s fragrance market.”

Executive, personal care business, Mexico

The Latin American fragrance market has returned to growth but domestic producers still have little market share, “At a regional level, it is the international rather than domestic companies that continue to dominate Latin America’s fragrance market,” explained an executive at a personal care business, “However, it varies by country. For example, Peruvians embrace international brands because there is not such a nationalistic society. In fact, I would go as far as to say that Peruvians preferred international brands. Brazil is the complete opposite: the government protects local production and imposes super high taxes on foreign companies and also Brazilian consumers are used to consuming Brazilian products, for example, the Natura brand is huge there.”

Despite such stiff international competition, local producers are showing some signs of growth driven by two trends: local production by foreign companies, and the increase in consumption of natural fragrances. Notably, consumer interest is increasingly focusing on sustainable and environmentally friendly products. A regional executive of a global beauty company confirmed, “Natural products are growing in popularity, it has been the trend for some years now. Using manufactured chemicals is going the same way as animal testing – consumers just won’t accept it anymore.”

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