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Brazil

New York Society of Cosmetic Chemists

May 2014

Ana Paula Palombo Terzi

The Fragrance Market

Agenda

Brazil:

Key Facts

Figures & The rise of the

middle class

The Brazilian Consumer

Cultural Codes &

Fragrance

Key Players

Channels of Distribution &

Market Dynamics

Northeast Region

Olfactive Landscape &

Evolution

& Preferences

Brazil Looking Forward

&

Final Considerations

The Brazilian Fragrance Market

Brazil:

Key Facts

& Figures

Since overtaking the US, the gap has increased to US$ 1,5 bi

Brazil: Fragrance Highlight

Source: Euromonitor

#1 Fragrance Market in the World! (In 2010, Brazil surpassed the US (US$ 5,3 bi) in fragrance reaching US$ 6 billion in retail value)

Brazil Facts and Figures: Socio-Cultural

Source: IBGE 2013

A B

C

D E

The rise of the Middle: Class C

Fragrance Market in Brazil

92% Mass market

8% Premium

The Brazilian Fragrance Market

The Brazilian

Consumer

Cultural Codes &

Fragrance

Brazilians are brand conscious, well informed and well travelled

The Brazilian Consumer

Brazilians are at the crossroads of three cultures:

- European Roots and Taste

- Aspire to the American Dream and lifestyle

- Influenced by local cultural values (Patriotism/Brazil as a brand)

Brazil has always had its selected group of “Noveau Riche” distinguished by

their extravagant tastes and their tendency to emphasize their new social

condition. This is also valid for fragrance.

Brazilians are spenders – In Brazil you can buy everything in installments, even

luxury goods (70% of purchases in the luxury sector are divided into

installments)

“Imported or International” are positive attributes. There is a belief and

recognition of the superiority of “imported products.”

Customer service is a magnet for shopping. Brazilian clients tend to develop

long term relationships with their favorite sales people.

The Brazilian LUXURY Consumer

The Brazilian Class C Consumer

Class C is trading-up

Premiumization:

Fine Fragrance to Personal Care

The Brazilian Culture Code: Feminine Culture

Brazil is essentially a feminine culture, cordial, warm and welcoming

The woman is at the center and in the workforce

“Mulher Guerreira” refers to the many Brazilian women that fight hard to make

ends meet, make sure her children are

taken care of and her house is clean

…and yet she is happy, proud and always

optimistic

Women have HIGH SELF-ESTEEM

They want their children to say ‘Mother, you are beautiful.’ then they want

their husbands to say the same, the girlfriends, the neighbor and so on…

Women opt for smaller families

The Brazilian Cultural Code - Faith

Brazil is a strong mix of religion and superstition

Brazilians never lose faith

The Brazilian Cultural Code: Colorful

Colors are everywhere, from the yellow and green typical of Brazil

reflected in fashion and food to an array of colors reflected in art and all

things Brazilian.

It is part of its uniqueness and visual identity.

The Brazilian Cultural Code: Touch and Smell

Me da um Cheiro “give me a bit of your smell”

Through touch and smell we express love in Brazilian Portuguese

Touch/Sensorial is very important

The Brazilian Cultural Code: Movement and Sensuality

Beauty is about movement, “the way you move.”

Sensuality projects when a woman moves and dances

In Fragrances movement is related to sillage

Movement, Touch and Sensuality are aspirational

The Brazilian Cultural Code: Architecture, Movement and Sensuality

Oscar Niemeyer recreated Brazil’s sensuous curves in his architecture

“ What attracts me are free and

sensual curves of Brazil.

The Curves we find in the mountains,

in the waves of the sea, in the body

of the woman we love.”

Oscar Niemeyer, Brazilian architect

The Brazilian Cultural Code: Soccer = FUTEBOL

In ‘Futebol’ they don’t play, they dance

Soccer players aren’t just athletes,

they are artists

It is not just strategy, it is improvisation

You don’t explain it, you feel it

Soccer is serious business in Brazil

The Brazilian Cultural Code: Soccer = FUTEBOL

The Brazilian Cultural Code: Humor – Dove for Men

The Brazilian Cultural Code: Emotion

The Brazilian Fragrance Market

Key Players

Channels of Distribution

& Market Dynamics

The Northeast

Top 3 Key Players

Well being Well

Beauty is what we do

O Boticario Eudora Quem disse,

Berenice ? The Beauty

Box Lingerie

Brand

Original Brand

with stand alone

stores

Now selling

products through

Direct Sales, too

Launched of

several

Nativa Spa doors

New brand

focused on

sensuality

Sold through

stand alone stores

and direct sales

New brand

focused on color

and fragrance

Stand alone and

Mall Quiosks

Target to a

younger consumer

New store

distributing

international

brands to

compete with

Sephora

Purchased in

2011

Beauty is what we do

The Company for Women

EDP + EDT

Higher Price,

Concentration,

“Value”

DEO COLOGNES

Intermediary Prices &

Concentration

DEO COLOGNES + FRESHNERS/SPLASHES

Lower Prices, Concentration,

Concentrations ~ 1.5% - 5%

Concentrations ~ 5% - 15%

Key Players – Basic Fragrance Portfolio Architecture

Source: Base: Ipsos Observer Brazil/ Mintel 1,385 adults aged 16+ who own and use fragrances

Where do Brazilians shop for fragrances?

Channels of Distribution

Data from past 12 months, June 2012

Source: Base:

Channels of Distribution

1

2

3

4

50%

23%

9%

6%

DEOCOLOGNES

CREAMS & LOTIONS

DEODORANTS

SOAP

D2D

DEOCOLOGNE REPRESENTS 50% OF DTD SALES!

Source: Kantar World Panel

While the impact of digital is undeniable, Brazilian consumers still have a strong

need for D2D due to lack of infrastructure, especially in the northeast.

Northeast – Fastest Growing Region for Fragrance

Northeast

NORTH (7% population)

SOUTHEAST (42% population)

NORTHEAST (29% population)

SOUTH (15% population)

MIDWEST (7% population)

Brazil: Regional differences – “Not One Country”

The Northeast

56% of Total Market Volume

46% in Total Market Value

Highest Fragrance penetration 83% vs 46% SE/South

Due to the hot weather, people take on average 3 showers a day

Freshness is key, not long-lastingness

Splashes are used in generous amounts

Fragrances are shared by all members of the family despite gender

The Northeast

Contrary to other regions, baby splashes are largely used by adults

Body oils and body lotions are key due to the predominance of dry skin

type. Overlapping scents is not a problem

Fragrances are also used to stay at home

Large usage of Lavender (culture influence)

The Brazilian Fragrance Market

Olfactive Landscape

Evolution &

Preferences

Exploration of freshness through Lavender and Eau de Cologne. MUSK is a MUST – Sensuality. Iconic Fragrances 1943 - Seiva de Alfazema Phebo 1950 – Lavanda J&J 1965 – Lavanda Rastro 1974 - Lavanda Gio Baby 1974 – Wild Musk –Coty 1983 – Musc de Natura 1985 – Lavanda Thaty – O Boticário

Freshness And/or Sensuality

80 The Brazilian Perfumery broadens

1993 International Perfumery enters the market. Local players, react and became more “sophisticated”. Perfumery gets more complex-fine fragrance.

1993 – Shiraz – Natura 1993 – Mamãe Bebê - Natura 1994 – Floratta Verde - O Boticário 1995 – Kriska 1995 - Essencial 1996- BIOGRAFIA Her 1998 – Accordes- O Boticário

90 Tropical fruit cocktails introduced new ways to express freshness FRUITY EXPLOSION: EKOS FRESCOR DE PITANGA EKOS FRESCOR DE MARACUJA HUMOR 1 CREAMY ORIENTALS EGEO – O Boticário 2000 – GLAMOUR O Boticário

FRESHNESS & SENSUALITY Fruity COCKTAILS

SUMPTUOUS SENSUALITY

+ intro Gourmand notes

Red Fruits

RED FRUITS and SOFT FLORALs

EKOS PITANGA NEGRA

EKOS MARACUJÁ ROXO

HUMOR 5

EGEO DOLCE

LUXURY CHYPRES

GLAMOUR BLACK

EUDORA

00 10 Women’s Olfactive Evolution

Optimism Colorful

Bright, Sparkling & Vibrant

accords from Fresh Fruits

Femininity

Non-descript Floral Bouquets

Sensuality Care Creamy &

Musky

Comfortable

Second Skin

notes

What Do Brazilian Women Want to Wear?

Movement

What Do Brazilian MEN Want to Wear?

Mo

ve

me

nt

Sophisticated Amber, Woods,

Vanilla + touch

of

leather/darker

wood

Performance

Outdoor Aromatic, Musky

Clean, watery,

non-descript

fruity/green

notes

Fresh and

Masculine

Fresh, Citrus,

Clean

Important Note: Women in Brazil use MEN fragrances, especially in the Northeast

The Brazilian Fragrance Market

Brazil Looking Forward

&

Final Considerations

Forecast

Brazil will lead value growth with an increase of

US$ 5 Billion by 2016

accounting for 30% of total Global Value in actual terms

Final Considerations

Sensuality, Movement, Style, Happiness, Togetherness, Pride and Humor are

important cultural/emotional codes companies must convey when executing

a product launch

Brazilians have a longstanding culture of fragrances

The woman is the “Household Director of Operations”

She consumes and decides what her family will consume

She is at the center and she is also the greatest “influencer”

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