The total Argentine market for cosmetics and toiletries was estimated at US$1.9 billion in 2011, and is predicted to grow by 10 percent in the coming year. With a population of almost 40 million people, Argentina offers significant opportunities for this sector.
The cosmetics and toiletries sector in Argentina is composed of three major subsectors: Personal Hygiene Products: soaps, oral hygiene products, deodorants, powders, hair care products, and shaving products; Cosmetics: make-up, depilatories, and skin creams; Perfumes: perfumes, eau de toilette, cologne, and aromatic essential oils.
The rise in cosmetics use by Argentines has led to the opening of a number of storefronts and the arrival of new players to the cosmetics scene. While consumption has risen by 20%, the rising cost of high-quality international products has opened the doors to local companies who offer the same quality but at a lower price. Today, Argentina is home to more than 400 different cosmetic manufacturers, nearly 80% of which are small to medium size businesses.
Although the raw materials are usually imported from third countries such as the U.S., Germany and Switzerland, the final production takes place in Argentina. Direct sales have risen and now account for 30% of the total market. Direct sales market leaders include Avon, Fuller Cosmetics5 and Amodyl. The target market for new local firms are middle class Argentines who before could afford to buy high-quality international products, but now, faced with a weaker currency, are limited to the local market. The average Argentine woman spends about $350 a year on cosmetic supplies.
There are very few official figures available on the beauty-related industry in terms of production, sales or service. Therefore the statistical data used in this report is based on estimates by knowledgeable business sources such as Euromonitor International, Chicago, IL, USA.
Over the past ten years, many major local cosmetic and toiletry companies have either been acquired or have merged with large international companies to attempt to consolidate their share of the market and to diversify their product line.
The traditional way to market products in Argentina is through an exclusive distributor with a countrywide distribution network. A frequently used alternative is to employ a manufacturer representative, who either takes orders and forwards them to headquarters or regional offices in the country of origin, or connects retailers directly with the U.S. supplier. Direct sale is an attractive channel for U.S. manufacturers interested and willing to enter this sector in Argentina.
In terms of marketing strategy, statistics show that television advertising can generate an increase between 40 and 60 percent in product demand. Imports of cosmetics and toiletries are targeted mostly to the middle and high-end segments of the market.
The Harmonized Codes covered in this report include the following:
3303000000 - - Perfumes
3304100000 - - Lip make-up preparations
3304200000 - - Eye make-up preparations
3304300000 - - Manicure or pedicure preparations
3304910010 - - Rouge
3304910050 - - Make-up powder, whether/nt compressed nesoi
3304990000 - - Beauty & skin care preparation (nesoi)
3305100000 - - Shampoos
3305200000 - - Preparations for permanent waving or straightening
3305300000 - - Hair lacquers
3305900000 - - Preparations for use on the hair, nesoi
3306100000 - - Dentifrice
3306900000 - - Preparations for oral/ dental hygiene, nesoi
3307100000 - - Pre- shave, shaving or after - shave preparations
3307200000 - - Personal deodorants and antiperspirants
3307300000 - - Perfumed bath salts and other bath preparations
3307900000 - - Perfumery, cosmetic or toilet preparations, nesoi
All products covered by the above HS Codes are levied a 18 percent import duty and 0.5 percent Statistics Fee. It should be noted that the same items produced in MERCOSUR member countries pay no import duties, no statistics fee and no Valued Added Tax when imported into Argentina
Market demand is currently increasing in all aspects of this sector. However, these products do fluctuate around an “as needed” basis during economic recessions and have a tendency to be lower in demand with decreased economic activity. Argentine men and women spend millions of dollars on cosmetic items in the pursuit of personal enhancement. The desire to improve upon one's appearance through the use of cosmetic means has only heightened and perhaps caused a larger gray area between strictly pharmaceutical agents and cosmetic ones.
Cosmetic items boast the ability to stop aging and deter skin maladies of all kinds. Some cosmetics have proven themselves to be very lucrative in the Argentine cosmetic market. Two main areas pushing the market are products that have the ability to stop or slow the effects of aging by protecting from UV rays, pollution and cellulite and products in the fragrance market dominated by the young people. An increasing number of Argentine girls are using make-up at a younger age. This target group spends approximately 5.9 million dollars per year.
Hair coloring is common and widely accepted. The influx of younger and male and female consumers of hair colorants fuels the growth of hair products in Argentina. Hair salons use mainly Wella and L'Oreal. Straightening hair rebounding continues to be popular among the local Argentine community. Procter & Gamble, Pantene, Head & Shoulders, and Clairol are the market leaders in the retail hair products sector. Johnson & Johnson, Neutrogena, Revlon and Wella are other well-established brands.
In perfumes and fragrances, the brand is the most important consideration for Argentine consumer. Brands associated with designers such as Gucci, Calvin Klein, Kenzo, Donna Karan tend to sell better than mass-market fragrance products. There is also a preference for lighter and floral fragrances and perfumes. Argentine males prefer to use deodorants to perfumes.
Skin care for men is gaining wider acceptance in Argentina. Men-only care centers are also becoming popular, especially for hair treatments.
American companies are among the largest suppliers in the Argentine cosmetic market. Although large U.S. multinational players like Avon, Mary Kay, and Revlon are doing well in Argentina, they are facing increasing competition from a number of international players mostly from France, Germany, and Brazil.