Almost 20 years after the establishment of the North American Free Trade Agreement (NAFTA) that created a free trade zone for Mexico, USA, and Canada, there are several industry sectors that continue to benefit from it. Cosmetics and beauty products have been one of the most positively impacted with a continuous market growth in Mexico despite the world economic crisis.
The value of the Mexican cosmetics market is estimated over USD$9.1 billion, which places it as the third largest in the Western Hemisphere, just behind the United States and Brazil. Although a mature market with increasing options of local and imported brands, consumers have a marked preference for American beauty products and cosmetics that still represent opportunities for U.S. exporters.
Mexico is not unchartered territory when it comes to beauty products and cosmetics. The Mexican consumer has been exposed for several years not only to U.S. brands but also to European products that, in the mind of the buyers, have the highest quality.
Starting with NAFTA in 1994, Mexico opened its borders to free trade and is now the country with second largest number of free trade agreements. In fact, a total of 43 nations have preferential trade treatment when exporting to Mexico. This means that there are no tariffs imposed on products being imported from the countries that have a free trade agreement with Mexico, as long as the product is manufactured the country of export.
Free trade brought more brands into Mexico as well as more manufacturing plants. Several multinational beauty companies set up manufacturing facilities in Mexico and use this location as the main distribution center for Latin America. This is the case of multinationals that supply the mass market such as Procter & Gamble, Unilever, and L’Oréal, to name a few.
Having a wide selection of beauty products at affordable prices contributed to change the taste, preference and purchasing decisions of the Mexican consumer. For example, the average consumer has gone from the use of only one hair care product in their daily routine, to no less than three. This explains the constant growth in the demand that made this sector remain strong in spite of the economic downturn of the previous two years.
Of course, locally manufactured products mean lower prices than imported goods and this is a critical element to consider if a U.S. exporter is planning on entering the Mexican market. It is a highly competitive market, but also one in constant evolution and eager to follow world trends for beauty products.