Personal Care Products Market

An Expert's View about Medical, Health and Cosmetics Products in Mexico

Posted on: 31 Jul 2012

Demand for personal care products in Mexico has steadily increased over the past decade due to the rising purchasing power of Mexican consumers. While the world economic crisis of 2008 reversed this trend, the latest data shows that the market for personal care products seem to have stabilized and resumed its previous trend. Growth of personal income and increased access to different types of credit have allowed Mexicans access to better quality products and have increased the demand.
Mexico’s personal care products’ market is extremely competitive as most of the largest international brands compete for market share. Many of the popular brands and new to market personal care products have entered the Mexican market only recently. Expansion of sales channels together with an increasing number of male consumers and heightened demand for natural or organic ingredient products have contributed to growth. Department stores, drug store chains, specialized stores and retailers are currently the most important channels of distribution. Multi-level marketing is also very popular among consumers.
The biggest segment in personal care products is hair care followed by skin care and fragrances. The Mexican market continues to be polarized, with consumers split between premium products and lower-priced, mass-market alternatives. Department stores typically cater to customers seeking high-end products, while those seeking low-price cosmetics shop in supermarkets and drugstores.

Market Demand
With a total population of 112 million, Mexico is the 11th most populous country and the 14th economy in the world by gross domestic product (GDP), which reached a record US$1.03 trillion in 2010.
Mexico´s population is growing at an annual rate of 1.1 percent. Nearly one half of Mexicans are under the age of 30 and more than 10 million are between the ages of 15 and 19. The largest population centers and consumer centers are the cities of Guadalajara, Monterrey, and Mexico City.
Mexico is one of the biggest markets for personal care products in Latin America. According to the Mexican Chamber of the Cosmetics Industry the personal care products market consists of 150 companies including large international companies like Procter and Gamble and Unilever, and very small businesses as well. The most important sales channels for these products are retail and direct sales ones. According to the Mexican Cosmetics Chamber the personal care products market grew 6.6 percent annually from 2001 to 2006 and almost 2 percent annually from 2007 to 2011. In 2011 sales of personal care products in Mexico accounted for USD $80 billion.

Market Trends
Changing consumption patterns among Mexican male consumers have increased the market for men’s personal care products. Male Mexicans are becoming increasingly aware of wellness issues and are placing attention on products such as shaving preparation, shampoo and conditioner, shower gel, facial cream, lip care, facial scrubs, mask, moisturizer, sunscreens, and light and fresh fragrance and after shave products. Multinational personal care products firms are pushing men’s beauty lines because competition in the traditional female demographic has become overwhelming and sales growth difficult to maintain. The women’s market is becoming saturated in Mexico. Lately, this category of “grooming men”, who purchase products for themselves, is increasing whereas in the past women used to buy the products for their boyfriends or husbands.
Products using natural and organic ingredients are reporting high demand because of the surge in consumer demand for chemically-clean products. Natural and organic products are one of the fastest growing sectors of Mexico’s personal care products industry. Some of the ingredients that are showing high demand are natural actives, natural extracts, organic oils, and essential oils. U.S. suppliers have an important advantage over other local and international manufacturers given that they have developed highly effective natural and organic products. U.S. suppliers have formulated, developed and launched certified natural and organic personal care products that meet the performance of conventional products, whereas local manufacturers have yet to make products of this quality.
Baby health and beauty products also have niche opportunities. A few of the most popular baby products brands in Mexico include Nivea Baby, Johnsons’ Baby, Evenflo, and Avent. Some of the common factors parents seek in baby/kids personal care products are products that are free from artificial scents, colors, preservatives, paraben, and talc, and products that only have natural or organic ingredients. These factors also apply for the preferences of mother-to-be and lactating mothers.
Strong marketing is crucial in the Mexican market. Most of the biggest conglomerates (L’Oreal, Procter and Gamble and Colgate Palmolive among others) have spent large sums building brand advertising campaigns using promotions in local TV, newspapers and magazine ads. Important factors for product acceptance are brand image and perceived product quality, while price and special features also rank significant.

Best Prospects
Over the last decade, Mexican shoppers have changed, as have their counterparts around the globe. Mexican consumers are more informed, less loyal, and look for good value products. Additionally, there is an increasing young population that will soon enter the workforce and demand new consumer goods that are more in line with global trends.
Mexican consumers tend to be drawn in by promotions offered through department stores. Discounts must be significant to be effective, however. According to industry experts, if a product is offered with less than a 20% discount, a Mexican consumer will not be likely to make a purchase. In the case of supermarkets and "big box" stores, the best strategy is to always offer the best price possible as retailers like Wal-Mart and Costco do.
Luxury goods offer good opportunities for export. Mexico ranks above Brazil and Argentina in sales of luxury brands in Latin America and according to consumer research firm ACNielsen; it is the fourth largest market worldwide.
Demand for luxury goods may increase in the future. ACNielsen estimates that by 2030 Mexico will have 6.4 million people with annual incomes over US$60,000. According to department store El Palacio de Hierro at least 5.2% of the Mexican population can be considered upper-middle class, with incomes of above US$8,000 per month, and at least one third of the total country population has access to high quality imported goods.
In recent years, Mexico has seen a booming cosmetics market with an increasing demand for natural and organic personal care products. Increased consumer interest in chemical-free products is driving this surge in demand for natural and organic ingredients. High and medium income Mexicans are increasingly knowledgeable about organic certification and natural standards, and foreign-made products are more trusted than local brands, due to local consumer perceptions that international certifications ensure product standards and quality.
The major advantage that European and North American companies possess is that they have developed highly effective chemical-free cosmetic products. Manufacturers in these regions have developed, and launched certified natural and organic cosmetics that meet the performance of conventional products, whereas local companies have yet to make such products. Consumers have confidence in the quality of imported products because local authorities have strict regulations on natural and organic products manufactured overseas to ensure purity and quality. As a result, natural products from foreign suppliers are prominently displayed on the shelves of many chain specialty stores and are well accepted by local consumers.
Demand is highest in this market is for facial cream and emulsion liquid, foundation, lipstick, face covering cosmetics, eye makeup, cleansing cream/tonic, nail-polishes and decorating products, fragrance products and medicated skin care products, especially hydrating and anti-aging products.

Key Suppliers
Mexican companies or subsidiaries of foreign companies are the biggest suppliers of personal care products within the country. There are also important American and multinational companies with a presence in the market. All of these companies have well-developed distribution networks and enjoy high brand recognition among consumers. Leading companies are Unilever, Beiersdorf, Colgate-Palmolive, L'Oreal and Procter & Gamble. Private label products are slowly but steadily pushing forward. Direct sales companies are also active in Mexico: the four best-known brands are Avon, Mary Kay, Amway and Yves Rocher. In the pharmacy channel, premium brands like Vichy or Eucerin are very strong and heavily supported.
Top retailers are also developing sophisticated distribution systems. Despite advances in logistics, retail stores still depend heavily on local distributors. The following are some of the top players per segment in the personal care market in Mexico:
• Hair Care: Procter and Gamble, Colgate-Palmolive, L’Oreal, Unilever, Garnier and local companies
• Skin Care: Beiersdorf with Nivea, Colgate-Palmolive, Procter and Gamble, L’Oreal, and others
• Bath and Shower Products: Procter and Gamble, Colgate-Palmolive, Unilever, and local brands
• Fragrances: This is a more fragmented category. On one side there are the high-prestige mostly European producers and on the other, some massive brands like Avon Cosmetics
• Men’s Grooming: Procter and Gamble is the biggest with the acquisition of Gillette in 2005. Unilever is also an important player, as well as Nivea Men and L’Oreal
• Oral Care: Colgate-Palmolive leads the Mexican market followed by Procter and Gamble
• Deodorants: Unilever and Procter and Gamble
• Baby Care: Nivea Baby and Johnson’s Baby

Read the full market research report

Posted: 31 July 2012

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