The Beauty Business Surges Again.

Walk into any department store and chances are the first area you will enter will be the Cosmetics and Toiletries department. For many women and increasingly men too, it is an irresistible magical place to shop. Welcome to the Beauty Business, the most profitable part of the store.

The Cosmetic and Toiletries market in Mexico, defined as hair care & coloring, skin care, make up, perfumes & fragrances, deodorants and oral hygiene, punches well above its weight in per capita consumption and share of world markets. According to CANIPEC (the cosmetics industry association), the beauty market in 2005 was worth 3.5 billion dollars, ranking around 10th in the world and growing at annual rate of 10%, compared to the worldwide growth average of 8.2%.

It’s hard not to be fascinated by the Cosmetics and Toiletries market, because of its size, product innovation, design & packaging, consumer typographies, brand dynamics and its undoubted mystique. Above all, the Beauty Business represents a constant, unrelenting, marketing challenge.

Whether it’s the latest make up innovation from L’Oreal, a new line extension from P&G’s Pantene shampoo or Unilever’s Sedal; new ideas for men’s grooming from Nivea; a new fragrance from Chanel, Calvin Klein or Joy or a new organic cream at the Body Shop, hardly a week goes by without some new offering appearing in the category.

Increased discretionary spending from working women, higher disposable income from an reviving middle class and access to consumer credit are the key factors driving demand in Mexico and other developing markets.

Distribution covers a wide and varied spectrum of sales points: from direct sales (Avon, Jafra, Mary Kay, Amway and Herbal Life etc.), to retail department stores, super markets, pharmacies, duty free stores, independent specialist retailers, salons and beauty shops, down to the informal sector of street markets and vendors. The Beauty Business is everywhere.

Manufacturers and producers also present a diverse and competitive market place, from the global giants (P&G – Max Factor, L’Oreal, Unilever – Pond’s, Beiersdorf - Nivea), to middle players (Grisi, Bristol Mayers) to small local producers and, increasingly, low priced imports from Asia and China.

Mexico, as a member of the World Trade Organization (WTO), is obliged to eliminate all existing tariffs and quotas on Chinese imports, effective this year. In the price sensitive low end market cheap imports are helping to boost sales. Unfortunately, so are counterfeits and generic copies of high end brands.

Profound changes, already evident in the US and Europe, are beginning to make themselves felt in the Mexican market. Changing demographics – the population of Mexicans over the age of 55 (the Grey market) will double in the next fifteen years to 25 million. Changing attitudes towards aging and changing definitions of beauty are changing how people interact with brands. Consumer activism against toxic ingredients is gaining momentum all over the world. The move to 100% organic cosmetics is already well advanced in a number of European countries. But no matter how the changes come it’ll still be a Beautiful Business.