Despite the slump, beauty is big business in Brazil

RIO DE JANEIRO: In her apartment in a tough Rio de Janeiro suburb, Geni Monteiro Coimbra pauses as she ponders a teasing dilemma - the tutti-frutti or the strawberry lipstick?

After a quick consultation with her local Avon lady, strawberry wins the day, and the 46-year-old Brazilian housewife signs off on a cosmetics bill of 50 reais ($27).

The sale wrapped up, Heloisa Almada Contreira marches on to the next of her 80 or so clients. She says she's selling about 1,700 reais ($930) worth of beauty products a week, around 25 percent ahead of last year's sales.

"For them, it's a necessity," said Almada Contreira, 51, who has been selling for the US cosmetics giant in the low-income area of Baixada Fluminense for more than 13 years. "Brazilian women can't go without their make-up."

The global financial crisis last year halted five years of strong economic growth in Brazil that had pulled millions out of poverty and created a new class of consumers.

A year on, these new consumers are emerging relatively unscathed from a recession which only had a small impact on jobs and income.

Consumer confidence and demand for credit have returned to near pre-crisis levels and the government says the economy is set to grow 1 percent this year, even as several other major economies struggle to emerge from recession.

With Brazil's economy, the world's 10th largest, relatively closed to trade, its vast internal market of 190 million people is proving key to the recovery.

Nowhere is their spending power more evident than in the beauty industry, whose explosive growth has made Brazil a battleground for brands such as Avon Products Inc and L'Oreal.

Brazilians' obsession with beauty, from body waxes to perfumes to looking good in bikinis, helped lift beauty and hygiene sales last year by 27.5 percent in dollar terms from 2007 to $29 billion, according to Euromonitor International.

That makes it the third-largest market in the world, trailing only the United States and Japan, despite much smaller average incomes. In the first six months of this year, sales were up 18 percent from a year ago, keeping Brazil on course to overtake Japan in 2010.

On the front lines is a 2.2 million strong sales force selling to friends, neighbors and door-to-door from city slums to remote towns in the Amazon rain forest. On Almada Contreira's street alone, there are four cosmetics sellers in an area where most people earn little more than $400 a month.

"We are democratizing luxury," said Avon's Brazil chief Luis Felipe Miranda. "In the Amazon, we use small boats and planes to deliver products. It can take six or seven days."

The company has 1.1 million "Avon ladies" in Brazil, a fifth of its global total. Its Brazil sales rose 23 percent in the second quarter, against an 8 percent fall in North America, and it will next year open a 70,000 sq m distribution center in Sao Paulo state, its largest anywhere.

Reuters

(China Daily 09/21/2009 page11)