Rafael

SECTOR CAPSULE: HEALTH AND BEAUTY SPECIALIST RETAILERS - BRAZIL
18 Jan 2010

HEADLINES
Sales increased by 15% in current value terms in 2009 to reach over R$46 billion. New legislation prohibits sales of convenience products at parapharmacies/drugstores. The number of outlets grew by almost 2% in 2009 led by expansion plans from large drugstore chains. The top five operators accounted for just over 20% of parapharmacies/drugstores value sales in 2009. Health and beauty specialist retailers are expected to post a CAGR of just over 4% in constant value terms during the forecast period.

COMPETITIVE LANDSCAPE
The beauty specialist O Boticário leads the sector with sales of R$2,341 million in 2009. O Boticário’s leadership can be explained by its increased market presence through the opening of new stores under franchising arrangements. According to company sources, Boticário covers 96% of towns with populations of 30,000 people. Another success factor is Boticário´s ability to adapt its product line to the demand from a growing number of women from lower socioeconomic strata through the introduction of a series of product items at reduced prices. Beauty specialist retailing is characterised by fragmentation, with a large number of small retailers struggling to build brand images consistent with market demand. Stimulated by the sector’s robust growth rates in recent years (beauty specialist retailers posted a CAGR of 10% in current value terms between 2004 and 2009), players such as Mahagony Cosméticos plans the opening of 35 new stores and L´Acqua di Fiori planned 50 new outlets in 2009. The French L´Occitane is opening 19 new stores and is considering distribution of L´Occitane products at parapharmacies/drugstores. In addition to competition within the beauty specialist retailing channel, supermarkets/hypermarkets and direct selling represent strong competition to beauty specialist retailers. While beauty specialist retailers accounted for 14% of total value