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Kline Study Shows Brazilian Cosmetics & Toiletries Market Boosted by Middle Class Buying Power

-- Brazilian Market Growth Leapfrogs France and Germany in Rankings --
LITTLE FALLS, NJ, May 08, 2008 – Continued expansion in the Brazilian economy has afforded cosmetics and toiletries marketers one of the most robust markets in the world in recent years, according to new data compiled by worldwide consulting and research firm Kline & Company. With nearly 14% growth in cosmetics and toiletries sales in 2007, Brazil now ranks fourth in the global market and is poised for further double-digit growth over the next five years.

The burgeoning middle class and increased consumption levels, coupled with GDP growth of 5.4% in 2007 and a more potent Real, has boosted Brazil ahead of bellwethers France and Germany in terms of cosmetics and toiletries sales for the first time since Kline started examining international cosmetics and toiletries markets. According to data collected for Kline’s Global Cosmetics & Toiletries 2007 market report, sales topped out at BRL 22,822 million (USD 11.7 billion) at the manufacturers’ level.

Sérgio Rebêlo, managing director of Factor de Solução, Kline’s affiliate based in São Paulo, says 2007 was the year of the “big, old-school” multinational company in Brazil, with top-tier firms growing faster than smaller players.

“The movement was led by companies such as Avon, which managed to increase sales by more than 26% after years of poor results in Brazil due to fierce competition with Natura,” Rebêlo said. “Avon’s success came through a restructuring strategy that renewed the company’s portfolio, increased media expenditures, and strengthened its relationship with sales representatives.”

Other global players such as L’Oréal, Beiersdorf and Unilever have also dialed up the competition with innovative products and heavy media investment. “On the other hand, ‘the Brazilian Star,’ Natura, lost some of its shine and was unable to maintain the huge growth rates it enjoyed over the last few years, with sales up only 9.5% in the domestic market,” Rebêlo said.

Makeup proved to be the fastest growing category in 2007 for Brazil, with a 17.8% growth rate, according to Kline’s report. In the Latin American market overall, the luxury class posted the highest growth in this category, up by 23.6%, followed by salons at 17.4% and specialty stores at 16.5%.

“People in the middle- and low-income levels have seen a big improvement in their purchasing power, and they’re spending more on beauty products,” says Carrie Mellage, director of the Consumer Products practice for Kline’s research group. “But because value is still important, companies that offer quality products with midrange price points are among the fastest growing in the market.”

Kline’s Global Cosmetics & Toiletries program, now in its third edition, covers 16 countries in Asia, Europe, Latin America, and North America and examines 21 product categories within six major product classes. The study details historical sales, growth, and market share for leading brands at the manufacturer, retail, and unit volume levels. It also examines sales by product type and new product activity and features five-year forecasts for the overall markets for each country, as well as each product class and category.

For more information about Global Cosmetics & Toiletries, go to www.klinegroup.com/reports/y559.asp or contact Sérgio Rebêlo at +55 11 30790792 or Sérgio Rebêlo

About Kline
Kline is a worldwide consulting and research firm dedicated to providing the kind of insight and knowledge that helps companies find a clear path to success. The firm has served the management consulting and market research needs of organizations in the chemicals, materials, energy, life sciences, and consumer products industries for nearly 50 years. For more information, visit www.KlineGroup.com.

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