While the impacts of the COVID-19 pandemic were strong in terms of long-term social isolation measures and a reduction in many household incomes, one aspect of the Brazilian population persisted: using fragrances daily. Perceived as essential by many consumers, retail value sales continued to increase in 2020, despite the pessimism expressed by many manufacturers and retailers at the beginning of the pandemic.
Although fragrances managed to register value growth above the inflation rate, it was not immune to supply chain disruptions. The consistent devaluation of the Brazilian real against the most important currencies contributed to ramping production and importation costs, either for components/ingredients or final products.
Despite continued growth, the configuration of the category changed in 2020. To overcome financial barriers – on the production side, with rising costs; and on the demand side, with reduced budgets – consumers welcomed national brands over imported ones.
While trading down was a direct consequence of the COVID-19 pandemic in 2020, it is expected that many consumers who tried different brands, especially national and mass brands, will not switch back to imported and premium brands, at least in the short-term. The exchange rate devaluation and lower purchasing power are expected to continue, especially over 2021, so these impacts might be longer-lasting than initially envisioned.
During the longer than expected social isolation measures, beauty specialist retailers were not considered essential, and therefore remained closed for several months of the year. Consumers’ attention therefore switched to e-commerce and direct selling, the only two distribution channels presenting share growth in fragrances in value terms in 2020.
Despite the challenging manufacturing scenario, fragrances was among the most dynamic beauty and personal care categories in terms of new product launches during 2020. This trend is not expected to be reversed in the short-term.
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This report originates from Passport, our Fragrances research and analysis database.
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